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What makes Africa a good business opportunity

The year of 2018 is finally giving shape to what Africa, as a continent has to offer. In recent years, we have seen Africa strongly undervalued as an investment opportunity; however, this trend is turning for the better. The main reason for the positive turn of events lies in the latest reports by the International Monetary Fund that place Africa as future second-largest economy in the world. In order to underline this projection there are three major fundamentals that assure African growth in next few years ahead of us. These three points include:

  • Population
  • Consumer habits
  • Economic diversity

With more than 1 billion people, Africa represents a valuable market with a tendency to double up in size by the middle of 21st century. A market this large is a self-propelling system that is able to grow and expand beyond measure. Moreover, around 20 percent of the population includes younger people. According to researches, over 200 million Africans are between the ages of 15-24 with chances for this figure to grow up to 321 billion by 2030. In other words, while the rest of the world is getting older, Africa is getting younger. This brings us to the question of workforce-all these young people are going to need jobs, housing and various types of products (food, drink, clothes, electronics, etc.). Simply put, Africa has a growing population that needs to be taken care of in every possible way. With domestic infrastructure and institutions mostly unable to live up to the challenge, it is not unusual to expect a large number of foreign investors pouring in to seize this chance for young working force and consumers.

Speaking of consumers, it is estimated that African population and businesses spend over 4 trillion US dollars, today. This number is expected to grow and reach 5.6 trillion by 2025 with 2.1 trillion going to household consumption, alone! The rest 3.5 trillion US dollars goes on business consumption. The key to capturing African consumer opportunity lies in big cities. Nigerian cities generate consumption that surpasses national average per-capita by double. Top three largest cities in countries like Angola hold more than 65% of national consumption volume. With upcoming trend of people moving into larger cities, it is clear to see how investing in African cities can be a very smart move for anyone who wants to see their business scale through the future. Additional benefit can be seen through the consumer habits of young urban Africans. More than 58% of African population living in large cities is brand-loyal, meaning that they are prepared to pay higher prices for well-known brands and popular products.

While Africa was widely known by its local commodities, the economy of this continent is beginning to reshape and diversify. Oil and diamond trade that used to be the backbone of African market are now accompanied by industries such as health-care, technology, construction, and fast-moving consumer goods. This new trend is paving the way for smaller African countries that in turn increases inter-continental trade volume.
Any investor with enough foresight can take these three important economic growth indicators as a clear sign that Africa is ripe for a long-term investment. With a vast market, abundant workforce and potential to grow inside and outside the continent, African continent is more than an opportunity; it is a prospect for the future.


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