Africa is touted as the next big engine of world economic growth. And considering its vast natural resources, it does seem possible that Africa might transform itself into a pretty big economy within the next few decades. As such, it is logical that any sensible investor should look at investing in the continent. However, do keep the following tips in mind when betting your money on Africa.
If you are an individual investor looking for a way to start investing in Africa, then the easiest option for you is to bet your money on Africa focused ETFs. These instruments are traded on the US exchanges. As such, you can be sure that your investment is protected by the country’s laws. In addition, ETFs also offer easy diversification options through which you can direct your money into multiple areas ranging from oil and gas, minerals, finance, and so on. This is a cheaper, safer alternative than investing directly in African stock exchanges.
North or South
Now, if you are going to be investing your money is any projects in the African continent, then you need to first decide which part of Africa you will focus on – Northern or Southern. Both these regions have different strengths and weaknesses when it comes to investment. The northern part of Africa is known for its rich oil and gas resources. Countries in the region include Morocco, Algeria, Libya, Egypt, and so on. The southern part of Africa is known for its mineral wealth like platinum, chromium, gold etc. As such, knowing which sectors to focus on will decide which region of the continent you need to invest your money in.
Always remain updated with the latest happenings in Africa weekly basis. Especially focus on the political developments in the region you are interested in. The continent tends to be pretty unstable when it comes to governments. If you avoid focusing on the region for a few months, there is a good chance that a political upheaval might have taken place that would negatively affect your investment opportunity. And if you have already invested in the region, then being unaware of the current political climate is the worst thing you can do as an investor.
If you are planning to start a business in Africa rather than using ETFs or investing some funds in local businesses, then you need to consider an important point – training. You will easily people across Africa who are young, talented, and very energetic when it comes to proving themselves on work. However, because of not being educated properly as to international operational practices, you might find them to be a bit lacking when it comes to essential skills of international level. However, this is a minor problem that you can easily resolve by providing sufficient training to your local employees. Just remember to take such expenses into account when you are creating the investment budget for your business in the region.