Investment Trends in Africa

The world endured a global economic meltdown because of the COVID-19 virus. The pandemic resulted in lower revenues and an increase in the unemployment rate in various industries. Although the number of persons impacted by the epidemic in Africa was relatively low compared to other regions, the pandemic placed increased pressure on the continent’s already-struggling health system and economy. It resulted in a significant drop in commerce and investment from United States, China and other global trading partners. Prior to the pandemic, several investment firms already focused on enterprises that provide emergency services in Africa, including healthcare, education, and food production, even before the spread of the virus.

Despite the pandemic’s aftermath, Africa still offers a plethora of investment prospects now that the world has regained a semblance of balance. African countries, which have some of the world’s fastest-growing economies, are becoming increasingly noticed by global investors as they seek growth opportunities. Prospective investors can benefit from the continent’s rapidly rising population, digital economy, and financial markets.

The financial technology (fintech) sector is one of Africa’s most promising investment possibilities. As a result of enhanced technology, Africa’s fintech sector has grown significantly over the years, and it is currently the world’s second-largest banking market. Due to the closure of physical banks because of the Coronavirus, most financial institutions are bolstering their digital infrastructure, building on the infrastructure they laid, prior to the pandemic.

In terms of fintech investment in Africa, the previous year was a strong one, and this year is likely to be much better. Venture capital and private equity from other countries, mainly the United States, serve as the major source of investment funding. Egypt, Kenya, Nigeria and South Africa, are the primary African markets to pay attention to as an investor.

As a result of Africa’s fast population increase, the continent has seen a wave of urbanization and infrastructure development. Foreign investors can profit from infrastructural development by investing in telecommunications, renewable energy, as well as transportation to name a few sectors. The increased requirement for infrastructure development has given rise to these opportunities. According to data, Africa’s population was nearly 1.5 billion in 2021 and would reach 2.5 billion by 2050. This increase would result in even more commercial prospects. Although Africa’s infrastructure lags far behind other regions, annual investment in this sector is increasing incrementally.

Healthcare, agriculture, and natural resources are other areas that offer investment potential. As a result of Africa’s rapidly rising population, more healthcare services, products, and infrastructure will be required. Africa is well-known for its wealth of natural resources and untapped agricultural potential.
Investing in Africa’s agricultural industry has been done for a long time, but not on scale. Because of advances in research and technology, this investment opportunity has become even more beneficial. Africa has the most cultivable area, yet only around 10 percent of it is used for agriculture. The continent has historically struggled to monetize these resources. However, thanks to recent innovations and investments, this situation is expected to improve.

African economies are diversifying and despite the abundance of opportunities, doing business in Africa is still fraught with real and perceived risks. When it comes to business and investment, risks are unavoidable. These risks, however, should not deter you from investing in Africa because the continent’s economy and opportunities are expected to grow even more in the years ahead.

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Boinu Capital Managing Partner Soji Fanoiki

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Soji Fanoiki

Soji Fanoiki

Boinu Capital Managing Partner Soji Fanoiki

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