African shares: what is the attraction

For decades Africa has wrongly and rightly been put cast as a continent without investment opportunities, plagued with business crushing corruption and no rule of law. In the last decade, Africa has moved to a positive light as a continent with unending investment opportunities and businesses.
Africa has a fast-growing youth population, with urbanization that is growing exponentially, different economies are getting the right attention needed to improve them, and this is already paying off. Trends and development indices are definite indications that shares of businesses invested in Africa are worth purchasing. Apart from these reasons, there are more reasons that make African shares attractive, and they include:

 

Proxy to invest in African Resources

Africa is rich in natural resources that have not been tapped yet. It is home to oil, natural gas, gold, platinum, iron ore, uranium, diamond resources. Recent research shows that agriculturally, Africa only uses 10 percent of its arable land, yet it harbors 60 percent of the world’s fertile areas.
Labour is cheap in Africa, most companies can keep cost of production low and quality of products high. In the last ten years, African has experienced stable governance with all war-torn countries being settled successfully with countries like Rwanda growing to be an emerging economy even after a long war. With better policies in play, businesses can grow past their expectations
There is stability in terms of governance; the countries which witnessed terrible periods of unrest have emerged as success stories. There are better policies in place, trade has improved, and so has the business environment.
These factors have made Africa a gold mine and magnet for foreign direct investment, and it has also witnessed an exponential growth of local companies with strong shares that have provided strong ROIs.

 

Strong Stock Exchanges

In sub-Saharan Africa alone, 29 stock exchanges are servicing 38 countries. There are also 2 regional stock exchanges as well. Although not all these stock exchanges have massive trading volumes, they have grown stronger representing how resilient the economies they represent are.

Efforts are also being put into countries to strengthen their stock exchanges improving investor confidence and education. This has paid off as African shares are growing strong standing up to their counterparts on other continents.

 

 

Fast growing economies

Although most African oil producing countries have experienced slow growth in their economies with the low oil prices, the rest of Africa is growing with positive economic growth rates to prove this. Smaller economies that do not depend on resources to grow are putting forth stronger economic policies, strengthening businesses, with countries like Ghana, Ethiopia, Ivory Coast, Djibouti, Senegal, Tanzania. Over half of top 10 fastest growing economies in the world are in Africa which accounts for only a quarter of the countries on the globe.

 

Countries diversifying beyond resources

Diversification has also been experienced in African economies, and this has been attracting investors from all over the world and bring about a burst in the establishment of local companies. All these businesses have proven to have viable shares for long-term investments. Morocco, for instance, is thriving with its strong diversification policies and strategies aimed at accelerating global innovation exports and Ethiopia excelling at its industrialization diversification.

 

Buying into African companies via share can provide good income and capital gains but this is only available with the right information

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About Andrew Kwabena

The Editor of MoneyInAfrica

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