Africa’s population stands at 1.2 billion people. It is projected to double by 2050 to 2.5 billion, represent 25% of world population. It is the continent with the youngest population on earth, with a median age of 20. 75% of the population is under 35 years. Therefore, it has an abundant labor force. It also requires huge investment to unleash its labor potential. Africa will become the most populous continent on Earth.
There are 52 independent states. They are under the African Union (AU), a social, cultural, economic bloc for Africa’s growth. In the AU’s African Agenda 2063, it states its Pan African vision as ‘An integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena.’
It has five regional economic and political blocks. These are South African Development Community (SADeC), East African Community (EAC), Common Market for East and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), CFI and Maghreb Union.
1. Labor
African has the youngest population on earth. The labor market is exploding with abundant over supply. 75% of the population is under 35 years. Yet, Africa is very poor. We are wasting our labor potential and have it exploited by rich nations. Rich nations develop and exploit their labor while poor nations let it go to waste.
With the digital economy, entrepreneurs can develop the abundant supply of labor and gain great profits.
2. Agriculture
This remains the most promising and lest exploited area in Africa. The continent spends up $35 billion annually importing food. We are food insecure. Africa Union sees the potential for African agriculture to lift millions out of abject poverty. According to The Economist, Africa’s agricultural potential is underexploited. Up to half of arable land is uncultivated. The cultivated land also produces 40% of its potential. Most of Africa’s agricultural production goes to feed its population. Even then, we have a food crisis, living from farm to mouth. With a growing population, agriculture is a sure business growth area for entrepreneurs. AU launched a ten year strategy to make Africa food secure and become an exporter of food.
Africa exports most of its farm products as raw harvest. This means that we are the mercy of many avoidable factors like pests, climate variations and post-harvest losses due to unreliable transport infrastructure. Exporting raw materials is equivalent to exporting riches. Agro-industrialization and adding value to raw materials is a major growth area in Africa. For example, Africa produces 75% of the world’s cocoa but receives only 2% of the $2 billion revenues and profits generated by chocolates. We export cocoa beans instead of finished chocolate, coffee beans instead of specialty brewed coffee and cotton instead of textile garments.
Agricultural value addition chains that process and add value is necessary for the future.
3. Energy
Africa is a giant energy storehouse. The climate is generally tropical and sunny throughout the year. Large parts are arid or semi-arid, meaning they get year-round sunshine. We have not also tapped geothermal sources as well as abundant fossil fuels. This means that Africa can generate cheap, renewable energy through out the year.
Further, untapped hydroelectric sources are estimated to produce and meet the growing demand for power in Africa. For example, the Grand Inga dam project at the mouth of the Congo River is projected to produce 43 GW. This can meet the continents needs. Annual growth in electricity consumption is pegged at 4 – 5%.
On average, only 45% of Africa has access to electricity. In some parts, the numbers are as low as 25%. This is one of the key factors in poverty and inequality.
Electric power generation leads us to the next growth segment. The growth in electricity generation is expected to
4. Automotive
This means that electricity related products and industries will be big business in the future. With the electric vehicle revolution already underway, the infrastructure needed to support this product is already being put in place.
80% of all cars sold in Africa are used with high mileage. They originate from Europe and Asia. The market for the development, manufacturing and selling new cars is picking pace in Africa. For example, Mobius is a Kenyan startup while in Uganda, Kiira Motors is a state corporation producing local vehicles. Innoson Motors a Nigerian car maker, while Kantanka Motors hails from Ghana. Wally’s is a Tunisian based auto maker. Though the majority of African manufacturers are still building Internal Combustion Engines (ICE), it is only a matter of time before they switch to electric vehicles. The global switch to electric will catch on in African very soon.
5. Electronics and consumer goods
Fast moving consumer goods is a major growth market in Africa. Consumption of electronic products in Africa has been growing exponentially. At one point, Africa was a dumping ground for electronic products. More electronic manufacturers are starting to see a shift in consumer tastes by Africans. A growing and affluent middle class is demanding for value for money.
6. Manufacturing
Recently, African governments launched the Africa Continental Free Trade Area (AfCTA) to spur trade within the continent. The recognition of the fact that manufacturing will lead the way to industrialization has caused African governments to encourage entrepreneurs to take up opportunities in the continent. Having such political goodwill, entrepreneurs stand higher chances of success. It is projected that trade within Africa will top at $666 by 2030. With an abundance of raw materials, abundant cheap labor, and government support, entrepreneurs have a head start.
7. IT and Telecommunications
The AU 2063 Agenda has the Pan African E-Network as a flagship project for Africa. This means developing an intra-Arica terrestrial network as a foundation for growth in information technology. The goal is to create an e-society where virtually all aspects of life (Socio-economic, political and cultural) can be enhanced using information technology. A good example is the COVID-19 pandemic lockdowns throughout the continent. Remote working, e-learning and online businesses replaced traditional methods of life. It is now clear that Africa has been forced to catch up with the information age. A demand in IT expertise and associated industries will follow.
As it currently stands, African internet use is at stands at 39.3% against a world average of 58.9%. Though Kenya’s internet penetration has grown 23,000% in the last 20 years, there is still an untapped online market.
9. Creative industry
In 2013, Nigeria’s economy was rebased. Overnight, it became the largest in Africa doubling in value. The creative industry was instrumental in the growth of the economy. It is also the fastest growing industry in the world. A key reason is the digital economy and access by African populations. With a young population growing in affluence, disposable incomes mean that they are choosing to spend more in content.
The world is also saturated with content from traditional global creative industry in Europe and Hollywood. There’s a desire to get more African content. It is still in its infancy and the potential is still very big.
10. Infrastructure
Africa has generally lagged behind the rest of the world in infrastructure. Roads, railways, air travel, pipelines and waterways have been basic.
The AU envisions all major African cities connected by a high-speed train network. This will boost intra African trade and tourism. African governments are extending goodwill to entrepreneurs so as to achieve the goal of interconnecting the African continent.
Conclusion
Africa is an entrepreneurs paradise. The availability of cheap raw materials, extensive virgin land, over supply of labor, and government policies helping investors to earn maximum returns from their efforts.
