Most of the world sees Africa as a continent with unlimited growth potential. Know the macro factors which will play a huge role in the future of Africa.
In most developed countries massive amounts of investment are needed today to get marginal improvements. The reason for this is they have reached a saturation point where changes are slow and don’t add much value to the output potential.
But in Africa even small investments can lead to massive output changes. Hence Africa is seen as the perfect investment destination and one of the few places left in the world which can give large returns on investment. But that is only part of the story for Africa. There are other macro factors which will play a huge role in making it one of the most coveted investment and innovation centers in the world.
- Age dynamics – Most of the developed countries today are facing trouble with the makeup of their population. As the numbers of kids per couple have dropped the average age of the countries has gone up. In countries like China and Japan this has reached troubling levels where the number of old people outstrips the number of young people. Africa on the other hand has a bounty of young people with more than 43% of African population below the age of 15. This gives it a huge human capital potential. A manufacturing and technology boom is given when a young workforce is present.
- Middle class – According to classic economic theories, the size of the middle class of any country is a good indicator of its growth and consumption potential. Today US is faced with a shrinking middle class who has led to penny pinching in their economy. Africa has witnessed a spectacular growth in the number of middle class families in the last 30 years. This leads to more discretionary spending which can spur production and innovation.
- Urbanization – For a long time most of Africa’s population lived mostly in small villages which led to a distributed workforce and was a limiter on the growth. In the last decade the number of people in cities has grown and so has the infrastructure in urban areas. By 2050 almost 60% of the population of Africa will be in urban areas. This will lead to development of massive shopping malls and other spending avenues for people.
- Mobile network growth – Mobile communication has been a major game changer for Africa. No one could have predicted how the connectivity would affect the increase in tech innovation and spending habits of people a decade ago. By the year 2020, Africa is expected to have more than 90% phone penetration leading to more and more collaboration and better access to facilities online.
- Tech Hubs – Most countries have set up special tech zones to attract the best of local talent and foreign investment in their countries. This has led to path breaking innovations like m-pesa from Vodafone which has been massively successful.
- Gender Power – More and more women have started to enter the work stream which has led to increase in the work force significantly. In the past women didn’t work in full time jobs which meant that 50% of the workable population was wasting its potential.
We expect great progress and exponential growth in Africa in the next few decades. There will be a long queue of brands and investors who would look to become a part of the African success story.