Africa, like the rest of the world, will be hard hit by the after- effects of Covid-19. However, in the long-term, Africa will provide great opportunities for investors and companies that wants to expand their interests and diversify their operations.
WhyAfrica was launched during one of the most significant events in modern human history. This, our first newsletter, was conceived during the initial hard lockdown in South Africa. Hopefully, and with your support, it will be around long enough to see us through the earthshattering aftershocks of the Coronavirus.
WhyAfrica has a slight biased towards mining and the extraction of natural resources, especially the exploration thereof. We regard mining as the first link in what becomes a long chain of development. Mining in remote regions naturally requires infrastructure. In undeveloped areas, the discovery of a great ore body inevitably results in an unstoppable domino effect, which starts with natural resources. This domino pushes the next one, which is infrastructure (roads, rail, energy, water, ports etc) followed by industry and commerce. These activities draw workers, and people need housing and food, which leads to the establishment of a construction sector, and related infrastructure like water and electricity provision.
Agriculture is the next domino, an industry, which in turn, has its own infrastructure requirements. In all these stages, environmental management and community relations play a key role in the success of a project, and conservation and sustainability of the whole ecosystem becomes important. The presence of natural and cultural attractions eventually leads to a tourism and hospitality sector and as more and more entrepreneurs set up shop, the economy of that region continues expanding. Although the first three stages (exploration, mining, energy, civil engineering, and construction) remain our primary focus, agriculture, conservation, tourism and environmental management also fall within our domain of interest.
African countries face enormous challenges, especially after the onset of Covid-19. However, in these challenges lie all the opportunities. The real beauty of Africa is that most of it is still relatively undeveloped, and for any company, whether you are a miner, a farmer, or an eco-tourism developer, Africa presents you with an almost blank canvass. I say almost, because to operate and establish a business in Africa, you need to play by the rules. And every country is different, in terms of politics, economics and regulations. And this is where WhyAfrica comes into the picture – we assist you in doing business in Africa.
In 2019 the economies of several African countries showed a distinct uptick and the outlook for Africa was extremely optimistic. Even though the outbreak of Covid-19 early interrupted this upward trend, and severely disrupted global markets, Africa’s long-term future looks bright.
Despite the health impacts and numerous additional challenges, Africa’s human population is increasing at an exponential rate, with the highest growth taking place among its young people. If governments implement structural reforms in time, this demographic dividend will pay off in the medium to long term as more working age people enter the labour market. Young Africans are eager to resolve problems through innovation and new technology. Moreover, the after-effects of Covid-19 will alter existing geopolitical relationships, bilateral agreements, and trade patterns; and intra-African-trade will boost most national economies.
In search of high growth areas in the aftermath of Covid-19, Africa will feature high on the list of companies diversifying their investment portfolios or entrepreneurs looking to establish operations in developing economies. The lack of infrastructure in Africa is often regarded as a constraint, but it also creates unlimited opportunities. The rewards of investing in African economies now, before the indicators head north again, will be significant, not only for those companies with a substantial appetite for risk, but also for Africa in general, which is in dire need of development.
Economic sectors like energy (renewable’s as well as oil and natural gas), technology and financial systems are expected to boom, while, on the other hand, primary sectors like agriculture, construction, mining and manufacturing, the foundations of any developing country, will continue to drive the much necessary growth across the continent. For companies looking to expand into the developing world, and for investors with a medium to high risk appetite looking for good returns, Africa could just be the answers. The best time to invest in Africa is now.