Monday, March 10, 2014

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African Dynamo, African Economic Opportunity

Africa is a Continent experiencing rapid development. In every Country, a lot of positive changes are taking place. The fact is however, that there still remains so much to do. To start, most development is only centered upon African cities, especially capital cities, leaving most rural areas of the continent untapped and undeveloped. In addition, most of the development going on in Africa is driven primarily by foreign investors, particularly the Chinese. This is not bad in and of itself, but it is wise and prudent for Africa to reliably draw upon the resources of it's own peoples. The answer, I believe, is that the African diaspora invest back in their countries of origin, creating a Continent that Africans can be proud to return to after years spent abroad. There are so many investment opportunities in Africa that need real attention right now, and if the opportunities are not seized, they may slip away. Now is the time for Africans living in the diaspora to start investing in Land, Infrastructure, Agriculture and Business. Lets take a look at some of the best opportunities:

Investment in mining/raw materials

Africa ranks first or second in quantity of world reserves of bauxite, cobalt, gold, industrial diamond, phosphate rock, platinum group metals, vermiculite and zirconium. Africa's mining industry has yet, however, to be really explored and exploited. There are deposits of minerals that can be intensively exploited for at least 4 or 5 generations to come. Now is the time for Africans in the diaspora to start investing for the exploitation of mineral resources. Once one invests into mining, they are likely to continue earning from their investments till long after their descendants take after them.

Investment in Land and Agricultural Development

Africa has more than 60% of the world's unused land. This means there is stunning opportunity for land use and development on the continent right now. I have been to so many villages in different countries where there are only 30 to 50 people on average, yet they are surrounded with land that can be over ten times the size of the village itself. This is true for many African countries, and it demonstrates that the unused land is actually bigger than the places occupied by people.

China has taken notice of this fact already; in recent years, Sino-African trade in agricultural products has grown quickly. From 2009 to 2012, China's agricultural exports to Africa grew from 1.58 billion U.S. dollars to 2.49 billion U.S. dollars, an increase of 57.6 percent. During the same period, China's agricultural imports from Africa, mainly non-food items such as cotton, hemp, silk and oilseeds, saw a 146-percent surge. Every Country in the World builds its wealth upon its land. If those living in the diaspora would invest in African land, they would position themselves as the financial winner as Africa develops in the future.

In my own view, this is the second best area for investment in Africa. If Africa is to become a good economic powerhouse in this world, it shall certainly be through Agriculture. This is simple; if we invest into mining, technology and so on, without ever looking at the agricultural area, what shall we eat? All the investment in other areas would only lead to people working for food, and ultimately importing it, while the majority of the world's untapped land sits unused right in front of them. Africa should be the next food production powerhouse for the world in the coming future. Areas of particular interest include:

Commercial farming
Almost 80% of African farmers are involved only in subsistence agriculture. This means every bit of production goes to meet the direct needs of the local peoples. It is reported that some 65% of Africa's labor force is engaged in agriculture and the sector accounts for about 32% of the region's GDP. There is great demand for commercial farmers on the continent. If the anyone is to invest in commercial farming on the continent, there will be great return as the competition is not much stiff right now. As evidenced by the video above, China's government hopes to capitalize on future production. By showing good faith in assisting the development of farming techniques today, they are positioning themselves well for a seat at the bargaining table tomorrow.

Farming products
Most African farmers rely solely on rain for their crops, and have consequently ended up with marginally dependable sub-optimal crop yields. They do not have access to technology that could enhance good productivity on the lands. Modern industrial agriculture staples like fertilizers have yet to be adequately produced domestically, so they must be imported, incurring huge transportation costs on top of often inflated prices on the world market. It's really very simple; invest in an agricultural technology enterprise, and their is little doubt the returns would be huge.

Investment in hospitality

Now is a great time to invest in the hospitality industry. The opportunities here cover a wide range of businesses:

Hotels and Resorts

The growth of International investment in Hotels has been an item of interest for foreign investors for some time. Marriott International for example, is nearing an agreement to acquire the continent's largest native chain, a move that would nearly double its current distribution there. Several major brands during the past few years have signed projects in key African cities, many of which have a nascent business travel population and few or no hotels under flags familiar to Western travelers. As of the beginning of 2013, international and regional chains had more than 200 hotel projects totaling about 40,000 rooms in the development pipeline, according to W Hospitality Group's 2013 Africa Pipeline Study.

Hotels are in great demand in most African countries right now. It is amazing to see that outside of major cities, most 'hotels' are more akin to hostels or houses, rather than the accommodations you would expect to see in such a business environment.. Ouagadougou, the capital city of Burkina Faso, for example, does not have enough top end hotels and restaurants to meet the demand from foreign business people. It is reported that if one wants a hotel room in this city, they would need to book well in advance simply to secure basic accommodations. this is a lucrative area for any investor on the African continent.

Investment in Financial services

It should almost go without saying that investment in the financial sector can be very lucrative in Africa right now. Many Africans know the opportunities to making money building businesses exists,  but they have inadequate access to capital. The financial systems in many African nations are a complete cobweb of restrictions and regulations, making them almost completely useless for citizens. If the diaspora would invest into establishing financial services in Africa, it is likely that could not only make money for themselves, but help to finally unleash the creative engine of Africa's young entrepreneurs.

Investment in technology

In Togo most people who own computers and have internet connections at home are considered to be the rich. Basic technology is seen to be so strange and miraculous that only the wealthy can afford such. Africa is in need of good advanced technology to boost their production in all areas. When it comes to technology, it is needed everywhere, in each and every area of production on the continent; and any investment into technology promises good and extraordinary returns. Their are some very promising developments on this front in certain countries. In Nigeria for example, Zinox Computers has become the country's first computer manufacturer, and companies like IBM have plans to build micro-processor plants as well. The tech investors of silicon valley are always looking for the next golden opportunity, so why not Africa?

Investment in Education

Considered to be the most important area of investment in any Country, education in Africa is absolutely necessary. This is the only area that will create and sustain all future developments in Africa, educating the generations of scientists, engineers, lawyers and doctors who will build the Africa of tomorrow. It is of the utmost importance that a pragmatic approach to educating people be funded and developed. People must be educated in order to acquire the knowledge of mind and body necessary to contribute to economic growth and development in the future. 

Unfortunately, as the video above illustrates, the situation in many African countries is absolutely unacceptable. Lack of resources, and inadequate planning and development have left countries like South Africa with educational systems that are producing individuals that cannot help themselves, let alone the wider economy or society. The higher education model can be profitable, but the real returns here are the fundamental improvement of society itself. My colleague Michael Bell recently asked the question of whether the black fraternity system developed by African American's should be expanded to Africa. My answer is that any system that can improve education is welcome in Africa.

If Africa is to move forward, the diaspora are the best people to contribute to development on the continent. Already, Africa's resources have been capitalized upon by much of the world, and the reality is that a failure of the people to stale their claim in their own land will result in future generations left with no claim to the land of their fathers. Consider these areas of investment, these African Investment Opportunities are very real right now. Lets invest in Africa


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