WHY INTERNATIONAL INVESTORS SHOULD LOOK TO AFRICA FOR TECHNOLOGICAL INNOVATION
The African digital renaissance is giving a long lasting promise to the shrewd international investors. 10 years of rapid growth of economy in Africa is an excellent platform where the consumer expenditures are increasing to levels exceeding $1 trillion every year. This is estimated to continue to the year 2020 as reported by Forbes magazine. Therefore, any astute investor should seize this excellent opportunity already presented by Africa.
Basically the middle class income population is increasing, urbanization is expanding and IT infrastructures are getting better and better as mobile phones and mobile payment systems are increasingly being used. All of these have presented a combination of favourable technological startups that got investors slavering. A greater percentage of the population do not have credit or debit cards and instead depend on mobile payment systems such as M-Pesa and Airtel Money. These systems are becoming an integral part of the community. Mobile payment systems are not the only technological advancements, there are plenty of other reasons as to why Africa is a wise investment platform.
Faster Population Growth
While other regions of the world are struggling with the challenge of population decline, Africa is proud to host over 1.2 billion people and the number is growing at a rate of 2% every year. A large population growth is certainly a good platform to invest in as the population will provide ready market bearing in mind that services offered are in demand. The six countries in the sub-Saharan region of Africa are among the 12 fastest growing nations of the world. That sounds like a good reason to direct investment in the region.
Higher Economies of Scale
The sub-Saharan African countries have some of the fastest economies in the world. For instance, Kenya’s economy is the third fastest developing in the entire globe just behind china and Philippines. 40 percent of GDP in the East African Community is accounted for by Kenya, which also has the best performing currency in the region. This budding economy is augmented by its ever growing population of educated and English speaking people who are also young and energetic.
A Growing Consumer Base
The middle class population in countries such as Nigeria, Ghana and Angola is on the increase and this relates to an increased number of consumers. The World Bank claims that 60% of the growth of the sub-Saharan economy is accounted for by consumer expenditures, as reported by Africa Pulse. This growth is expected to grow to more than 5% by the year 2016 which is faster as compared to the average growth of global economy.
Growth of infrastructure
Over the past ten years, countries such as Kenya, Ethiopia and Uganda have spent significant investments in building and upgrading of their infrastructure. As in the case of Kenya, the country is expected to make an investment of USD $55.6 billion to improve its infrastructure I the power generation and telecommunication sectors. Actually, the rate at which the economy is growing is greatly affected by the investments directed to the upgrade of infrastructure.
Across the entire continent, several initiatives have been laid to provide groundwork to continually accelerate development of the business sector. This simply means that some few steps into the future, there will be provision of more opportunities for international investors in the region. Good examples of these initiatives include SmartXchange in Durban and RLabs in Cape Town South Africa. Another good example is Iceaddis in Ethiopia.
Other good reasons to invest in Africa include improving educational growth, diversification and rising trends among others. Investors who are after sound investment opportunities shouldn’t look any further. Africa presents favourable opportunities for international investors to cast their nets.