Leveraging of Mobile Networks

The lion roars: Africa opens up to investment

The vastness of Africa’s potential has been evident for centuries. Blessed with ample resources, rapidly growing populations and huge tracts of arable land, Africa has long been the subject of speculation and expectation. Yet, while Africa is still not widely perceived as a welcoming investment climate, we firmly believe that the continent offers some of the greatest promise for those bold and resilient enough to invest in this rapidly emerging continent.

The fact that respondents cited consumer market growth as their top motivation for investing in Africa is not surprising. Africa boasts more than a billion people, a fifth of whom fall into the 15 to 24 age bracket. Many estimates suggest that the number of youth in Africa will double in the next 30 years. Improving the continent’s prospects is the fact that many of its governments have made strong headway in addressing the lingering legacy of post-colonial inefficiencies by trying to establish stable democracies, effective legal and tax regimes and realistic economic strategies.

Once turbulent and opaque markets (e.g. Ghana, Nigeria, Angola and Ivory Coast) are now experiencing long periods of economic, political and social stability. Yet, success in Africa is by no means assured, with progress often held back by bureaucracy, inadequate infrastructure and a deep-rooted nepotism that obliges entrepreneurs to share their wealth and offer jobs to relatives and friends. Most markets also suffer from a lack of certain essential skills, such as engineering, IT and management.

However, our experience suggests that Africa is increasingly ‘opening for business’. Since 2009, special economic zones have been introduced in several African countries, including Zambia, Mauritius, Ethiopia, Nigeria, South Africa, Egypt and Algeria, each offering exciting prospects for growth and job creation. In addition, major infrastructure projects are starting to move out of the pipeline.

In Angola, for example, the government expects to attract more than US$4 billion in non-oil foreign investment. And already, major players are taking note; GE recently formed a joint venture
with Angola-based GLS Holding to construct a new manufacturing facility in the country worth almost US$200 million to help fulfill its HGM strategy. For most foreign players, the ability to deliver and support effective social programs will be an integral part of the Africa growth strategy. Whether it is building roads, housing, schools and hospitals or simply demonstrating a
commitment to local communities, Africa offers investors a unique opportunity to be part of the continent’s renaissance.

The KPMG Global High Growth Markets Outlook 2015  is ready for download.

David Okwara

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