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Africa is Still Open for Business Despite COVID and Unrest

According to Tshepo Ncube, Head of Global Corporates Pan Africa at Absa Group, there is more to the utterances of analysts regarding Africa as unfavorable for business.

Without a doubt, their declaration came as a result of the present power tussle by the military in Guinea and South Africa’s civil disorder.

For the past decade, the 54 countries in Africa have presented diverse opportunities for market investors from developing their financial markets. These countries, like all others, face challenges.

Before 2020, one cannot boost the economies of Morocco and Egypt, for instance, but their plans to draw the interest of foreign investors are apparent with their recent innovations.

The African continent still requires investing in infrastructures to grow its markets. Among the inadequate facilities that African countries are neglecting are good road networks, electricity, and water.

Analysts see a shortage of these investments among the rising uproars in South Africa among other African countries.

These economies expect the social plans and provision of infrastructures to come from their dwindling tax system. Recall that yield only comes from capital according to the rule of finance.

A Look at the Foreign Direct Investment (FDI) in South Africa

South Africa’s net Foreign Direct Investment as of the end of 2018 shows 18.2 ZAR billions which increased to 28.6 in 2019. Despite the COVID-19 pandemic, the country’s FDI rose to 83.6 ZAR trillion in 2020.

The above encouraging trend is a part of the efforts of President Cyril Ramaphosa of South Africa to attract foreign investors into the country.

Heineken, for instance, made an R31billion contract with Distell Alcohol Company, while there is a plan for them to produce alternative energy motor vehicles by Toyota South Africa locally. 

Ford and Mercedes also are making tremendous investments in the automotive industry.

These investments, among others, are expanding the economy and continue to attract patient investors who are already yielding interest on their investments.

Generally, the reason why Africa is still open for business despite COVID and unrest are;

1.2019 estimate reveals that 20% of the growth in the African economy emerged from the investment from Chinese companies, which amounted to $110 billion.

The investment of China into the African agricultural, transport, and energy sector is to meet up their 2030 aim of feeding their consumers of about 800 million.

2. Big companies like Mercedes, Toyota, Heineken, Ford, and more are establishing assets in Africa upon realizing that their capital investment into the continent will produce better returns.

3. Foreign investors are funding deals for Africa technology start-ups, especially (financial technology) as of 2021.

The funds and others from Kenya, South Africa, Egypt, and Nigeria amount to $1.3 billion geared towards improving technology in Africa.

Honestly, the 9th to 18th July 2021 civil unrest in South Africa did not speak well of the continent.

Notwithstanding, we should also bear in mind that Africa remains the best cutting-edge market for good returns in investment.

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