Before you get your hopes up, no, you can’t invest in continents. However, businesses on continents are a different story. So don’t let your geographic location inhibit you from making sound overseas investments.
Despite its small recent contraction of economic activity due to Covid-19, Africa remains one of the largest growing economic hubs. Here are six factors that continue to drive money-savvy investors toward Africa.
1. Increasing Infrastructure
Goods can’t move without roads, ports, and warehouses, and those are just a handful of the many new infrastructure projects underway in African countries. This infrastructure is a boon for Africa’s logistics industry, and why financial experts such as Fidelity Indemnity managing director Christopher Roy Garland of Botswana are watching with a close eye.
2. A Younger Workforce
The mean age in the United States is over 30, while the mean age in Africa is just over 19. This younger workforce should help quench the demand for physical labor required to meet the increasing need for infrastructure. For better or worse, younger workers are often paid less than their older counterparts, making the cost of labor less when employing this younger generation.
3. Ready Entrepreneurs
Not only does Africa have the highest percentage of entrepreneurs among its working population, but it also is the only region in which female entrepreneurs outnumber their male counterparts. While male entrepreneurs still tend to earn more, the increasingly diverse pool of business owners allows investors to invest ethically. Access to capital was listed as the issue most plaguing African entrepreneurs. Monetary investments can lift these businesses off the ground and potentially fill the pockets of their backers.
4. Wealth of Resources
Unless you’ve failed grade school world history, you probably know the shameful history surrounding the export of Africa’s raw materials. However, you don’t have to open a mine to start profiting off of the abundance of natural resources. In fact, by investing in African manufacturing and African entrepreneurship, you can take advantage of the continent’s natural bounty without becoming involved with the exportation of raw materials that continues to stifle growth. Natural gas, valuable metals, gems, fertile land, and oil are just some of the many resources that African businesses can take advantage of.
5. Adaptability to Technology
One advantage to building an economy from nearly the ground up is that modern technology can become part of the framework. Coins and paper money are so deeply ingrained in the structure of European and American economies that replacing them entirely with digital transactions would be difficult, to say the least. Transitioning to digital currency would not be nearly as cumbersome for the newer and easily moldable economies in Africa. Some places in Africa are already keen on making the switch to a paperless system.
Africa has nearly 30 stock exchanges representing businesses in over 35 countries. Though these exchanges vary with volume and volatility, many regulations and practices have been put in place to preserve transparency for investors. While investing in a new economy is inherently risky, the risk can be mitigated by using exchanges with such transparency laws.
Civil unrest and government instability have stunted growth in countless regions in Africa. With a significant number of countries now overcoming these hurdles, it may be time to reevaluate whether or not your financial portfolio should include African businesses. While budding economies often impose certain risks to investors, there is no doubt that many financially savvy firms and individuals are keeping their eyes on Africa.