Before you hope, no, you cannot invest in continents. However, companies on continents are a different story. So don't let your position discourage you from making smart foreign investments. Despite the recent slight slowdown in economic activity due to Covid-19, Africa remains one of the most important economic centers in the developing world. Here are six factors that continue to drive frugal investors in Africa.
1. Infrastructure development
Goods cannot circulate without roads, ports and warehouses, and these are just some of the many new infrastructure projects under construction in African countries. This infrastructure is a boon to Africa's logistics industry, which is why financial experts like Christopher Roy Garland, CEO of Botswana-based Fidelity Indemnity, are keeping a close eye on it.
2. Younger workforce
The average age in the United States is over 30 years, while the average age in Africa is just over 19 years.This younger workforce is expected to provide the necessary manpower needs to meet the growing infrastructure needs. For better or worse, younger workers are often paid less than their older counterparts, lowering labor costs when hiring the younger generation.
3. Willing Entrepreneurs
Africa not only has the highest proportion of entrepreneurs in the labor force, it is also the only region where there are more female entrepreneurs than male entrepreneurs. As male entrepreneurs continue to earn more, an increasingly diverse pool of entrepreneurs allows investors to invest ethically.Access to capital is cited as the biggest concern for African entrepreneurs. Cash investments can get these companies off the ground and potentially line the pockets of their sponsors.
4. Resource Abundance
Unless you read world history in elementary school, you probably know Africa's infamous history of resource exports. However, you don't have to open a mine to enjoy the abundance of natural resources.Indeed, by investing in African manufacturing and entrepreneurship, it is possible to exploit the continent's natural wealth without engaging in commodity exports, which continue to stifle growth. Natural gas, precious metals, precious stones, fertile land and oil are just a few of the many resources that African companies can exploit.
5. Adaptability to Technology
One of the advantages of building an economy almost from the ground up is that modern technology can become part of the structure. Coins and paper money are so entrenched in the fabric of the European and American economies that it would be difficult, to say the least, to completely replace them with digital transactions.Transitioning to a digital currency would not be as onerous for newer, easier-to-design African economies. Some places in Africa are already interested in dematerialization.
Conclusion
There are nearly 30 stock exchanges in Africa, representing companies in over 35 countries. While the volume and volatility of these exchanges vary, numerous regulations and practices have been put in place to ensure transparency for investors. While investing in the new economy is inherently risky, this risk can be mitigated by employing deals with such transparency laws.
Social unrest and government instability have slowed growth in countless parts of Africa. As a significant number of countries overcome these hurdles, it may be time to reassess whether your financial portfolio should include African companies.While emerging markets often present some risk to investors, there is no doubt that many financially savvy companies and individuals are turning their eyes to Africa.
0 Comments