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Countries and sectors to focus on in Africa for the next 5 years

Countries with unequal development potential, but with a growth forecast of 4% for the continent as a whole, Afro-optimism is back.

 

The Havas Horizons study entitled "Financing African Growth to 2023: Perceptions of International Investors" is indeed a step towards a revival of investment projects in Africa.

 

Two figures to illustrate this trend:

 

  • 92% of international investors reaffirm their optimism and renew their confidence in the continent's economic prospects over the next five years,
  • 80% plan to strengthen their positions in Africa*
  • Survey conducted among a panel of executives (CEO, Africa Directors, CFOs, senior analysts, etc.) of 50 major global groups operating in Africa in various business sectors, including Goldman Sachs, Rothschild & Co, Saint-Gobain, Sanofi, Société Générale, CFAO Retail and Quilvest Private Equity.

 

 

 

This renewed optimism in Africa is correlated with the return of growth on the continent: from 2.2% in 2016 to 3.6% in 2017 and should reach 4% in 2018 and 2019 according to projections by the African Development Bank (AfDB).

 

 

 

Investors' optimism about the continent's economic prospects is based on known structural parameters such as the emergence of a large middle class, increasingly loyal trading partners, not to mention the continent's demographic dynamism. But the study also reveals that, if the leaders interviewed have regained their optimism on the African question, it is also that they are seeing an improvement in the business climate.

 

 

 

However, this dynamism is far from homogeneous throughout the continent, and although East Africa suffers from civil wars and insecurity (Somalia and Sudan for example), it is the African region that records the highest growth rate of the continent (forecasts higher than 6% in 2018-2019). In this context, Mauritius is doing well by positioning itself as an investment platform for East Africa thanks to a stable political and social climate and an advantageous tax system for companies.

 

 

 

The top 3 sectors of activity preferred by investors are the following: financial services with the constant rise in the rate of bancarisation, mass distribution with domestic demand that is constantly increasing and energy whose stakes are directly linked to the size of the African population and its averaging.

 

 

 

On the other hand, new technologies, a less predictable sector, would have great potential in Africa. Investors even speak of a typical African innovation model.  These technologies are mainly linked to financial services and telecommunications, knowing that one of the real characteristics of African development is that it has relied heavily on mobile as an instrument for accessing the Internet.

 

The African-style innovation model follows the dynamics of "leapfrogging," a term economists use to characterize a process of rapid technological change that skips certain intermediate stages of a development stage. This was the case, for example, with mobile telephony, which skipped the wireline network stage, as did banking services, which developed directly on mobiles, without going through the bank branch box.

 

For more information on the subject, do not hesitate to consult our page dedicated to the strategic place of Mauritius as a gateway for investments to Africa.