It is unusual that something so big goes almost unnoticed, yet when one refers to investments opportunities one rarely thinks about Africa, a true giant. With 1.216 billion people (15% of the global population) and almost with 3.5 times the surface of the United States, this huge continent is facing a period of vivid change where sharp investors can find their gold mine.
A Decp Of Growth
Africa’s transformation saw its beginning in the decade between 1995 and 2005, where the efforts of the local economic lawmakers were focused on reducing the growing inflation which for years frightened foreign investors.
In addition to this, some countries like Nigeria (Africa’s biggest economy) made great strides mainly in two fields: the reform of the public sector and the improvement of security against terrorism. Unfortunately, as Oxford University Professor Paul Collier wrote, the recent global economic crisis hit the African economy, the price of commodities collapsed, and the scenario became too risky for investors.
1.216bnis the population of Africa
Although showing undoubted progress, this big continent seems still unable to change its role in the world economy, where it accounts for just 3% of the global trade.
As a matter of fact, African economies keep focusing on exporting commodities (like cotton and minerals) instead of concentrating on a long-run view where processing resources, is the key to growth. To reach this ambitious target, it is pivotal to wipe out the inefficiencies that afflict the whole continent.
When The Problem Becomes The Advantage
The analysis of the root causes leading to Africa’s economic inefficiency shows that two of them could be the starting point for a stunning improvement: transports and electricity. Transportation is very complicated in Africa.
As stated by J. Musitwa for the World Economic Forum, Africa lacks systematic infrastructure, which slows the export-import activities making the internal connecting roads impassable. This strongly contributes to the very low intra-regional trade (18% of the total trade on the continent, extremely scarce compared to the 69% in Europe and the 50% in North America).
In addition to this, the International Energy Agency shows that less than 30% of sub-Saharan Africans have access to electricity and there are, on average, 56 power outages a year which induce an estimated 20% losses in revenues.
The Power Of The Internet
Moreover, electricity is vital to allow Africa to enter the internet community which is nowadays a powerful tool for diverse aspects such as the economy, information and, last but not least, social connection.
Indeed, it is globally recognised that a digital revolution brings new opportunities, but for Africa, a giant continent surrounded by water and too often exploited by Western economies, it is even more meaningful because being connected with the world is not just a matter of growth and GDP: it also means integration.
Once you feel integrated, you can start analysing your position in the world economy, and you are ready to find the courage to jump on the bandwagon.
More Than Meets The Eye
But, as the wise Bedouin teach, there is not only sand in the desert, if you know where to search. Africa is the youngest country in the world with 40% of its population under 18 and young means opportunity.
This is a huge chance because young Africans are not only a breath of fresh air in the world economy but they are also becoming the first generation in their continent remarkably willing to innovate its lifestyle.
As research shows, mobile telephony in Africa was non-existent in 2000. Sixteen years later, the number of mobile users on <<<<<the continent is about 700 million and still growing. Additionally, the smartphone adoption is similar to the global average, but with a faster expansion.
Over the last few years, Western venture capital>> companies have seen the potential and are investing more in Africa, especially in the technology sector.
The Need For Education
These results will be extraordinarily improved by the development of the education system which is still in its infancy. In a few years, the efforts that are being made in Africa regarding tertiary education could form a new ruling class with undisputed benefits not only for the whole African continent but also for world economies.
Will Africa manage to show its economical potential and overcome its limits in the next decade?