Amid discussions about rising global inflation, high food prices, supply constraints, the war in Ukraine, and climate change targets, is there a positive story to tell about investing in Africa? When it comes to global trade, where does Africa, a prosperous continent propelled by agricultural exports and commodities, fit in, and are there any opportunities left?

Several African countries are still attempting to build and stabilize their economies by decreasing their reliance on FDI and aid. However, despite advancements in the last few years, a significant hurdle for homegrown entrepreneurs is still gaining access to finance and funding.

Investing in Africa: The Business Case

African countries are becoming more important to the world economy because they have some of the fastest-growing economies in the world. The population is young and growing quickly, and household income and consumption are expected to increase. In addition, access to digital and mobile technology is growing quickly, the infrastructure gap is closing, and Africa is getting ready for mass industrialization. Also, the U.S. government has taken steps that have never been done before to help investors. And because business environments are changing all over the continent, the chances of investing in Africa’s many different countries are much better than they were a few decades ago.

Even though there are many opportunities, doing business in Africa is still linked to real and imagined risks. Institutional and infrastructure barriers, imbalances between risk and reward, and high transaction costs can make it hard for U.S. investors to find opportunities and close deals.

The U.S. government’s plan to increase trade and investment between African countries and the U.S., called “Prosper Africa,” helps deal with some of these problems. Prosper Africa uses the tools of 17 U.S. government agencies to give investors information about the market, help with deals, financing opportunities, and ways to improve business environments.

Africa offers several ways to invest.

As the market improves, African entrepreneurs and firms are inventing new products and services, and investors are working with Prosper Africa to close deals. Africa’s investment potential differs by country and location.

Financial Services

The rising purchasing power of the continent’s middle class is fueling a surge in demand for financial services, including banking, insurance, mobile payments, and loans. Moreover, the closing of the infrastructural gap, the emergence of digital and mobile access, and the prospect of mass industrialization are projected to encourage investment and open up new trade possibilities for U.S. and African enterprises operating in a wide range of promising industries. As a result, the United States should think about putting money into the financial technology industry. Africa also has the fastest-growing mobile money market, with over 180 million active accounts, five times that of any other region.

Health Care

Approximately 1 in 5 People Will Live in Sub-Saharan Africa By 2030. As a result, demand for medical facilities, medical services, and individual health care items will rise. However, despite the continent’s increased reliance on brick-and-mortar medical facilities, telemedicine and digital health are beginning to show promise.

Information Communications Technology (ICT)

Sub-Saharan Africa’s mobile subscriber base reached 495 million by the end of 2020, up nearly 20 million from 2019. This equates to 46% of the region’s population. Over 40% of the region’s population is under the age of 15, meaning that first-time mobile phone buyers among the young will continue to be the dominant source of growth for the foreseeable future. An additional 120 million members will bring the total to 615 million (50 percent of the region’s population).

List of African nations with the most mobile phones

1. Nigeria

Nigeria boasted 199.6 million mobile connections as of March 2022, according to the West African country’s Communication Commission (NCC).

2. South Africa

In 2022, GSMA Intelligence estimated that 108.6 million people in South Africa had a cellular mobile connection or 179.8% of the population. Between 2021 and 2022, the research showed a 4.8-million-connection increase (4.6% growth).

On the other hand, its internet penetration was 68.2%, with more than 89 million smartphone users. In 2021 and 2022, it was reported that 31.8%, or 19.2 million individuals, were still not online in the country.

3. Egypt

In the first three months of 2022, 93.4% of the population of the north-eastern African nation used a mobile phone. The number of mobile connections rose by 1.9% from 2021 to 2022. During the time under examination, 71.9 percent of the population (or 75.66 million people) had access to the internet at home.

4. Kenya

Kenya had 64.9 million active mobile (SIM) subscriptions as of March 31, 2022. However, this decreased from the previous high of 65.1 million on December 31, 2021. In part, the SIM registration effort is to blame for the drop in SIM subscriptions, as many SIM cards have been deactivated. According to GSMA, Kenya has 52 million smartphone connections, making it Africa’s third-most populated country after Nigeria and South Africa.

5. Ethiopia

By the beginning of 2022, 58.54 million people in Ethiopia had a cellular mobile connection or 49.1 percent of the total population. Over 9.4 million new mobile connections were added in the country between 2021 and 2022. (19.2 percent). At only 25%, it has a far lower internet penetration rate than most developed countries, despite having 29.83 million users.

9. Ghana

Ghana has one of the largest mobile marketplaces in all of Africa. At the beginning of 2022, there were 44.9 million cellular mobile connections. As of January 2022, 140% of Ghana’s 32 million people have access to a mobile network.

By January 2022, there were 2.6 million more mobile connections in the country, representing a rise of 6.2% from the previous year. As a result, 16.9 million people in the country used the internet during the analyzed period (53 percent).

10. Democratic Republic of Congo (DRC)

At the beginning of the year, 43.95 million cellular mobile connections were in the Democratic Republic of the Congo. This country is now a part of the East African Community (EAC).

11. Uganda

In the first three months of 2022, Uganda, Kenya’s western neighbor, had 27.67 million cellular mobile connections. While mobile subscriptions increased in other African nations, GSMA Intelligence found that in Uganda, they decreased by 698,000 (-2.5%) between 2021 and 2022.

As of the beginning of 2022, 29.1% of Uganda’s 47.7 million people had access to the internet at home. As of January 2022, the landlocked country had 13.92 million internet users, an increase of 1.8 million from the previous year’s corresponding month.

Infrastructure

Africa’s population is growing, and the continent is becoming increasingly urbanized. By 2025, 100 cities will have over a million residents, while Latin America will have 50. Because of this, the telecommunications, electricity, water and sanitation, and transportation sectors all present promising investment potential.

Other Sectors

The industries of hospitality, agriculture, aerospace/defense, consumer goods, design/construction, environmental technology, food/beverage, and textiles/apparel are all expanding and have excellent investment prospects.

Finally, the latest developments in Africa support the idea that the continent’s economic reform plan merits active participation. Among these changes are enhancements in macroeconomic restraint and general governance. It’s time to invest in Africa. Africa’s young population adds to an abundance of labor. It lowers manufacturing costs, which outweighs the expense of conducting business on the continent. Investing in Africa is smart for international investors.