It is a fact that Africa is the fastest growing continent in the world in terms of population. With recent investments and developments in infrastructure, the continent might prove to be the fastest growing economy in recent times. The entire continent faces a demographic transition that took decades in other regions of the world, due to today’s progress in various areas change takes place daily.
“The business potential is tremendous, with expectations of technological growth, high demand for infrastructure and rapid urbanisation fuelling the continent’s long-term economic prospects.” This excerpt from an article by Kim Buker and Michael Hewson sums up the vision of outside investors that see not only the fastest growing economy but a high demand in various aspects of urban development.
Apart from the positive view and expectations being held, the article also expresses concerns that might arise as in any foreign investment. Most notably the Country risk concerns, which could be divided into four subcategories: political risk, sovereign risk, economic risk and social risk. What most concerns investors is not security risks, but political instability in some way. Many times sudden changes in power from political party to another brings a change in policies that regard the sovereignty of foreign investments.
Foreign investment can be uncertain, but one data that has been released and seems like a promising path is local startups. Last year alone, the many startups in the continent received over $1 bn USD in investments from multinationals. It is unlikely that a change in legislation causes the prohibition of foreign investments to startups, so in this point investing is “safe”. If the startups brings returns larger than what was invested is another risk, but depending on the area a positive return could be almost certain. The area that already makes billions is Fintech and payment services.
With almost 60 percent of adults in the continent lacking a formal bank account, mobile payment services and other types of currency trading platforms thrive and to know that last year startups with this type of purpose received over half a billion in investment in Africa alone is great news. Another area that seems promising in the next 5-10 years is the exploration of LNG through the Southeastern coast of the continent. The $25 bn USD project approved by Anadarko in 2019 is the greatest prospect for development in the region. Developing a facility that not only processes but liquifies the gas that makes it easier for long-haul transportation is a huge development for the Mozambican hydrocarbon future. The country could see many more investments in the future from Eastern Asian nations that seek a cheaper and more reliable source of LNG.
What could also be seen is a return of the West African gas pipeline that turns 29 years old in 2020 and could be repurposed for the transportation of other hydrocarbons perhaps. An expansion of these ducts that incorporates Nigeria’s oil supply would also serve as a valuable asset seeing the situation that the current lack of management that the nation’s pipeline sees. Clean energy is also a great prospect in business for the future of the continent’s economy. The Noor Power Complex is the first development of Morocco’s solar program and one of the largest CSP sites in the world.
The project is part of the country’s 2010-2030 energy strategy, with twin goals of improving the reliability of energy supply and sustainably reducing the Kingdom’s dependence on external suppliers. The project will diversify production sources by adding renewable energy supplies, raising their share in the electricity mix to 42 percent by 2020, compared to 15percent in 2015. The total cost of the project is $2.2 bn USD, and as of November 2019, only 25 percent has been invested.