Africa Rising in Long-term Profitability

In recent years, many people have thought of Africa as a poor continent with many poor individuals or as a place for humanitarian aid. The fact about Africa is very different from these perceptions. Even though it is true that Africa is still a poor continent, Africa has a lot of potential to be a good investment for many companies.

Africa has a many natural resources such as gas, oil and minerals.

In the next decades, the world fuel consumption is expected to rise by 25 percent. Along with the increase in demand for natural resources, the price for these commodities has also increased significantly from $25 per barrel in 1999 to more than $245 per barrel in 2008.

Taking advantages of its reserve in natural resources, Africa has become one of the fastest growing economies in the world.

With the growing economies, African countries are attracting many companies from different industries from oil and gas companies to telecommunication, banking and retailing. However, Africa countries are still dealing with many serious challenges such as poverty, diseases and high infant mortality.

With the help of other nations, these challenges are being resolved in a timely manner to make Africa a more attractive investment for people around the world. One of the biggest indicators for Africa’s long term success is the decrease in its inflation rate for a lower inflation rate means a more stable economic environment and a safer investment.

Africa might carry a high short term risk at the moment, but its long term profit is undeniable by anyone.

Phong Pham

Sources: McKinsey & Company, The New York Times
Photo: Borgen Project