Investing in Sub-Saharan Africa
The next Frontier for Middle East investors?
With the combined African economy expected to grow at double the rate of advanced economies between 2014 and 2019, the potential investment opportunity is unquestionable.
Trade links between Africa and the Middle East are deep rooted and historically significant. From the Middle East traders who brought Islam to North Africa to modern day political and economic support and trading of agricultural, natural resources and hydro carbon products, the ties between the regions have grown ever stronger.
Investors from the Middle East region are increasingly recognizing the significant opportunities that Africa offers for investors. In this article we explore the key investment themes and opportunities that are driving this and some of the challenges to be considered.
Leading global economic growth rates
Sub-Saharan Africa is forecast to record the highest GDP growth rate between 2014 and 2018 at 4.8%. Strong GDP growth is anticipated to be underpinned by the rise of the Middle Class, population growth, the dominance of youth, rapid urbanization and the fast adoption of digital technologies.
In addition to higher forecast African population growth when compared to the rest of the World, a significant portion of the population is anticipated to enter the middle classes. Indeed, by 2030 over half a billion Africans are projected to be Middle Class. While these numbers are very impressive, it should be noted that 60 per cent of those considered Middle Class today live on c. $4 dollars/day, though their relative purchasing power is significant.
More than 200 million Africans (20 per cent of the total population) are aged between 15 and 24, and that demographic is expected to grow to c. 320 million by 2030. These younger Africans form a large share of the rising Middle Class and seek to access a wider choice of food, consumer goods, entertainment and increased connectivity.