By Hanan Alnufaie

The International Monetary Fund (IMF) has projected that Africa will be the world’s second-largest economy within the next few years. A continent that is full of great factors that can make it a great place for investment.

With a population of more than 1 billion people, Africa offers an enormous potential market. And while the rest of the world is aging, Africa is young. According to Deloitte, some 200 million Africans, about 20% of the population, are between the ages of 15 and 24, a figure expected to rise to 321 million by 2030.

Africa had a presence in the recent First Investment Initiative (FII) event in Riyadh where Saudi Gazette met with Nana Sao from Africa Capitalworks, an African-focused investor that invests in mid-market businesses by giving them growth capital in Africa. He talked about the investment opportunities in Africa.

“I am here to talk about collaboration in Africa. During my visit to the Kingdom, I found out that many businessmen are receptive about Africa. They do not know about the appealing opportunities there. This international conference has given us the opportunity to start talking with people about this continent. I conducted several meetings with many foreign investors. Especially Saudi businessmen, who have expressed their interest and willingness to invest in Africa. That was very important for us as a company to introduce people to appealing industries they can invest in there,” he said.

He added that the investment opportunities in Africa require a strong partner with strong technical capability, in addition to having a good track record. “We presented that. The opportunities in Africa due to the high GPA growth are attractive. The GPA growth differs from one country to another in Africa, but it varies from 6-10% across the different countries.”

African consumers and businesses spend a total of $4 trillion today. By 2025, McKinsey projects that household consumption will reach $2.1 trillion and business spending $3.5 trillion — a total $5.6 trillion in business and investment opportunities.

He then went on to explain the difficulties that the foreign investors might face. “Investors must understand the local currency depreciation and some technical challenges. That is why it is key to find the right business partner while investing. Furthermore, understanding law regulations is always crucial. I can summarize it by stating ‘understand the market’ you are heading to.”

“In some places of Africa, there are economic zones and trade commissions that are set up to facilitate and encourage foreign investment. But this is not uniform in the continent. Africa is big, there are different trade blocs,” he added.

When asked about best areas of investment, he said: “Foreign investors can invest in agriculture, infrastructure, financial services, consumer products, manufacturing, and telecoms. There are wide range of industries to invest in.”

Africa is continuing to move forward with promising growth rates. Countries not dependent on resources for growth, typically smaller economies, are progressing with economic reform and increasing their competitiveness.