– Chiugo Ndubisi, directeur exécutif, Heirs Holdings
Africa is a continent rich with untapped potential and unparalleled opportunities for investors seeking growth, diversification, and impact. Often overlooked in favour of more established markets, Africa offers unique value propositions across various sectors that make it an emerging powerhouse for global investment.
Globally, there is a growing recognition of how crucial private capital is for economic growth. Despite opening their economies to attract investment, African countries have not seen a significant influx of Foreign Direct Investments (FDIs). This reluctance to invest in Africa is partly rooted in historical, ideological, and political skepticism about foreign investment on the continent which may stem from past negative experiences. Considering that Africa’s real GDP growth rate in the 2000s was more than double that of previous decades, far outstripping growth in other markets, and since Africa continues to offer the highest returns on foreign investment compared to other developing regions, this is the time to rethink this skepticism.
Africa’s Investment Terrain
Africa’s economy is one of the fastest growing in the world, and new initiatives like the African Continental Free Trade Area (AfCFTA) are helping to create a market that has the potential to be bigger than those of other economic blocs. Additionally, many countries are attempting to woo investors by offering incentives and cutting down on red tape.
Investment in Africa now comes from a wider range of sources, with more interest from new investors. Interests are no longer just from the West, but from newer global sources – China’s $51 billion commitment to African infrastructure and Saudi Arabia’s $40 billion investment plans. More recently, the eighth edition of the Saudi-led Future Investment Initiative (FII) featured for the first time, the New Africa Summit, which was co-chaired by African investor and philanthropist, Tony O. Elumelu, CFR. There has also been a shift towards high impact and strategic sectors like technology, renewables, and healthcare, instead of traditional mining and oil, with more attention given to Environmental, Social, and Governance (ESG) standards.
The positive impact of this varied foreign investment is evident in countries like Kenya, Tanzania, and Uganda. These foreign companies bring essential management skills, invest in infrastructure, and focus on worker training and health. They also have better connections to global markets and, contrary to some fears, do not seem to push out local businesses. For example, when Safaricom launched M-Pesa, it not only revolutionized mobile payments but also supported local businesses by enabling easier payments and expanding access to financial services. Instead of crowding out local firms, foreign backed investments will partner with them to further develop their linkage to gobal supply chains.
Intra-African investments have also become common as African countries have increasingly begun to invest in one another. Nigeria’s National Bureau of Statistics reported that the country received a combined $507 million in investment from South Africa and Mauritius within the second quarter of 2024 alone. Notably, these two countries are part of the top 5 countries with the highest foreign investments inflows to Nigeria, both outranking the United States (which only contributed $82 million).
However, Africa still needs to attract a lot more FDIs to fully harness the benefits of foreign capital for economic growth and better integration with the global economy.
Why Africa Should be on Every Investor’s Radar?
Demographic Dividend: Africa is home to almost 20% of the world’s population and its youthful population (more than 60% under the age of 25) presents a dynamic labor force and an expanding consumer market. As urbanization accelerates, the demand for infrastructure, goods, and services is set to skyrocket, driving positive economic growth. By 2050, Africa young population is projected to double, making it home to one of the largest working-age populations globally.
Natural Resource Wealth: Africa is a treasure trove of natural resources, accounting for: 30% of the world’s mineral reserves, over 60% of global cobalt production (vital for batteries), significant shares of oil, gas, and renewable energy resources. Beyond extraction, there are opportunities in value addition, energy transition projects, and green infrastructure.
Booming Technology Ecosystem: Africa’s technology sector is flourishing, with the rapid rise of fintech, agritech, and healthtech startups addressing unique local challenges. The continent’s tech hubs, such as Lagos, Nairobi, and Cape Town, are becoming innovation hotbeds. African startups raised over $6 billion in 2022, showcasing investor confidence in the tech ecosystem. Despite its nascent environment, the continent has birthed about 7 tech unicorns over the past few years, further confirming its vast potential.
Green Energy Transition: As global economies pivot toward sustainability, Africa’s renewable energy potential—solar, wind, and hydro—presents opportunities to meet domestic energy needs and export green energy. The Sahara Desert’s solar projects could power Africa and Europe, aligning with global climate goals.
