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Top reasons why Africa is still the top destination for Foreign Direct Investment

Sunday, 16 April 2017

While the normally favored investment destinations such as Egypt, Angola, Kenya, Nigeria and South Africa still get the bulk of foreign development investment( FDI) projects, other countries which were not originally the focus of global investors such as Republic of Congo ,Sudan, Mozambique and Ghana are steadily rising.

Secure monetary growth anticipation

African countries persist on enhancing their GDPs by about 6% each year. New technologies, hybrid seeds, and other essential innovations are a few factors that have added to this continued improvement. In fact, many African countries ranked top with regards to an increased GDP as compared to countries from other continents. Unlike places such as the U.S and U.K that anticipate slow growth in the upcoming years, Africa’s economy is likely to grow considerably over time.

Progressively less aggressive

Presently, there are handful African countries that are beleaguered with wars and civil conflicts. It is projected that 60% of the African population lives in countries that are liberated from hostilities and inconsistency. This is praiseworthy in comparison to Asia, which has a tally of 66%. By encouraging democracy in Africa, Africans have made their nations more attention-grabbing to both home and foreign investments.

Increased household expenditure

Years back, Africans only consumed foodstuff and other products that they created by themselves. However, at present more farmers are producing cash crops for selling overseas. The consumers of coffee, cocoa, tea, milk and several other goods then deposit the money into the farmer’s bank accounts. This indicates that African farmers currently have liquid assets in adding up to their considerable disposable income. The money is spent on manufactured goods and equipments from all over the globe. Shopping malls are sprouting everywhere in the continent.

Demand for indispensable produce

As developed countries go on with their development, they require more vital commodities, which are abundant in Africa. For instance, Africa possesses a loaded gold reserve, and it also holds 10% of oil reserves worldwide.

China’s augmented participation in Africa

Scores of Chinese companies have invested heavily in African countries. The leaders of nations such as China have accepted that they need more resources from Africa in order to finance both their expenditure and development in the future. This has forced Western countries to start considering Africa as a steady investment partner.

Improved wealth creation and large trained workforce

Industrialists, mainly in farming and technology, are producing advances that are generating new professions and income streams. The population African is becoming more hopeful as more people consider that their living will get improved in coming years. Mobile phones are now available in far-flung villages, which are an excellent sign that affluence is getting even those who were considered to be hopeless in terms of livelihood improvement.

Having a large and experienced labor force is a formidable advantage, because investors and international companies get lots of easily trainable and willing employees. This trained workforce is owed to the entire investment that African countries have placed in reorganization of education sectors. In comparison to China and also India, Africa is opening up to become an outstanding outsourcing spot.

Youthful demographics

The advantage, of having young demographics, indicates that African regimes are less held back by pension plans. This transforms to a young and energetic African workforce, for example, the mean age in Nigeria is 19 years as opposed to America where it is 37 years.


Vast cultivatable land

The area, which is appropriate for farming, has become inadequate in other continents. Researchers believe that the globe needs African farmers to augment their agricultural produce significantly.

Increased urbanization

More Africans presently live and labor in metropolitan cities. Urban residents usually payout for everything they use, which comprises houses, haulage, water and provisions. More employment openings are created to gratify for this escalating population.

Gas and oil exploration

Gas and oil discovery has started in the East Africa and the region presently has an increasing geopolitical outline. At present, the area continues to experience a spell of gas and oil allied activities. The unease is that the rush may lead to abandonment of the enormous agricultural sector. The region's governments on the continent must not hurry to rid of the goose that for years has been endowing them with golden eggs. Even with cash from oil, excess reliance on bringing in food from other continents enhances susceptibility, particularly with the instability of food prices in global markets.

Many African countries are becoming functional democratic states, thus magnetizing investors worldwide. In general, new investors are ardent and shy away from developed markets like America for expansion because those markets are not likely to expand as fast as they did in the past. The U.S is, in fact, going to experience lesser investment rates moving forward. There exist other worries like commercial fraud and menace of African regimes. However, in spite of these hazards Africa remains the best continent to invest in as it presents massive benefits.

All these factors combined with the reality that Africa’s inhabitants are flexible, make the Africa continent an apt place for various kinds of investments.

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