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Five key sectors to consider when investing in Africa

Five key sectors to consider when investing in Africa

Still in its infancy stages of development, Africa has become a global platform for economic competition, catching the eye of multinational organisations looking to expand operations. It’s safe to say, Africa is fast-emerging as an investment destination of choice.

Africa’s economy has traditionally been rooted in the primary sectors, given its favourable climate conditions and abundance of natural resources. However, the success of its economic development is not restricted to the extractive industries.

Other sectors such as construction, financial services, food, agri-processing, healthcare, manufacturing, wholesale, and retail are emerging as vital industries driving development on the continent.

A recent study by Adams.Africa Advisory details the key sectors that are poised for take-off, helping clients navigate challenges to secure opportunities across the continent.

1. Agriculture

Africa’s economy is heavily dependent on its agriculture sector, which contributes significantly to the continent’s development. While the continent accounts for about 60% of the world’s uncultivated arable land, only 7% is irrigated, and only 8% is under managed water and land development.

2. Energy

Despite Africa’s sizeable pools of energy resources, access to both fossil fuels and renewable energy is in short supply. African states are placing the utility of renewable energy high on the agenda.

3. Healthcare

New healthcare technologies, such as medical drones, AI, robotics, telemedicine, mobile screening, and mobile applications are gaining momentum, allowing Africa to leapfrog traditional infrastructures and improve access to services while promoting efficiencies in delivery.

4. Telecommunications

Africa continues to experience delays in the development of reliable and fast internet infrastructure. Investment is needed for the development of broadband networks, as well as the expansion of advanced telecommunications technologies.

The shortfall in investment, coupled with a growing skills shortage and lack of technological innovation will continue to hinder development. To bridge the gap, the participation of the private sector is needed, and can assist markets in becoming viable investment destinations in the long run.

5. Transport

Inadequate infrastructure capacity across all four modes of transport continues to hinder economic growth. 50% of the road networks are in dire condition while the continent’s railway network is grossly underdeveloped and requires considerable investment in order to realise several planned large-scale transportation corridors, including the Trans-Kalahari Highway.

These factors give investors room for financial and knowledge injections into the various development projects currently underway, as well as those that are needed to meet the demand for optimal human and economic development. Modernising Africa’s transport infrastructure requires both investment and expertise, specifically public-private partnerships.

Development priorities vary in scale and by industry across regions and countries. Investors require targeted research, market entry strategies, and feasibility studies in identifying regional and country-specific gaps and opportunities in being better informed on potential investment costs and risks before making in-roads on the continent.

To assist investors entering the African marketplace, Adams & Adams through its Adams.Africa Advisory unit offers a comprehensive range of business, economic, political, and legal research services, coupled with up-to-date information and a precise framework for investment and IP protection across Africa’s jurisdictions.

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