11 Reasons Why Africans In The Diaspora Should Invest In Africa Now

Zimbabwe Investment and Development Agency during an Investment Promotion Agencies forum looking into how intra-regional entities can invest in Africa more. The forum was held in Egypt in 2021

Every day millions of people leave their homeland in search of better opportunities abroad to enable them to make a decent living and invest in Africa. Developed countries often have numerous job opportunities and fewer natives willing to do them hence creating a huge labor gap.

Those that finally settle and get their dream jobs, become pillars offering tremendous financial support to their families back home. But is that enough and sustainable?

Young people in an office meeting
Young people in an office meeting (Photo credit: Mikhail Nilov /ย Pexels)

There are numerous reasons why Africans in the diaspora should invest in profitable projects valuable to them and their kin back home. Remittances will only impact their immediate family but a profitable investment will have a far-reaching effect.

In other words, their remittances can be converted into long-term investments which will have more economic impact on the nationโ€™s economy. Such investments can become so profitable that it facilitates the return of Africans in the diaspora.

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While investing in Africa is not alien to most Africans in the diaspora, they often lack a good reason to do so. For them, remittance for family upkeep is enough. However, informed investments that seek to eradicate high levels of poverty, hunger, and illiteracy will have a far-reaching effect.

Why is the African diaspora important?

Throughout history, the African diaspora participated in most of the worldโ€™s notable events. Apart from working as slaves, Africans joined the early explorers during expeditions long before the slave trade became popular.

They participated in both the first and second world wars, despite being discriminated against due to their skin color.ย The maltreatment through colonialism and racism during and after the slavery era led to the formation of the Pan-African movement.

Looking into strategies to invest in Africa during and after COVID-19. African Diaspora Network representatives attending an investment symposium in 2021
Looking into strategies to invest in Africa during and after COVID-19. African Diaspora Network representatives attending an investment symposium in 2021 (Photo credit: MOVEMEBACK)

According to Understanding Slavery, Pan-Africanism sought to unite all Africans in the diaspora and fight against colonialism and racism while promoting pride in being black and African. In recent times, highly skilled and educated Africans travel abroad to offer their services in what is commonly known as brain drain.

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In essence, the African diaspora is not only important to Africa as a continent but to the whole world at large. The influence of Africans in the diaspora in the medical field and global culture, in general, cannot be overemphasized.

11 reasons why Africans in the diaspora should invest in Africa now

To the rest of the world, Africa has all along been known as an impoverished continent. However, the United Nations recognizes Africa as a prosperous continent in which investors are now seeing great ventures and opportunities.

They only need to be creative in their approach to the existing gaps. The African continent has a fast-growing youthful population which should be harnessed for growing the continentโ€™s economy.ย 

Although foreign investment in Africa dropped by 16% as reported by the United Nations due to COVID-19 pandemic, this remains the best time to invest in Africa. As the world gets back to normalcy, demand for goods and services as well as tourism is growing again. This scenario creates a conducive environment for investment.

If you are one of the Africans in the diaspora looking for a reason to invest in Africa, one of the points below should enlighten you on why you should do so. Shall we?

#1. Availability of skilled and semi-skilled labor

Ghanaian youth in a lecture hall
Ghanaian youth in a lecture hall (Photo credit: Dominic Chavez/World Bank)

With 60% of Africaโ€™s population below 25, the continent has great potential for sustainable economic growth. Investors setting up industries and engaging in other businesses will have an ample supply of skilled, semi-skilled, and casual labor.ย 

The presence of cheaper labor makes it easier for investors to scale their production without overly telling on the price of their finished product. This gives them a competitive advantage over foreign products.

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#2. Improved digital coverage

In recent times, Africa has upped its digital coverage at a rate higher than in any other region of the world. This significantly increases access to useful information and technical know-how that is key to exponential economic growth.

For instance, East Africa pioneered the development of functional and easily accessible digital mobile money payment networks. Villagers or ordinary people without bank services can now easily participate in growing the economy locally and internationally.

The high digital adoption in Africa means that digital hardware and software companies looking to invest in Africa will have a ready market. Similarly, manufacturers and business owners will have highly skilled programmers, data analysts, and search engine marketers.

These experts will be an essential driving force in the operation and general running of successful and stable businesses.

#3. Availability of raw materials

One of the largest gold mines in South Africa
One of the largest gold mines in South Africa (Photo credit: Energy Capital & Power)

Natural resources and raw materials, which are readily available in Africa, are key components of most businesses. Africa has 30 percent of mineral reserves and 40 percent of gold of the worldโ€™s resources according to United Nations Environment Programme (UNEP).

One of the laws of choosing a business location is the nearness to raw materials. When you invest in certain sectors in Africa, you will cut down on the logistics required to source the raw material for your business. Investors can benefit from exploiting petroleum, natural gas, uranium, gold, cobalt, and diamonds just to name a few.

#4. Political will and stability

Improving political will in most African countries is one of the reasons for the rapidly growing business investments in Africa. Multinationals and Fortune 500 companies are opening offices in Africa. In recent times, China has upscaled its investment in several African countries.ย 

A lot needs to be done to improve the political stability of the entire region. According to The Global Economy, a -0.69 points stability index shows a relatively stable political environment. This index makes Africa an ideal region for major investment ventures.

