TechInAfrica – The realities of investment in African market have shifted due to the COVID-19 phenomenon, yet attractive opportunities remain in a wide range of sectors that include the emerging markets, such as the financial, education, and health, to the more conventional ones such as energy and agribusiness.
These three factors have played an important role to attract investors before and post-pandemic:
- Where the safe markets are
Investors need to dial down the risk and return calculus, to which they find the African investment opportunities to increase in relative terms despite the economic recession around the corner and any political stress.
- Swift return rate of economic shock
The pandemic may have hit hard in many sectors, but IMF finds East African to get back faster than expected, reaching 1.4% at the end of 2020 due to its successful containment pandemic response as well as the diversified economies compared to other regions.
- Structural trends that stood with time
The impact of pandemic don’t and won’t stop the African markets any time soon, thanks to a set of structural trends that drive the growth and opportunities for attracted investors. These structural trends include the youth demographics, improved internet connectivity, optimistic growth of startups, and high mobile penetration rate, along with a lowered transactional cost.
Promising opportunities in emerging sectors:
- Financial services
The financial sector sees an 8.5% growth each year. With the high demand for mobile money observed in West Africa than a conventional bank, Mastercard interest in the country’s fintech, as well as the acquisition of Lagos-based Paystack by Stripe for over $200m, it’s safe to say that the sector is seeing shots from both local and foreign investors.
- Education technology
When 300 million African students are learning at home during the pandemic, the edtech startups are using the time to transition to digital learning while making access to learning resources and tools viable for the students.
- Healthcare technology
What’s observed is the high growth of funding, from $20m to over $90m in just between 2019 and the first half of 2020 for the healthcare sector. These are one of the things investors have mostly noticed. Not only that, but healthcare startups have also been trying to leverage high mobile penetration to solve the gap between urban and more rural accessibility.
- Creative industries
The cultural goods open up job opportunities for half a million people while generating $4.2b in revenue. Big entertainment players like Netflix, Universal Music Group, Sony Music, and Warner Music Group have entered the market, which may help sustain the growth in the creative industry.
- Renewable energy
The focus on powering Burkina Faso, Djibouti, Eritrea, Mali, Mauritania, Niger, and Nigeria with renewable energy worth 310 GW makes the sector potential for investors. It’s part of the African Development Bank’s Desert to Power initiative, and when integration of the project can happen regionally, the stability of energy supplies and reduced energy cost for business can be achieved.
With the factors that underline the African market dynamic, driving the private investment toward the continent can help spark that growth in business opportunities, jobs, growth, and prosperity for the people.