Infrastructure Development: Africa’s infrastructure gap is both a challenge and an opportunity. Investments in transportation, energy, telecommunications, hospitality and housing are critical to supporting growth. The Lekki Deep Sea Port in Nigeria is attracting global investors, enhancing trade efficiency in West Africa.
Attracting more FDIs
To attract more investment, African countries need to prioritize certain key areas that make their economies more attractive and competitive. They must work on stable and transparent governance, improve their infrastructure, prioritise human capital development and set up effective regulatory frameworks. The benefits of these efforts are already visible in countries that have successfully implemented critical reforms.
For example, Rwanda streamlined its business processes, making it more attractive to investors. Nigeria’s Lekki Free Trade Zone, which includes a deep-sea port, demonstrates how infrastructure upgrades can reduce business costs. Meanwhile, South Africa is currently enhancing education and training in the tech sector to attract investors by providing skilled workers. Additionally, Botswana is combating corruption through its Directorate on Corruption and Economic Crime (DCEC), creating a more trustworthy environment for investors.
Economic diversification and embracing technology are also key initiatives that can be deployed. The expansion of the Ethiopian manufacturing sector beyond agriculture, Nigeria’s fintech boom, and Egypt’s new tax incentives, are all examples that show how African countries can make themselves more attractive to investors through diversification.
Africapitalisme
Development in Africa cannot only rely on governments, donor countries, and charities. The private sector must take a leading role in the continent’s growth. True progress requires strong partnerships between businesses, governments and the international community. These partnerships of parity – not just demands for aid – alongside focusing on long-term investments in key areas, improving regional connectivity, and thinking about future generations, form the core of Africapitalism.
In keeping with this philosophy, Heirs Holdings in 2011 invested in Transcorp, which was originally established to mirror Singapore’s state-owned multinational investment firm, Temasek. With Heirs Holdings’ investment and expertise, Transcorp has become a household name in the hospitality industry and expanded into the energy sector, becoming a regional leader – one of the most impressive private-sector-led transformations on the continent. Heirs Holdings demonstrated again its track record of business turnaround when it entered a joint venture with the Nigerian National Petroleum Corporation (NNPC), which has led to a 100% increase in production output and gas for power generation, supplying several power plants across the country. Over the past 15 years, Heirs Holdings has invested in diverse, critical sectors with a strategic quest to improve lives and transform the African continent.
Another example of how important private-public partnerships are is the success of the Ugandan government’s Dairy Development Authority’s partnership with local dairy farmers to improve the dairy supply chain through training and better infrastructure.
Africa is the Opportunity
For the world to reach its full potential, Africa needs to industrialise, and this will require significant investments in key sectors like power, energy, healthcare, technology, education, real estate, and financial services.
Africa is not merely a hidden opportunity. It is an inevitable destination for forward-thinking investors. By capitalising on its demographic advantages, abundant resources, and growing markets, investors can achieve financial returns while contributing to sustainable development. Now is the time to engage with Africa’s story before the rest of the world catches up.
Publié à l'origine sur Business Day
About the Author
Chiugo Ndubisi is an Executive Director at Heirs Holdings, responsible for providing strategic oversight of investment and integration across Heirs Holdings’ investment portfolio.
He is an accomplished financial services professional, with over 25 years of experience in banking and finance. Prior to joining Heirs Holdings, he served as an Executive Director at the United Bank of Africa Plc (UBA), overseeing Treasury and International Banking. He was also responsible for the Group’s international subsidiaries: UBA America; UBA UK; UBA France; and UBA Dubai. At UBA, his previous roles included Group Chief Operating Officer and Group Executive, Transformation & Resources.
Chiugo has also served as a member of the Board of Trustees, Central Bank of Nigeria Banking Industry Resolution Trust Fund, as well as member of the Audit Committee of the Nigeria Interbank Settlement Systems (NIBSS). He is an alumnus of the Wharton Business School, and a fellow of the Chartered Institute of Taxation of Nigeria (CITN), the Chartered Institute of Bankers of Nigeria (CIBN) and the Institute of Chartered Accountants of Nigeria (ICAN).