INVESTMENT IN AFRICA: THE RIGHT THING TO DO
Putting up funds to yield multiples is definitely what everyone desires, as getting more money from your capital increases your wealth and also confirms to you that your plans are working. But before your capital can yield results, some questions have to be answered; what do I do? Where do I do it? What are the things I need to know?
Two of the above questions will be answered in this article; Where to invest and things to know.
With an increasing population of over 1.2 billion, Africa is a viable market for investment considering human powers, starting up cost, and some other factors, but what are those things you need to know and do about investing in the second largest continent of the world?
Here are top picks of things to know and do before investing in Africa
- What to invest and where to invest: The continent has a total of 54 countries and according to 2016 ranking by the International Monetary Fund (IMF), Nigeria is Africa’s largest economy with a nominal GDP of $537bn followed by Egypt with GDP of $330bn, and South Africa coming third with a GDP of $266bn. What this record implies is that the business levels of each country differ, so investors need to know which country is most suitable for the kind of investment that wants to be made be it; agriculture, telecommunications, education, energy, technology or any other sector.
- Carry out market research: Customers will only go to the market where their needs can be met, hence, the most successful businesses are those that meet the demands of the customers. Talk to people, engage in discussions and hear what people think of your products and the services you want to render. By doing that, the people have given you a directional plan so that you can meet their desires and eventually enjoy a good reception about the investment.
- Innovation and Creativity- In a continent that has more than 1 billion persons, you need to constantly seek for ways to satisfy the needs of your customers. Giving your customers the same taste of good or service will only make them “bored” and “feel tired” of the good or service because they know what to expect. But in the case where you add creativity and new innovations, the customers will be more eager to check out the developments.
- Cost Benefit Analysis- The dream of every investor is to minimize cost and maximize returns. This can’t be done overnight! Investing in Africa requires more cost especially when investing newly, this is because some things such as energy, power, human resources, technical know-how, and expertise are not yet in abundant supply in Africa. For example, Nigeria which is rated as the largest economy in Africa cannot boast of constant and regular power supply (this surely increase the cost of investing). Irrespective of the cost, investing in Africa still has a huge benefit prospects; according to CEO of Nigeria-based Sahara Group, Tonye Cole, he said “Africa still seems to be the only place where you can make returns above 20% or thereabout on projects”
- Legal Requirements: For any form of investment in Africa, promoters of the investment should meet with the respective agencies in opening business and carrying out business activities. Registering the company makes the company/investment a legal entity (can sue and can be sued)
In Ghana, downtown Accra and neighboring suburbs are seeing a surge in construction as developers see a growing influx of cash from foreign investors. Improvements in consumer financing and mortgages in the banking sector will also add to the opportunity for residential and commercial real estate.
Richard Quest a CNN reporter who was in Nigeria a few days ago said: “Nigeria will have the largest and most intelligent workforce in the world”. If a country’s workforce is vibrant and active, it will boost the economy and hence attract investors because the market is booming.
Coming to Africa is a good thing, but investing in Africa is a better thing!!!
Invest in Africa today…