The continent of Africa faces many economic difficulties that may make it an unsafe destination for investors looking for a quick profit, but the long-term investment opportunities may seem very promising.
Writer Akash Agrawal asserts in a report published by the American "Modern Diplomacy" that a slowdown in growth in Africa would raise investor concerns, but the emerging sectors constitute an important opportunity for those who want to achieve big profits in the long run.
The youthful demographics and promising indicators in a number of sectors and the abundance of natural resources are all factors that point to real growth opportunities in the African continent during the coming years.
The writer notes that, according to a report issued by Rand Merchant Bank in 2019 on the best investment destinations in Africa, Egypt, Morocco and South Africa ranked first.
But in what sectors can investors put their money on the African continent?
Agriculture
Agriculture is among the most developed sectors in Africa, and this sector contributes more than 15% of the continent's GDP, and has achieved good growth rates thanks to government policies that give it a high priority.
Coffee, cocoa, corn and wheat are among the most important agricultural products on the continent, and Ghana, Nigeria, South Africa, Ethiopia and Uganda rank among the best producers.
The abundance of arable land, the increased use of technology, the availability of a young workforce, and the increase in government support are among the most important factors that attract investment in this sector.
Manufacturing
Africa has an abundance of raw materials that can be easily converted into manufactured products. A booming industrialization can drive economic growth and development significantly on the continent, but this sector faces great challenges such as a shortage of skilled labor and infrastructure problems.
Despite the obstacles, the manufacturing sector in Africa remains a promising area, as the proportion of manufactured goods exports increased from 18.7% in 2012 to 35.6% in 2017, compared to a significant decline in imports and greater reliance on locally manufactured products.
Retail business
The African Development Bank expects the African middle class to grow from the current 350 million people to nearly one billion in 2040.
This growth will contribute to the development and modernization of the retail sector in order to meet the needs of the increasing number of consumers.
The latest Brookings Institution analysis on African consumer market trends shows that consumer spending has grown at a compound annual rate of 3.9% since 2010, reaching $ 1.4 trillion in 2015, and that figure is expected to rise to $ 2.5 trillion by 2030.
The writer believes that the main investment opportunities in this sector are developing the infrastructure and establishing the high-quality commercial spaces that the continent greatly needs.
Funding
The financial sector represents one of the most important sectors in Africa, as it organizes the financing process in all economic sectors, and innovation in this field guarantees the development of banking services, facilitating the integration of markets and reducing the risks to investors.
Countries like Rwanda, The Gambia and Senegal have made tremendous progress in developing their financial and banking systems, but the continent's ranking in terms of financial indicators has declined between 2017 and 2018 due to faltering reform efforts.
However, the author affirms that the financial sector, with its significant impact on a wide range of sectors such as health care, agriculture, housing and education, provides promising opportunities for investment.
Infrastructure
Infrastructure problems represent a major impediment to investment and economic growth in Africa, and there is a wide gap between the continent's infrastructure needs and the financial resources devoted to its development.
In countries such as Ethiopia and Tanzania, road construction and energy and other projects have contributed to increasing economic growth rates, and construction and bridge-building projects in Egypt have been one of the means of expanding economic activity.
Infrastructure projects create jobs and revitalize the local industries market in light of the increasing demand for goods to complete major projects.
The real estate sector in Africa has witnessed a remarkable development, and its great returns may be a magnet for foreign investors, despite some obstacles and risks, notably the problems of individual ownership.
The African continent, despite all the challenges and obstacles that have long made it a risky investment destination, can turn into a land of promising opportunities.