Investing In Africa’s Fast-Rising Economies – Part 2

Image by: David Berkowitz
By Steven Morrison II

In Part 1, we discussed why most people don’t see Africa as a good place to invest, and how those assumptions are wrong. Africa is, in fact, a booming continent, with a big bright future ahead of it.

True, there are problems and difficulties faced by the people of Africa that would – under normal circumstances – keep anybody from trying to make a better life for themselves and to grow and create business.

But the African people have proven themselves to be resilient and willing to work hard, unwilling to give up in the face of great adversity. And if there isn’t the support structure that they need to get it done – such as the infrastructure to move of goods throughout the continent – the people, businesses and investors improvise and get creative.

Take Africa’s burgeoning charter aircraft business that we discussed in Part 1 – it is a sure sign that people see great things (and even greater rewards) ahead, and are interested in laying the groundwork.

What This Means To The Investor

The truth is those business flights are a sign that men and materials are being moved through Africa and that the commercial sector just can’t keep up. In fact, it is estimated that 80% of all flights within Africa are of a commercial nature.

The bottom line is that on the famed Dark Continent, business is booming. Struggling, but booming. It is in these tumultuous places that the biggest bucks can be made as the more skittish investors sit on the sidelines, waiting for more stability to materialize before they take a risk.

That’s why, it is believed by experts, that now is indeed the time to hitch a ride on the African express train. The question is, are you willing to take a chance?

“The African continent continues to benefit from relatively high growth in emerging economies, such as China and India, which have become more and more important for Africa’s trade and investment,” says a report by the African Economic Outlook.

How To Cash In

The tourism sector continues to boom for Africa, so smart money may be even wiser money to tie into investments there. Airlines, hotels and travel companies that service Africa will all see continued growth for decades to come.

Commodities certainly keep the continent moving in the right direction. However, the continued roller coaster ride known as price fluctuations keep Africa from sustaining any steady growth in this area.

Image by: US Army Africa

However, mid-term and long-term growth in virtually assured, according to the expert projections, as India and China continue to grow their thirst for raw materials and imported goods. Perhaps investors should “curry” favor with an Indian company with ties to African imports.

And speaking of China, Big Red continues to pour money into Africa. Need proof? The United States used to be the dominate trade partner with Africa. In 2009, China wrestled that honor away from US and soared it to new heights (2011 figures calculated at $160).

The amount of business between Africa and China is astronomical.

No Place Like Home

Amidst all of this fervor and excitement about African investments, the easily overlooked angle is Africans themselves. As consumers, their spending power is expected to go through the roof as the calendar moves forward.

“The number of households with discretionary income is projected to grow by 50% over the next 10 years, to 128 million,” says a report from The Brookings Institution, a Washington, D.C.-based public policy nonprofit.

“By 2030, Africa’s 18 leading cities are projected to have a combined spending power of $1.3 trillion,” the report said.

That means Africa will be soon needing to import goods – all kinds of goods – until they can get manufacturing and those pesky warlords under control. External firms that export goods to (and that have the capacity to market within Africa) would seem to be the ones to benefit here.

Africa is waiting for you … how long will you wait for it?