The Myth and the Reality of Investing in Africa

If a financial analyst offered you the chance to invest in a country that is expected to have economic growth of six to eight percent, almost all would be enticed by the offer.  However, once you discovered the country was in the middle of sub-Saharan Africa, would this cause you to shy away from promising returns?

Since the beginning of the 21st century, Africa has emerged as a leading global investment destination.  Of course, there is no way of truly investing in the continent of Africa.  After all, the region consists of 48 countries of the sub-Saharan category, with numerous islands that comprise of the rest of the African Union. These countries that consist of the African Union are all distinct. In the fact that all vary in types of government, economic health, and culture.

The International Monetary Fund (IMF) seeks to promote and facilitate international trade, high employment, sustainable growth and reduce poverty across all nations of the world. The IMF also tracks the growth rates of all countries. What may seem surprising to most people is that there are more than a few countries in Africa that are growing at incredible rates.

In fact, the average of the Real Gross Domestic Product (Real GDP) of the countries that make up the sub-Saharan category is expected to grow by at least 6% by the end of 2015.  This average includes many countries such as Kenya, Rwanda, Tanzania and Ethiopia that have the potential to double their real GDP over the next decade.  These growth rates in Real GPD outpace all emerging markets including that of the United States and the European Union.

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What’s important to understand is that this continent will become a major investment destination in the coming decades. Investment portfolios of western societies motivated by promising returns will increase their exposure to African economies and the companies driving them. By increasing capital expenditures to these foreign economies, it will allow them to grow more efficiently and also benefit all involved parties.

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