Should An International Investment Company Focus On Africa?

While Africa may seem to be a great place to invest for an international investment company, there are a large number of emerging markets that currently show much greater promise than most African markets. Places like China, Southeast Asia and the Middle East would all be on the list ahead of Africa for these places. However, there are some opportunities available in Africa for the shrewd investor that could have huge returns over the course of time.

Negatives to Investing in Africa

There are many reasons to use caution when considering African investments. The instability of the continent as a whole and many of the individual countries in specific mean that any investment capital pouring into these nations could be lost. Civil wars and disruptions are an everyday fact of life in many African nations.

Tribal power struggles also limit the effectiveness of foreign direct investment in Africa. As one tribal king gains power and another lessens, the work of an investment firm may be lost.

Education rates in Africa are growing, but are still very low, and the technology infrastructure is limited. While cell phones and wireless internet access are providing options, the entire continent is largely still underdeveloped. Notable exceptions are South Africa and Egypt, but each country still has a great deal of civil unrest.

The Positive

Despite these negatives, there are some positives to African investing that are often overlooked.  Africa has one of the biggest caches of natural resources in the world, many of which have been underutilized to date due to technological considerations.  The Sahara Desert, the largest in the world by area, is also an area that receives much sunlight and could be used for electricity generation in the future.

In addition to the geographic positives in Africa, there are also the people.  Africa has a relatively young population, some of which are slowly starting to come out of poverty.  Investment would keep these young people in Africa to develop African industry rather than looking to the developed world for migration.  In that situation, the rapid development of industry encouraged by investment could easily generate impressive returns over the course of the next two decades.

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