WASHINGTON, D.C. – For many Westerners, Africa is epitomized by images of conflict, oppression, genocide and disasters. Whether it was the assassination of Patrice Lumumba, apartheid rule in South Africa, or more recent droughts and malnutrition, the Western image of Africa is generally one of a continent in peril and in need of relief.
However, Africa has come a long way since the Cold War. Huge economic strides made in sub-Saharan Africa during the new millennium explain how investing in sub-Saharan Africa is smart business. During the past decade, according to the International Monetary Fund (IMF), six out of the ten fastest growing economies in the past decade have been sub-Saharan Africa countries. In a recent article in the Global Post, businessman and former Rwandan refugee Tribert Rujugiro accused U.S. businesses of “leaving money on the table” if they are not investing in sub-Saharan Africa.
As if to highlight Rujugiro’s point, the IMF projects that ten of the twenty fastest growing economies during the next five years will be in sub-Saharan Africa, and none will be in the developed Western world. This is due in part to a newfound stability in many of these countries. Nations like Mozambique and Angola an end to their respective civil wars in the past few years, and are now reaping the economic benefits of peace.
The real benefit of investing in sub-Saharan Africa comes from the rapidly growing middle class in the region. With almost 350 million people, Africa’s new middle class is larger than the population of the United States. As Africans move into the middle class, they start purchasing and consuming more products, which bolsters the economy. As the sub-Saharan African economy continues to grow, the middle class will also keep expanding rapidly. This creates the ideal situation for what companies call ‘hockey-stick returns’ on investment, referring to the shape of a rapidly rising graph.
Rujugiro encourages American companies to invest in Africa now and cautions against “surrendering the African marketplace to companies from the European Union, China, Russia, India, Brazil and Turkey”, who all are investing in the continent. The time is now for American investors to turn their attention to Africa, as it will pay big dividends in the future with high sub-Saharan growth.
– Martin Drake