By Leon Louw
After a year dominated by Covid-19, WhyAfrica believes that there are still many reasons why companies should invest in Africa.
As the curtains come down on the melodrama that was 2020, the continent of Africa finds itself in a peculiar position. After a few years of gradual, but solid GDP growth, Covid-19 dethroned Africa as the lead actor in 2020. High expectations for Africa to take centre-stage during a year in which the African Continental Free Trade Area (AfCFTA) would have been implemented, quickly dissipated as Covid-19 swept all other concerns from the main stage. So, why invest in Africa?
AfCFTA is one reason why companies should invest in Africa. According to the World Bank, AfCFTA will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at USD3.4-trillion. It has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.
Although the pandemic’s impact on Africa has been devastating, and the outfall will linger long after the 2020 curtains have closed, there is hope. In fact, there are many opportunities. AfCFTA will come into effect early in 2021, and the continent is in desperate need of development. In the aftermath of the Coronavirus, most governments across Africa realise what it will take to revive their ailing economies. Aside from structural change and reform, and eradicating the scourge of corruption, partnerships between government and private investors will be vital in implementing growth and development policies. Investing in mining, energy, roads, rail, ports, water infrastructure, agriculture, and tourism, are key in ensuring that the spotlight of the world shines on Africa in 2021.
Entering Africa as an investor, however, can be a risky undertaking, especially in fragile states. Although the rise of a nationalistic, often xenophobic fervour in some African countries, and the unsettling activities of insurgent groups in others, have raised red flags, Africa in general is still an attractive investment destination. Despite perceptions, anybody can invest or do business in Africa. Moreover, where the risks are high, the rewards are often higher. But one has to enter Africa with caution, do your homework and be prepared to negotiate.
The most important factor, though, is to make a difference. Get to know communities and their needs. Talk to them. Visit them. Understand the environment. Understand how communities interact with nature. Analyse and determine the role of every single actor in this ecosystem and how you, as an impact investor, affect the entire ecosystem. Ask questions and plan how you, as an impact investor, can maintain that ecosystem, and how, in the long-term, you can enhance every cog in the wheel. Don’t just tick boxes to comply, make a difference. Many companies operating in Africa have done so successfully over the years and will continue to do so in the future. Covid-19 is a blip on the overall long-term growth trajectory of Africa. Despite enormous challenges ahead, Africa’s future looks bright.
The year 2021 will be a watershed though. Urgent economic reforms in many countries are urgently needed. Covid-19 and travel restrictions have put a lid on what is really happening on the ground in many countries (Mozambique and Ethiopia for example). Freedom of speech and the persecution of journalists in many countries across the continent are clear threats to newfound democracies, as is the inability to hold free and fair elections. But Africa has come a long way, and all indicators show that recovery is well underway, and growth will continue, albeit at a more subdued pace than predicted in 2019.
WhyAfrica plans to follow this growth trajectory and will continue disseminating and analysing events in Africa as they unfold. Our passion and mission is to keep WhyAfrica’s clients, readers, followers, and business partners informed and updated. There are many ways that we can assist, advise and partner with you, the impact investor in Africa, to ensure your investment makes a difference, not only on your profit margins, but to the people in Africa. Through sponsorship and advertising, we inform our large audience and network about the importance of your products and services, and how it will benefit Africa. WhyAfrica’s in-depth reports, which can be purchased directly from our website, are well-researched, informative, and based on on-the-ground knowledge and experience, to assist you in making a difference in the African countries you decide to invest in. We also undertake commissioned research and provide a platform for companies to exhibit their own research reports and case studies. Next year, for the first time, WhyAfrica will publish interactive digital magazines, which, together with our bi-monthly newsletters, continue attracting more readers and followers across the globe. If you are not already a subscriber or advertiser, make sure you sign up as soon as possible. Advertising space is limited and there are good combo deals for 2021.
There is a WhyAfrica book in the pipeline and as a grand finale towards the end of 2021, we plan a road trip from Cape Town to the north of Tanzania to determine how Africa is coping with the new normal. Along the way, we aim to visit as many projects and business operations as possible, produce videos and interview all the role players, to get a good understanding of where the continent is heading, and how it has been coping. All the information will of course be available from WhyAfrica in reports and in book form. If you have a project in Africa and you want WhyAfrica to visit the operation or if you would like to become involved in sponsorship or advertising, please let us know as soon as possible.