Factors contributing to economic expansion in Africa
For some time now, investors have seen Africa as a place where the only investments they could make were tied to the extraction of natural assets like oil. However, over the past decade, Africa has seized the initiative and taken the lead in the development of many sectors, catching the attention of investors and showing them what is possible. Some of these sectors that have seen immense growth include infrastructure, iGaming, agriculture, telecommunications, and banking. Let’s look at how Africans could benefit from economic growth and why new investors will find it easier to launch and run their businesses.
Africa’s Best Growth Sectors
Some of these industries weren’t even on investors’ radar a decade ago, but with persistence and hard work, they’ve grown tremendously. Here are some of the most developed African industries that domestic and foreign investors are focusing on:
Considering the size of Africa, it makes sense that new apartment buildings, commercial buildings, resorts and hotels are being built. In 2020 alone, the value of commercial development reached $118 billion, the value of industrial construction exceeded $21 billion, and the value of cultural real estate reached $300 million.
In total, the African real estate sector was estimated at $143 billion in 2020. With these figures, the value of the infrastructure sector in Africa as a whole was the highest.
Over the past few years, the telecommunications sector in Africa has experienced a giant spike. Some smartphone manufacturers have set their sights on Africa. Even though 83% of smartphones shipped in Africa are in the lower price bracket, it gives people a way to promote and improve their online business.
While some may see the telecommunications sector as a monopoly, others see it as an opportunity for competitors to enter the market and offer different solutions, guaranteeing everyone access to the Internet.
Before 1996, Africans could only bet on horse racing. However, the National Gambling Act has established a licensing system for all African countries allowing operators to apply for a gambling license and, if approved, they could open land-based casinos.
A national lottery soon followed and players had a wider range of gambling options. However, it proved more difficult to regulate the internet gambling industry. Despite the challenges, more than 30 countries have successfully legalized Internet gambling.
Over time, more and more operators started to enter the market, and it became safer for players to have fun at an online casino or bookmaker. Today, you can find operators such as Pariderect that offer their players a variety of features.
While online casinos are very present in the market, the favorite type of online gambling for Africans, especially young people, is sports betting. Specifically betting on football matches.
Agriculture has remained one of the major sectors in Africa which contributes massively to its GDP. The sector is even responsible for employing nearly 226 million people, or about 44% of the African labor force.
Over the past two years, countries like Sierra Leone, Chad and Ethiopia have had the highest contribution to GDP in Africa.
It is not surprising that the industry continues to grow considering that large nations like South Africa and Nigeria, which respectively dedicate around 96 million and 69 million hectares of land to the cultivation of crops.
The main crops grown in the majority of African countries are rice, maize and wheat. Millions of hectares are still unused and investors are eager to seize the opportunity and invest in the industry.
The banking industry has grown slowly over the past decade, especially with the introduction of FinTech. Fintech has allowed some banks to locate further away from the country where they are based.
If we look at the banking sector by Tier 1 capital, South Africa plays an important role in the African banking sector. Tier 1 capital of South African central banks in 2021 reached $34.4 billion.
Other neighboring countries include Nigeria, Morocco, Algeria and Egypt, which combined with South Africa make up the largest banking markets on the continent.
Of course, the continent also has other industries, some of which may not be as promising as the ones we have already highlighted. But nothing seems to prevent Africa from progressing to become one of the major players in the world economy.
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