Africa is one of the richest continents in the world, harbouring an abundance of gold, diamonds, metals, minerals, energy resources, and most of all: people. The region's diverse population goes hand in hand with a myriad of different cultures and languages as well as policies, governmental structures, economic landscapes, and opportunities for investors. North Africa, which comprises all countries above of the Sahara Desert, is one of the continent's most thriving regions, writes North Africa Ambassador Eman Ahmad writes in her inaugural column for Afrinection. In terms of investment, a number of sectors stand out, she says.
When looking at sectors that are poised for investment in terms of number of transactions, the top five comprises financial services (17% of all transactions), non-essential consumer goods and services (14%), industry (14%), consumer goods (14%), and construction materials (9%).
When looking at the value of all annual investment transactions, telecommunications scores tops with a 25% value share, followed by non-essential consumer goods and services (15%), financial services (12%), industry and utilities (10%), and materials and energy (9%).
Whilst you will find competition in each of these industries in terms of attracting investment, the North African market is generally speaking thirsty for more innovative approaches. Two sectors stand out, in that regard: telecommunications and non-essential consumer goods and services.
The former, telecommunications, is a large and complex industry which needs and depends on appropriate governmental policies as well as relevant infrastructure. That said, the market is always in need of new developments and innovations. Public-Private Partnerships (PPPs), especially in infrastructure projects, can help enhance the network in general, but this depends on governmental policies, with barriers of entry varying hugely from one country to another.
Growing purchasing power
The second sector attracts a lot of investment is non-essential consumer goods and services. The top middle-class of North Africa’s population might not be huge, this group has nevertheless a very strong purchasing power.
This and a growing general middle class makes this industry very investment-friendly. North Africans, in general, are optimistic, they believe in the future, and as a result, they are working hard to build their private and business legacies, often with the intention to hand it over to younger generations. As a result, per capita incomes in North Africa have grown, with 40% of the region’s population currently earning $20,000 per year, says the African Private Equity and Venue Capital Association (AVCA).
In other words, North Africa has a great potential and offers plenty of opportunities for investors from abroad and elsewhere who are looking for long-term yielding projects. If you want to invest and you don’t know where to start: consider giving North Africa a try.
About the author: Eman Ahmad lives in Egypt and is Afrinection's North Africa Ambassador. She has recently completed her MBA, is fluent in English and Arabic, and will be writing about investment trends and economic issues in northern Africa.