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South Africa president, Cyril Ramaphosa insisting on why political stability is essential in encouraging venture capitalists to invest in Africa.
South Africa president, Cyril Ramaphosa insisting on why political stability is essential in encouraging venture capitalists to invest in Africa. (Photo credit: AA)

#5. Readily available market

Worldometer indicates that Africaโ€™s population is at 1.4 billion. Therefore, it is a fact that the huge population presents a ready market for goods and services. By 2050 the population is expected to grow to 2.5 billion.

For example, investing in the underutilized natural resources in Africa will give your company a high chance of running profitably and efficiently. This is due to an ever-growing market and a steady supply of workforce.

Imagine what will happen if you are able to solve one of Africaโ€™s numerous problems and have 1.3 billion people queueing up to subscribe to your service. Africa has a huge and largely untapped market. Therefore, it is not surprising that European and Asian countries want to partner with African governments.

#6. Thriving showbiz industry

The entertainment and fashion industries in Africa have seen huge growth like never before. Major events now take place in the content. The African film and music industry is currently getting global attention giving investors a solid reason to invest in Africa.

Apart from African renowned actors and musicians going for performance tours abroad, more notable players in the entertainment industry are choosing Africa as an ideal destination during the Christmas holiday and New Year festivities.

The diversified economy in Africa means that regardless of your investment interest, you will definitely find a country that will welcome you with open arms.

#7. Infrastructure deficit

A high-class road network in Africa
A high-class road network in Africa (Photo credit: Africa Executive)

A lot of improvement has been done to Africaโ€™s infrastructure with some countries having world-class transportation and communication networks. However, more improvement in infrastructure in rural areas will lead to improved and sustainable economic growth.

Most agricultural production takes place in rural areas where there are vast acres of land. Improved road network, power supply, and water connection will automatically increase the production of food for human and animal consumption as well as provide work opportunities for the youth.

Huge economies like China have concentrated their investment in Africa on infrastructure construction and improvement. Companies who choose to invest in Africa should consider making their investment in infrastructure for optimal benefits.

Africa desperately needs the investment of Africans in the diaspora to help solve the infrastructure deficit. With improved infrastructure, Africa will fast-track its economic growth.

#8. Diversification of African economies

Several African countries are moving towards diversifying their economies by competitively and actively engaging in non-commodity businesses. The diversification of the economy shields a country from sudden economic shock when its primary means of foreign exchange earning is hampered.

Zimbabwe Investment and Development Agency during an Investment Promotion Agencies forum looking into how intra-regional entities can invest in Africa more. The forum was held in Egypt in 2021
Zimbabwe Investment and Development Agency during an Investment Promotion Agencies forum looking into how intra-regional entities can invest in Africa more. The forum was held in Egypt in 2021 (Photo credit: Zimbabwe Investment and Development Agency)

By having Investment Promotion Agencies, African countries are making the process of setting up a business easier for investors. The agencies assist in business registration, tax remittances, and ensuring compliance with government policies.ย 

There is no other incentive better than making it easier for inventors to set up businesses. This also shows the commitment of many African governments toward creating the right environment for investors, particularly Africans in the diaspora.

#9. High potential in sustainable development

Africans in the diaspora often have the privilege of experiencing the use of advanced technologies in enhancing efficiency and output. As an African diaspora, you can export these technologies to your home country.

For instance, new technological methods that are working elsewhere can be used to boost food production. This will help to mitigate the effect of climate change and guarantee food security.

Also, optimal utilization of readily available oil and natural gas combined with solar, wind, bio, and geothermal energy can completely solve the nagging power problems in Africa.

African countries can adopt working strategies in technology, energy, supply design, and management sectors and customize them to meet their needs.ย With high-performing economies to learn from, Africa as a continent has the potential to lead in economic growth.

#10. Favorable and flexible government policies

African leaders during a past African Union (AU) African Continental Free Trade Area Summit in Kigali, Rwanda in 2018
African leaders during a past African Union (AU) African Continental Free Trade Area Summit in Kigali, Rwanda in 2018 (Photo credit: AFP PHOTO / STR)

More and more governments in Africa are revising their policies to accommodate entities willing to invest in Africa. There is no better time to take advantage of the improving government policies in Africa than now.

Countries like Egypt, Rwanda, Morocco, Kenya, andย Mauritius have adopted new laws that ease investment and encourage business startups in their respective countries. They are also among the best countries with ease of doing business in Africa.

#11. Higher return on investment

A little investment in Africa will usually yield a huge return. This is because Africa is still an emerging economy and the market is not yet saturated. Whether you are offering a product or a service, finding a market for your offering is usually easier compared to developed nations.

Likewise, it is easier to find an affordable and vibrant labor force in Africa compared to other continents. Also, scaling in Africa is easier compared to developed economies.

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Image depicting financial growth
Image depicting financial growth (Photo credit: micheile dot com / Unsplash)

This is because most African countries face similar challenges and have fairly similar policies, particularly within the same economic bloc. That explains why most companies will start in one country and expand to a neighboring country within a short time.

The return on investment will gradually get slimmer as the African market becomes saturated and competition increases. That is why it is important to invest now and make the most out of your investment before the saturation period.

Conclusion

Africaโ€™s young population will continue to grow, creating an increased demand for consumer goods and services. Investing in Africa now will give you a high return on your investment over time.

Also, your venture will stand a better chance to expand and have a higher competitive advantage over those that will come after you.

The continent is also the fastest growing in terms of foreign direct investment. This is an indication of a conducive environment for business. Which sector in Africa do you find most attractive for investors? Share your thoughts in the comment box below.

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