The pessimism and scepticism which has surrounded African investment in previous decades is coming to an end as the realisation is dawning among investors that Africa is indeed a land of opportunity.
Delegates at the second annual African Investment summit were left in no doubt that Africa’s future is paved with rich promise.
The two-day event held in London attracted attendees from around the world to discuss the prospects for the continent’s continued growth and expansion as a prime emerging market for investors.
Among the keynote speakers were Nigerian Finance Minister Ngozi Okonjo-Iweala and British MP Mark Simonds as well as a host of investment analysts and finance experts.
From why Africa, to how Africa
The delegates agreed that Africa is halfway through a transformative process and at this stage many of the barriers to investment have disappeared in large parts of the continent.
UK MP Mark Simonds said: “The conversation has definitely moved from why Africa, to how Africa.” Mr Simonds has recently travelled across the continent with European private and public investment in mind. “More needs to be done to spread the word of Africa as a land of opportunities and ambition,” he said.
The current situation is one of under-investment, with deep chasms of promise yet to be infiltrated by capital and business opportunities. Just 20 percent of Small to Medium Enterprises (SMEs) in Africa has access to capital, compared to 44 percent of those in South America.
This picture is changing rapidly as investment bodies and individuals see the potential and not the peril in Africa.
Simonds said: “African success is no longer based on extractives, but on the internet, mobile technology and innovation – there is also a growing interest in green energy.”
Nigeria’s Finance Minister Ngozi Okonjo-Iweala is the mastermind behind Nigeria’s effort to become the first African nation to balance its budget. She was one of the most anticipated speakers at the conference.
Her message was one of unilateral investment in Africa, but one that included the continent itself. She said: “Africa has gone from lost cause to hot prospect.”
“We are no longer waiting for the US and Europe to invest, Africans are increasingly investing in Africa, and have the capacity to do so.”
Okonjo-Iweala is not wrong. For example, the biggest investor in Nigerian companies is South Africa. More than $1 billion per annum flows into Nigeria from South Africa, into projects largely connected with telecoms and other emerging industries.
Profits are soaring – from the $1 billion invested in Nigeria from the South, the Nigerian minister predicts $360 million profits per annum. This is largely down to the burgeoning middle class who have boosted consumer spending to $1 trillion and the six-fold increase of internet use since 2005. Both of these are likely to grow in the years to come.
Work in progress
With that said, investors are well aware of issues that still prevent widespread investment in Africa. Youth unemployment and infrastructural problems are just two areas that need drastic improvement if the continent is to reach its potential.
Infrastructure in particular is an area investors are being encouraged to court at this moment. Energy and internet provision is surging through the continent, bringing with it new challenges and opportunities.
Education in Africa still undoubtedly lags behind the rest of the world, but monumental progress is being made. In countries like Rwanda and Ghana, mobile banking, new technology and higher pay is vastly increasing the quality of education, and creating a new generation of intelligent, innovative and able Africans.
“It is a shame that this is not the usual story from the media,” said MP Mark Simonds. “With events like this we can make known the potential of Africa, which is important for investors and the public.”
At times, areas of concern and of promise can overlap. One of these is Africa fledgling agricultural areas. More than 60 percent of unutilised arable land on the globe is on the African continent. The vision is that Africa can be a net exporter of food.
With the right investment, as is already being seen from Brazil, China and Southern Europe in particular, Africa’s richness in grain could supersede its other natural resources. Hi-tech, mechanised agricultural industry could be a reality in many countries sooner rather than later.
The African investor is no longer looking solely for oil and mining, but for moisturiser and mobiles. Companies like Zambeef and SeedCo currently lead the charge for a capable, consumer driven Africa, whilst the thousands of budding young entrepreneurs across the continent are waiting eagerly to make use of the approaching swell of investment that is just around the corner. Now is the time for Africa.