1. Africa is the second largest and second most populous continent on earth. With a population of more than a billion people, African has a growing middle class. While in 1980 just 28% of Africans lived in cities, today more than 40% do. This percentage is close to China’s and larger than India’s. in addition, according to McKinsey Global Institute, Africa’s imminent boom in consumer spending is set to rise from US$860 billi
  2. Africa is now open for business. Government welcomes foreign company registration and to ensure they emerge, improvements were made in terms of political, microeconomic stability and microeconomic reforms. Governments have lowered inflation, trimmed their foreign debt and adopted policies to energize markets. They have reduced trade barriers, cut corporate taxes and strengthened regulatory and legal systems.
  3. Africa boasts and abundance and variety of resources, including an approximate of 10% of the world’s reserve of oil, 40% of gold and 82% of chromium and platinum metals. Africa also has a growing demand of raw materials such as fruits and different metals and minerals;
  4. According to an International Monetary Fund (IMF) forecast report, Africa will have seven of the top ten fastest-growing economies over the next years.
  5. International entrepreneurs easily obtain bank credit to establish their business. As an example, South Africa is ranked number 1 in the world in terms of ease of getting access to bank credit according to World Bank’s Ease of Doing Business 2013.
  1. Africa has cheap labor. On average, South Africa skilled labor costs US$1,000.00 per months and unskilled labor US$100 per month. Kenya average wage is only US$485.00, and Egypt’s is US$200.00.

African investment strategy

  • Multinationals rush to gain access to Africa’s fast-growing markets, harvesting massive returns from unlimited oil and gas, commodities and technology demand. Consequently, Africa consistently boasts 7 of the top fastest global economies;
  • Did you know, Africa and India boast similar populations, yet Africa spent 35% more on goods and services in 2008 than Indians did? Similar to China, approximately 40%. Of Africans live in cities which increases national productivity. Furthermore, 70% of Africa’s population is under the age of 30. The middle-class population is 300m;
  • However, international entrepreneurs must remember Africa is a developing continent with much uncertainly, and lawless compared to western economies;
  • To critically compare and contrast different African countries, refer to this webpage to determine the optimum country for your business.The US African Growth and Opportunity ActThe U.S. Government has also enacted several policies that promote the development and transformation of economies in Africa. One of these policies is the African Growth and Opportunity Act (AGOA). AGOA provides African countries with the ability to participate in business transactions with the U.S. Although, in order for a Sub-Saharan African to be granted access to this opportunity, countries must institute or be in the process of establishing a:
    1. Free-enterprise Economy:This economy must enforce property laws, limit the abilities of the government to manage the economy and utilize an open trading structure.
    2. Rule of Law:The law must treat all citizens equally. All citizens must have a right to a judicial hearing as well as a fair trial. African countries must also allow for the diversity of political opinions, interests and lifestyles to coincide.
    3. Remove Limitations on U.S. Commerce:African governments must safeguard intellectual property, conclude trade debates and support foreign ventures.
    4. Reduce Poverty:Countries must pass legislation to eliminate poverty in respective regions. This includes improving healthcare, developing education systems, upgrading infrastructure and more.
    5. Eliminate Corruption:African officials must pass policies or implement task forces to eradicate corruption and bribery.
    6. Establish Rights for Workers:Countries must limit the hours of work per day, establish a minimum wage and standardize safe working conditions.

    This list of requirements incentivizes African countries to transform African economies into a reliable and business-friendly environment. This will generate more business opportunities for international companies, reduce poverty in Africa and stimulate economic growth for the continent. Currently, 38 of the 54 countries in Africa are eligible for opportunities produced by AGOA. The U.S. goal is to increase the number of countries eligible for these services and further promote the transformation of African countries. Many U.S. companies are investing in Africa due to AGOA.

 

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