10 myths about investing in Africa.
Let’s clear the air on what is or isn’t true:
Myth 1: Africa is underdeveloped.
→ Africa is home to some of the fastest-growing economies in the world.
→ Urbanization rates are increasing.
→ Technology is transforming the continent with leading startups.
→ Intra-African trade is projected to grow.
Myth 2: Political instability is rampant in Africa.
While there are pockets of instability, many countries are stable.
→ Two-thirds of African countries are democratic.
→ Many countries have had peaceful transfers of power over the last decade.
Myth 3: Africa is a country.
Africa is a continent comprising 54 unique, independent countries with different economies, cultures, and languages.
It’s important to understand each country’s unique opportunities and challenges.
Myth 4: Africa is only suitable for natural resources.
While Africa is endowed with vast natural resources, it also has a growing middle class with rising consumption.
The services, manufacturing, and technology sectors are also growing.
Myth 5: Africa is too risky to invest in.
Risk is present in every market globally.
→ African economies are more open than ever before.
→ Risk mitigation practices have improved.
→ The African Union has enacted policies to foster regional integration and growth.
Myth 6: Corruption is rampant in Africa.
While corruption does exist, it's not unique to Africa.
In many African countries, there are robust legal frameworks and anti-corruption agencies.
Protect yourself by implementing strong corporate governance and compliance policies.
Myth 7: Africa lacks skilled labor.
Africa is home to a young, growing workforce.
→ Many African countries rank highly on the World Economic Forum's Human Capital Index.
→ Africa is inching towards having the largest working-age population in the world.
Myth 8: Infrastructure in Africa is inadequate.
Infrastructure development is necessary, but it's not a deal-breaker.
→ Significant improvements have been made in roads and airports.
→ Innovative solutions are employed, e.g. mobile money, mini-grids, and ride-sharing.
Myth 9: Africa only receives aid.
While aid still plays a role in Africa's development, it is no longer the sole funding source.
Private investment and trade are increasing, and aid is replaced with sustainable business models.
Myth 10: Africa is not for everyone.
Investing in Africa is not a one-size-fits-all approach.
Understanding your investment objectives and risk tolerance is essential.
While it may not be for everyone, it may be worth considering as part of a diversified portfolio.
I hope you found this content useful.
If you’re looking to invest in world-class African tech startups, you can learn more about investing with us at AjimCapital.com
