Despite the negative narratives that have been spurned from Africa, it remains one of the most naturally endowed continents on planet earth. Africa remains a goldmine for prospective investors, however, the necessity demands that these investors know how to invest in Africa.
Investing in Africa requires an in-depth knowledge of what works in the 54 independent countries of the continent. For one, the state of underdevelopment that affects all African countries presents inestimable investment opportunities to investors from other developed continents.
In this read, we explore the best ideas open to every intending investor in Africa. These ideas will give such investors some leverage that should necessarily boost their ROI.
What is the most profitable business in Africa?
If you have been wondering what type of business to start, then you’ve come to the right place. According to small business statistics, being your own boss is one of the most compelling reasons to start your own business. Owning a company allows you to work when, where, and how you want. No one is going to interrupt you or challenge you.
This is a perfect life that many people aspire to live one day, and thanks to some brilliant business ideas, it is well within your grasp.
Some of the most profitable businesses to consider in Africa include;
What is the best business to start in Africa?
In Africa, it rains business opportunities. A plethora of these opportunities also have a high ROI. However, we can only mention a few. Thus, we have narrowed it down to about 12 here.
Here are some of the best business ideas to start in Africa;
- Electric motorbikes for Africa’s urban centres
- Tapping into Kenya’s affordable housing market
- Garbage disposal: the next big thing
- Opportunity for more value retailers in Nigeria
- Battery recycling – a spin-off from the small-scale solar boom
- An efficient maintenance repair operations (MRO) industry
- Starting a tourism-related business in Côte d’Ivoire
- Add value to Ethiopia’s local commodities and then export
- Become a supplier to Chinese companies in Africa
- Intra-nation private Schools and Universities.
- Intra-country tourism in Nigeria is a gem in disguise
- Manufacturing of matches in Rwanda
Which country is best for business in Africa?
Gone are the days when business leaders and investors could find development everywhere on the African continent. To be successful, it’s now more necessary than ever to comprehend the specific scenario in each market.
According to the World Bank Group’s Doing Business 2020 report, Mauritius has emerged as the easiest and safest place to do business in Africa which is ranking 13th globally.
In other words, the best country to do business in Africa is:
- South Africa
- Cote d’Ivoire
- Egypt, Arab Rep.
What can I invest in Africa?
Investment prospects in Africa vary by country and area, and they include venture capital, private equity, institutional investment, and foreign direct investment, among other business sectors and asset classes.
So, if you want to invest in Africa, here are the sectors you can invest in.
- Food and beverages
- Consumer goods
- Hospitality and recreation
- Financial services
- Aerospace and defense
Is it easier to start a business in Africa?
Yes, it is easier. Because chances abound in this area of the world, Africa provides fertile ground for investors and enterprises to thrive.
Africa as a continent has risen to prominence as an emerging market for businesses. It is the world’s fastest-urbanizing region and, after emerging Asia, the second-fastest-growing region.
To put it another way, you should be able to simply start a business in any of Africa’s countries. However, there is a slew of considerations that go into beginning a firm.
The World Bank’s Ease of Doing Business Index, as well as other assessments, have attempted to make this decision easier for you.
Businesses across all areas have experienced significant expansion, including technology, FinTech, agriculture, transportation, and so on.
Africa is primed for entrepreneurship and innovation, with plenty of room for expansion as well as a hub for business development, production, and incubation.
However, the success of your business in Africa is mostly determined by your plan and subsequently its implementation. If you get your execution correct, not only will your investment rise but so will your profit margin.
Dangote, Kenya’s Equity Bank, Ethiopian Airlines, DStv, MTN, and other significant African brands have effectively developed businesses influencing and connecting people to previously unavailable services.
How can I be successful in Africa?
Political dangers, turmoil, a lack of infrastructure, and, in certain circumstances, growing corruption characterize African markets. A market entry into an African country requires significant and in-depth preparation due to the extremely diverse environment.
This requires locating market data, which is frequently unavailable in the necessary quality, establishing a network of connections, and identifying niches that allow for expansion.
Steps to market entry should be taken one at a time, ideally beginning with exports to a seasoned importer. Using a disciplined and professional framework for market entry, such as the company2newmarket process, is another essential success component.
By facilitating four specified processes, this approach enables firms to successfully enter new markets in less time, with fewer resources, and with lower risk. As a result, market entry becomes more predictable and stable.
Success Tips When Doing business in Africa
To run a successful business in Africa, it is imperative that our client understands the local business custom.
- With over 2000 languages spoken, Africa is the most linguistically diverse region in the world. English is commonly used in Northeast and Southern Africa but our Clients doing business in Northwest Africa will need to hire a French or Arabic translator.
- In Africa, if a market opportunity seems too good to be true, it probably is. Always keep in mind that Africa has a thriving scam industry that makes a living off of promising naive entrepreneurs making major commercial agreements.
- In Africa, strong relationships are essential for doing business. As a result, we encourage our clients to attend gala dinners, trade shows, and exhibitions held throughout the country.
- Titles are significant in many African countries, so always address potential clients as “chief,” “prince,” “boss,” or “engineer.” During meetings, though, a good sense of humor is also necessary. Most African businesspeople are noted for being gregarious and exchanging banter during meetings and commercial transactions.
- Ethnic conflicts abound in Africa, so be conscious of your local business partner’s ethnicity (s). As local businessmen, their identity may have a significant impact on your market potential.
- Many African countries are highly unstable, so consider buying political risk insurance. The World Bank’s Multilateral Investment Guarantee Agency (MIGA) and several national development agencies offer insurance products to cover these risks.
- Finance is always an issue in Africa, so talk to lenders early. While African banks are not always reliable, startups may alternatively seek support from NGOs and microcredit institutions, especially if they demonstrate that the financed project will be beneficial to the local population.
How to Invest in Africa in 2022
African countries, which have some of the world’s fastest-growing economies, are becoming increasingly important players in the global economy.
Household earnings and spending are expected to rise due to the young and fast-rising population.
Africa is poised for mass industrialization as digital and mobile connectivity grows at a rapid pace, and the infrastructure gap closes.
So, this is one of the ways to invest in Africa
ETFs and Mutual Funds
One way to invest in these nations is through exchange-traded funds (ETFs) and mutual funds. Not only are these funds traded on U.S. stock exchanges, but they also contain built-in diversification and professional management.
They cost far less than building a portfolio with American Depositary Receipts (ADRs) or foreign stocks that trade on foreign stock exchanges.
Note: For market participants new to investing in African companies, mutual funds and ETFs are the safest bet, followed by the American Depositary Receipts of select companies.
Africa still has a lot of problems to deal with. Political and social upheaval, a lack of infrastructure, and poverty are all issues that plague the country.
However, the larger picture depicts the continent’s improvement; there is rising political stability, economic growth, and advancements in the continent’s banking systems, with improved accounting and transparency.
Demand from the country’s developing middle class is increasing, and local businesses are expanding to meet that demand. Nobody can anticipate the growth trajectory with certainty, but Africa appears to be on the right track.