Africa Month: Why You Should Invest in Africa

In 2020 the COVID-19 Pandemic slashed all aspects of foreign investment in Africa. Foreign Direct Investment in East Africa and Southern Africa, declined by 16%. Africa’s commodity-dependent countries were more severely affected than non-resource based economies. This should tell us something; natural resources are good but are only worth anything if we are able to extract them.

The reality is that the state of the continent’s overall economy took damaging knocks due to the pandemic, and the state worsened due to – for instance, the hostile conflicts that affected entire global supply chains between the Ukraine and Russia. Within South Africa, the looting and recent floods in Kwa-Zulu Natal have not helped this region’s case either. Recovering has not been an easy feat. A few years ago, I could have banked on the construction industry being the top sector to invest in, however, profitability in this industry has been at staggering lows. So Why Should anyone invest in Africa?

I say invest in Africa because of the people, invest in the men, women and children. Tidjane Thiam said it so beautifully, he said, “ The challenges in Africa are many and real. What we Africans have in the face of these challenges is our intelligence, our capacities, our emotions, our determination and our convictions. This is what we realistically have to work with.” If this is what we have to work with as the people of this land, then surely investors should partner with us based on those terms and not elaborately designed strategies that were designed for first world countries. It is imperative that they make the link with the importance of the human factor, the answers, the niches, and the opportunities belong and can only belong within Africans themselves. Moreover, I strongly believe the 2 reasons I present below, are good enough reasons for potential investors to consider putting their money in Africa, despite the very real reality of weak markets.

1. Customers are changing:

With the growth of Africa’s middle class, there is the development of new expectations. We are educated, we are young urban professionals, and we are brand-aware and sophisticated in terms of our consumption. In agricultural terms we are good soil to put your seed into, investors would want to take advantage of this.

2. Africa is diversifying:

Africa is seeing a returning diaspora that recognizes the potential and opportunities in their own countries. This population supports local economic growth with their skills and talent, by acting as “first movers”, investing back in their communities. To me, it would seem more logical and cost-effective to invest in someone that is favoured by local trade policies. This not only helps the locals but it is also quite beneficial to investors because we have moved towards a world where it is the intangibles that hold the most value on balance sheets; it is no longer just the properties and the equipment that makes up the bulk of any company’s value – what matters more and more is goodwill. As a result, there is now a benefit in capitalizing on what is in people’s minds as it guides our consumer behaviour. Investors could project yielding good Returns of Investment in our continent because of this trend.

Concluding, Africa has real intellectual and human capabilities, we already have goals specific to each individual region, and we are not idly waiting for someone to spoon-feed us. However, with that being said, we are open to anyone willing to listen to us and see how they can help us achieve these goals. Africans have an eternal commitment to hustle, when we are faced with tough situations, by nature we are designed with the ability to rise, be creative and act.

Bank on the people!!

Sources:
UNCTAD, World Investment Report 2021
The World Bank
AFDB African Economic Outlook 2021
World Economic Forum

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