Africa’s growth potential remains misunderstood and underestimated to this day. It is the second-largest continent with a fast-growing population which means that businesses have more growth opportunities in Africa than they do in China, India, or Russia. One of the biggest examples supporting this claim is Heineken. According to its latest results, Africa has been 42% more profitable than the company’s worldwide average.
Agricultural development: Africa has been lagging due to the many droughts and famines it has faced over the years. However, the locals have started to realize the abundance of resources present in the continent, and with the help of the latest innovations businesses in Africa can use them for their benefit. With investment in latest machinery, Africa’s oil and gas regions can be explored and these minerals can be exported as well as they can be used by the locals. This will create employment opportunities for many citizens who will be able to afford necessities.
In addition to this, many businesses have taken interest in the continent’s untapped agriculture potential and set up factories to process crops like tea and coffee. This has helped create awareness of the continent’s capability in the international market and will hence push more firms to expand their businesses to Africa.
Growing and urbanizing population: Africa has a population of 1.2 billion people and more than 80% of the growth is taking place in cities. This fast urbanization coupled with a 90% boost in mobile data traffic makes it an ideal choice for many businesses. A number of local and international firms are targeting the local’s unmet needs in education, healthcare, food, etc. This has increased customer spending by 30% since 2015 and since most of the population consists of people from the younger generation, they tend to be very demanding customers!
Apart from that, the boost in mobile phone penetration throughout the continent makes it easier for the customers to stay up to date about the latest business launches and for businesses to market their products online. Moreover, many international businesses have also given employment opportunities to a number of hard working candidates to work for them online.
Tourism: Many people are oblivious to the beauty that Africa holds. The tourism industry contributes to increasing Africa’s tourism by 7.1%. Cape Town, Madagascar, Cairo, etc are famous tourist spots because of their artifacts, beach resorts, and much more. Due to this reason, many travel companies are set up in Africa in which they have hired a number of residents and have given them training regarding the rich culture of the continent. These young locals act as guides to the tourists and earn a handful of money.
On the other hand, there are a number of challenges that firms have to go through while setting up in Africa. Although the country is moving towards development, it still lags in infrastructure and several areas do not have access to electricity. According to recent studies, locals in some parts of the continent have difficulty in finding work as they have become dependent on the resources provided by different NGOs. Lastly, it is difficult for businesses to secure loans and other forms of local financing in the country as there are lower trust levels in Africa than in other parts of the world.
However, African countries are encouraging firms to set up businesses in the continent and are providing education and training to the locals which will help them in working in different sectors. Until then, businesses will have to become flexible to the market conditions of Africa in order to seize the opportunity of working there.