What are key areas of opportunity to capitalize on for Africa’s development? Large infrastructure projects in Africa need foreign partners. Infrastructure spending in Africa is estimated to reach $93 billion per year, and tax revenues and other domestic resources will not be enough to fill the financing gap for infrastructure projects. Information and communications technology (ICT) needs remain high in spite of the rapid growth in mobile phones and mobile banking. Major companies, including Google, Microsoft, Huawei and GE, are betting on the continent and investing in research and development. The rising African middle class is also attracting investors in the retail sector. For instance, French supermarket chain Carrefour and American big box store Walmart have expanded their operations to Africa. Banking is also attractive given the low financial depth in Africa. Foreign investors are now innovating to focus on urban centers with a high potential for consumer spending. In 2020, the household spending of Alexandria, Cairo, Cape Town, Johannesburg and Lagos will total $25 billion dollars. One untapped area is agriculture for major investment. Africa has about half of the planet’s arable land and there are potentially large expected returns from this sector, especially if its infrastructure gap is reduced. Finally, portfolio investments in equity markets, domestic bond markets, and Eurobond markets are increasing and private equity firms are increasingly investing in the region. In 2013, the MSCI African Frontier Market (equity) index was up 28.5 percent and $10.7 billion of sovereign bonds were issued by capital markets in Africa. There are now five times more sovereign ratings in Africa than there were in 2000.
Posted on: Sat, 13 Dec 2014 01:22:43 +0000
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