Ahead of SuperReturn Emerging Markets, Eric Newman, Treasury Manager, City of Stamford, explains how Africa's transformative potential can reshape the global economy over the next 30 years. With 54 countries, diverse cultures, and rich resources, Africa is set for significant growth. Regions like North, East, West, and Southern Africa offer opportunities in technology, agriculture, and healthcare. The population is projected to reach 2.5 billion by 2050, fueling urbanization and consumer spending. Investments in agriculture, renewable energy, and electric vehicles underscore Africa's strategic importance. Despite challenges, Africa's emerging markets offer lucrative opportunities for investors leveraging local expertise.
The continent is diverse in languages, cultures, regions, and industries. In the Northern Africa the largest economies are in Egypt, Algeria, and Morocco. East Africa’s engines are Kenya Uganda, Tanzania, Ethiopia, and Rwanda contributing to the regional growth. West Africa has Nigeria, Ghana, Cote d’Ivoire, and Senegal. Finally Southern Africa includes South Africa, Botswana, and Namibia. All the regions offer opportunities in technology, agriculture, healthcare, education, e-mobility, and consumer goods.
African Union is now a member of the G20 like the European Union membership and the recent expansion of BRICS to nine member countries has resulted in Ethiopia and Egypt joining member South Africa. Africa accounts for 19% of the world’s population today at 1.5 billion and is projected to reach 26% or 2.5 billion by 2050. That is one in four will be African descendant with an average age of twenty-four.
Urban migration continues to surge, with 60% of the population expected to dwell in cities by 2050. Consumer spending in Africa is expected to surpass $2 trillion within the next few years, a 30% increase from 2015 levels. The food, beverages, access to pharmaceutical products and healthcare services, education, and transportation are growth sectors. Food and beverages are approaching $740 billion in spending.
The inflationary pressures of recent years have prompted global institutional allocators to explore agriculture and real asset strategies. Allocating into the Agriculture and Ag Tech companies and funds not only diversifies global portfolios but can protect against inflation while contributing to the region’s development and advancement.
The Democratic Republic of Congo (DRC), located in Central Africa stands as a prime example of Africa's ag and real assts potential, with vast untapped resources across its landscape. It is the second largest land area in Africa and the 11th largest globally. The DRC possesses over eighty million hectares of arable land, a substantial portion of which remains underutilized. Its expansive grasslands and savannahs can support a sizable livestock population, while the biodiverse Congo Rainforests covering 52 percent of the country and offers opportunities for sustainable forest-friendly products.
The DRC benefits from rich fisheries along its Atlantic Ocean coastline, the Congo River, and numerous lakes, capable of yielding an impressive 707,000 tons of fish annually. This abundance of natural resources positions the DRC as a key player in Africa's agricultural and environmental sectors, with significant potential for sustainable development and economic growth.
Throughout the continent governments and private sector are investing in electric vehicles and the battery and charger ecosystem. Ghana recently joined a growing list of countries that waived import duties on electric vehicles to develop local manufacturing of the vehicles. This complements Africa’s concentration of essential minerals needed for renewable energy technologies, further highlighting its strategic importance on the world stage. Senegal launched West Africa first 100% electric Bus Rapid Transit financed with local and international investors using a P3 model. More than 90% of Kenya’s electricity produced from renewable sources and by 2040 it is projected there will be a 50%-65% electric vehicles adoption in Sub Sahara Africa. Venture backed electric vehicle start-ups are now in Kenya, Zimbabwe, Ethiopia, Uganda, South Africa, and Egypt.
Today Africa has three of the world’s mega cities defined by populations of ten million or more. The United Nations is projecting that by 2050 Africa will have fourteen mega cities. The migration of millions from rural areas to cities in search of high-paying jobs and a better quality of life will create opportunities for corporate and institutional investors. Historically Africa’s big four referred to Giraffes, Elephants, Rhinos, and Lions. Today, it is a reference to four biggest African tech and fintech hubs that are in Nigeria, Egypt, Kenya, and South Africa. Kenya is known as the Silicon Savannah for its highly educated workforce engineers working in e-commerce, cleantech, fintech, e-vehicles manufacturing, and enterprise investments. As urbanization and a rising middle class occurs the demand for upscaled goods and services, housing, higher education, transportation, and consumer products increases.
For investors looking to allocate capital into Africa, partnering with African managers can provide several advantages. These managers often possess local expertise, cultural insights, and established networks, enabling them to identify and capitalize on unique investment opportunities. Emerging managers tend to be more agile and entrepreneurial, allowing them to adapt quickly to changing market conditions and seize emerging trends.
Investing in Africa also comes with its challenges, including political instability, regulatory hurdles, infrastructure constraints, and currency translation. It is critical to do your due diligence and risk management when selecting investment opportunities and partners. Consider reaching out to your country’s State Departments, Prosper Africa, development finance institutions and other institutional investors who are investing in geography as you begin the journey. Investing in Africa and all other emerging markets requires the 4 P’s: patience, persistence, personal relations, and partnerships.Investing in Africa also comes with its challenges, including political instability, regulatory hurdles, infrastructure constraints, and currency translation. It is critical to do your due diligence and risk management when selecting investment opportunities and partners. Consider reaching out to your country’s State Departments, Prosper Africa, development finance institutions and other institutional investors who are investing in geography as you begin the journey. Investing in Africa and all other emerging markets requires the 4 P’s: patience, persistence, personal relations, and partnerships.
Many different strategies and vehicles to gain exposure and returns from venture capital, private equity, private credit, or publicly traded securities through one of the twenty-nine stock exchanges. Africa’s vast untapped markets are open and seeking long-term global investors and partners.