Real Estate Investor Magazine South Africa April 2016 | Page 15

OPPORTUNITIES

environment conducive for foreign direct investment.
Apart from that, there is widespread development of
critical social and physical infrastructure, and there
is an increasing pool of well educated, Englishspeaking, enterprising workers in most countries
across the continent.
There is also a significant boost in the spending
power of Africans. According to the African
Development Bank, Africa’s fast-emerging middle
class is now comprised of over 300 million people,
with the general consumer spending across the
continent hovering past the $1 trillion mark. Africa’s
5 most lucrative sectors for investors are as follows.

Infrastructure

Investing in infrastructure is critical to Africa’s growth.
While there have been significant improvements in
the development and quality of infrastructure across
the continent, there is still a clear-cut deficit. Needless
to say, this shortfall has its consequences, including
bottlenecks in the smooth running of trade and export
activities. But funding infrastructural development
in Africa is not cheap. According to the World Bank’s
2008 Africa Country Infrastructure Diagnostic
study, the continent requires about $80 billion
annually to cover infrastructure needs. Of course, the
financing capacity of individual country governments
is limited; hence there are opportunities for private
investors to partner with African governments in the
development of under-performing infrastructure—
such as investing in reliable power supply, water
resources, roads and railway systems.

Agriculture

Africa is currently home to 60% of the world’s total
uncultivated, arable land. As the world’s population
increases rapidly, global agricultural production
must rise to feed these growing numbers. Much of
that increased agricultural production will come
from Africa. While the traditional obstacles to
boosting agricultural output in Africa have been
well documented (including a deficit of distribution
infrastructure and trade barriers among others),
several African governments are making substantial
and successful efforts in surmounting these
shortcomings. As these barriers are overcome and
agricultural output is increased, there’ll be a business
opportunity for the manufacture and marketing of
products such as fertilizers, pesticides and seeds as
well as a demand for food processing services such as
www.reimag.co.za

grain refining. Already, a growing number of private
equity funds are springing up to finance agricultural
production in Africa.

Mining

Several African countries have vast deposits of mineral
resources that have been left largely unexploited
because of a lack of technical know-how, as well as
the financial incapacity to embark on capital-intensive
mining projects, for example, Nigeria’s hugely
underdeveloped mining industry. The country also has
a wide array of mineral resources which include iron
ore, coal, bauxite, gold, tin, lead and zinc which have
been neglected because of the country’s preoccupation
with its massive oil deposits. The Democratic
Republic of Congo, Tanzania, Namibia, and Zambia
are other examples of African countries that also have
unexploited high-value reserves of diamond, cobalt,
gold, copper and other resources.

Africa is becoming an
increasingly attractive hub
for foreign investors in light of
various economic, political and
social reforms that are sweeping
through the continent
Consumer Goods

With Africa’s exploding middle class (over 300
million people) always looking to be serviced with
new products, Africa’s fast moving consumer goods
sector looks promising. There is a huge and evergrowing opportunity for manufacturers and retailers
of FMCGs like food, beverages, home care and
personal care product ˈ