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Africa Business Opportunities PDF Print E-mail

Africa is a $2.6 Trillion Business Opportunity.1

Africa’s diverse regions are now among the world’s most rapidly growing. The annual flow of Foreign Direct Investment (FDI) into Africa increased to $62 billion in 2008 and is now almost as large as the flow into China.2

While other world markets are slowing or declining, Africa is booming and will be the economic epicenter in many sectors. Africa’s combined customer spending in 2008 was $860 billion; and 20 African companies have revenues of at least $3 billion3. In 2010 Africa’s collective GDP will be $2.6 trillion equal to or surpassing Brazil and Russia. Customer spending will be $1.4 trillion4. Africa is expected to replace the Middle East as the United States’ the number one supplier of petroleum.

Africa’s economic gains and ever growing markets are among the most stable in the world. During the 2009 global economic crisis that severely impacted the world’s largest and most powerful countries. Africa was only one of two economic regions where GDP actually increased during the global recession. Although the growth rate did slow it is already on the move up to a projected 4.5 percent by 2011—among the fastest in the world.

Africa-based privately traded companies’ average annual return on capital of companies studied was 65% to 70% higher than comparable firms in China, India, Indonesia, and Vietnam. The median profit margin was 11%—better than comparable figures for Asia and South America. World Bank data confirms these findings.5

Africa represents a verified potential of over $2.6 trillion across multiple sectors in the coming years.

 

Africa offers the highest return on direct foreign investment in the world, far exceeding all other regions.6

Defense: The defense sector in many African countries is not separate and distinct from the remainder of the public sector as it is in the West. Militaries in many of these countries are interwoven with social and cultural capital and form an important part of infrastructure capital opening markets in multiple sectors for business that do not traditionally market to defense.

Peacekeeping: In 2009 alone, the United Nations (UN) spent approximately $7.8 billion on African peacekeeping operations. The challenges of the future demands and the evolution of the Peacekeeping force itself requires the UN explore new ways to identify, raise, train, equip, support and sustain the civilian, police and military capabilities.

Maritime: The potential market is one of the largest and most promising. The total estimated market size including current expenses and capital investment for regional maritime management infrastructure is approximately $1 billion over 10 years, starting in 2010.

Telecommunications: Telecom revenues increased at a 40 percent Compound Annual Growth Rate (CAGR) with the number of subscribers rapidly exceeding 400 million. By country Telecom investments average approximately $15 billion a year.

Infrastructure: African governments and private sources combined are investing about $72 billion a year to build Africa’s infrastructure. The cost of bridging Africa’s infrastructure gap is approximately $93 billion a year over the next decade.

Resources: Growth in Africa’s resource sector will continue with estimates of total value annual production increasing to $540 billion by 2020, a regional growth rate of 2 to 4 percent per year.

Consumer Goods: African GDP per capita should continue its 4.5 percent CAGR until at least 2015 and produce over a 35 percent increase in spending power. An estimated 221 million basic-needs consumers will enter the market by 2015.

Agriculture. At more than $100 billion annually, Agriculture is Africa’s largest economic sector. The continent has 60 percent of the world’s uncultivated arable land but low crop yields require substantial improvement to farming techniques, equipment, infrastructure and capabilities throughout the value chain (up and down stream). Fishing is also an over billion dollar industry requiring substantial modernization from techniques to equipment.

Health. Billions of dollars are available for viable healthcare programs. Countries need to build then integrate primary, secondary, and tertiary health care delivery into a comprehensive country-wide network.

Mining. Africa’s mining sector suffers from decades of neglect and has hundreds of missions to invest in areas from mining technologies, equipment, and techniques for mineral exploration.

Banking. Banking is one of the fastest growing sectors in Africa and one heavily dependent on technology and infrastructure for an expanding system. Another multi-billion dollar market.


1. McKinsey Global Institute, Lions on the move: The progress and potential of African economies, Charles Roxburgh, Norbert Dorr, Acha Leke, Amine Tazi-Riffi, Arend van Wamelen, Susand Lund, Mutsa Chironga, Tarik Alatovik, Charles Atkins, Nadia Terfous, Till Zeino-Mahmalat, June 2010.
2. McKinsey Quarterly, Checking Africa’s vital signs, June 2010, accessed on-line at [ www.mckinseyquarterly.com/article_print.aspx?L2=41&L3=0%ar=2606 ].
3. Ibid.
4. Ibid. 
5. Harvard Business Review, Now’s the Time to Invest in Africa, Paul Collier and Jean-Louis Warnholz, January 2009.
6. According to the Overseas Private Investment Corporation (OPIC) and the UN Trade Agency (UNCTAD) as published in Africa: Open for Business, accessed at [ http://africaopenforbusiness.com/business.htm ], September 2010.