Opportunities in Africa


Until recently, many people considered Africa a hopeless continent and a territory which is located in isolation from the international system. In the focus of the research about Africa, there is a question why the area is in a state of permanent crisis, and its inhabitants live in constant conditions of conflicts, poverty, sufferings from numerous diseases, and crimes. Continuing this logical chain, it would be possible to come to the conclusion that there are only humanitarian disasters without significant political processes taking place in this part of the world. However, under the influence of globalization, many historical opinions should be revised. Due to high rates of economic growth, the attitude towards Africa has changed dramatically in recent years. These days, the continent is considered a “rising star” in different spheres. In the book Creating Wealth by Harnessing Opportunities in Africa, it is noted that “Africa will receive a new philosophy of business, social structures, development, wealth, and quality of life”. Thus, a great future is expected for the continent, and the purpose of the paper is to examine opportunities that are in Africa nowadays.

The Current State of Africa

Economic recovery is observed throughout the continent. In the book A Brief Look at Economic Opportunity in Africa, it is stated that “the growth rates in Africa far outstrip those of developed markets meaning that the future is even more promising for business here”. In 27 out of 30 most economically developed African countries, economic growth accelerated after 2000. All economic sectors including the mining industry, the financial field, retail trade, agriculture, transport, and telecommunications have facilitated this process. Such a leap in the economic development of the continent is a result of increasing political and macroeconomic stability, as well as conduction of microeconomic reforms. In the future, the key to the region’s economic advancement can be a rise in the level of integration into the world economy.

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Furthermore, for many years, the international community has been investing billions of dollars in African economies to contribute to their development. Nevertheless, the results have been minimal. These days, Africans increasingly take their destiny into their hands and turn to the free market and competition. Therefore, they get on the road to economic prosperity. African countries understand that policy that promotes the advancement of trade, investment, and growth of the private sector is the most important condition for the economic progress. Moreover, they begin to realize the enormous benefits of the introduction of real exchange rates, privatization of parastatal monopolies in such key sectors as energy and telecommunications, as well as the reduction of barriers to trade between African countries. The growing trend towards privatization – whether through enterprise management contracts and direct sales of parastatals enterprises, such as objects of communal services, or through the transfer of operation of the businesses into private hands on a rental basis – proves that the number of market solutions of problems of economic development continues to rise. The results are obvious. There is a significant increase of the flow of foreign investments in numerous African states including Eritrea, Ghana, Benin, Ethiopia, Malawi, Namibia, Mozambique, Tanzania, Zambia Togo, and Uganda. Moreover, a list of African countries that have embarked on the path of reforms is also rather long.

After a decade of reforms in the legal field and economy, many African countries today are more than ever ready to attract foreign investments. It should be noted that this continent has enormous potential for expanding trade and investment. Representatives of big business understand this. Such world famous corporations as Coca Cola, General Motors, and many others send their representatives to the continent in search for opportunities to build the business cooperation. Besides, those organizations that are currently operating in Africa are doing really well, and their income is among the highest across the globe.

To continue, over the past several years, there has been an unprecedented surge in investment in the oil and gas sectors in Africa. In the last fifteen years, when international companies have lost access to Middle Eastern oil fields or preferred not to invest in them, Africa has offered more favorable conditions in the sphere. Thus, the continent has attracted the investments of such leading organizations like Shell and Exxon Mobil. These corporations have become highly interested in the development of huge and virtually untouched fields, particularly in the Gulf of Guinea and North Africa. Furthermore, the continent has the largest reserves of light sweet crude oil that is extremely popular among oil refining companies in developed countries.

Problems and Possible Improvements

Meanwhile, in countries of the African continent, there is still a huge risk in terms of doing business, and one should stress that this flaw must be overcome primarily by African countries themselves. Their governments should accelerate the process of privatization of state enterprises, continue work on elimination of the barriers to trade and investment, expand efforts in the field of regional integration, stop bribery and corruption, create legal framework conducive to foreign investments, and build the infrastructure for business prosperity.

Despite the fact that the volume of foreign investments into the economy of African countries has increased in recent years, the flow of funds to these states is still rather insignificant. In fact, African governments should pursue the policy that could persuade foreign companies that they can get a reasonable return on invested resources and work in an environment associated with minimal risk.

There are several key areas where a lot still should be done. The first one is infrastructure. If the company cannot get the energy resources necessary for the operation of businesses or if energy costs are too high, these organizations simply will not be built. If the enterprise cannot provide the transportation of goods or products to the market or suppliers because of the poorly-established traffic system, it will be impossible to build business in this country. If, after delivery of the goods to the port, they are there for several weeks waiting for the shipment because of bureaucratic delays, the company that owns the goods will prefer to work elsewhere. In addition, it is impossible to deny the fact that electricity in Africa is too expensive, and in rural areas, there is large deficit of power. Therefore, it scares away foreign investors. In fact, there are no objective reasons for this as the African continent has great potential in the field of hydropower. While African countries could join the competition in the global market in such industries as textiles, high operating costs including energy costs reduce the real competitiveness of textile products of these states. Africans should realize that they enter into rivalry not only with other African countries but also with those of the world community.

Another sphere that should be improved in Africa is legal framework. Current investors must import a significant part of the equipment and materials necessary for production using seaports services. Meanwhile, the work of many of them in Africa is so badly organized that imported goods may lie there for weeks waiting for the shipment. Obtaining permission to start work on the project in Africa can take from a few months to several years. However, in other regions of the world, this procedure lasts a few weeks or months. Economic losses associated with such delays are usually subsequently compensated by the companies due to the increase in the final product cost. This fact inevitably affects the competitiveness of this good in international markets. For example, even if the profitability of the sugar factory is higher in Cameroon than in Indonesia but the permission and funding in Cameroon require two years and one year in Indonesia, a potential investor is likely to choose the latter.

One more problem is associated with economies of scale. Foreign investors are still worried about the fact that the domestic markets of African countries are too small to support investment anywhere else except the mining industry and those based on the exploitation of natural resources that manufacture products for export. Larger and more attractive markets can be created if Africa is able to expand regional integration by lowering national barriers in the field of trade and investment, as well as the harmonizing the non-tariff obstacles such as national standards for the products. The community for the development of Southern Africa includes about a dozen of African states, the total population of which is almost 150 million people. In West Africa, there is also the economic community that consists of 16 countries. It represents a market with nearly 200 million potential consumers. Nevertheless, to date, the pace of integration remains extremely low.

Finally, political stability is an extremely important factor for the further development of the region. Even in conditions of high-cost economy, businesses can count on great profits. Meanwhile, nothing scares foreign investors more than political instability and internal strife. The inability to predict the future course of events in many African countries is considered the most significant factor that hinders the intentions of foreign investors. The proof of this statement is the absence of foreign investors in such conflict zones as Zaire, Liberia, Rwanda, Burundi, and Somalia, as well as other unpredictable states such as Gabon, Niger, Sierra Leone, and Cameroon. Immediately, it becomes clear that foreign investors prefer to stay away from places where there is an open political struggle or a great possibility of political conflicts which may result in change of business conditions. Guinea is a classic example. After the death of Sekou Toure in the middle of the 1980s, the government of the state opened the country’s economy and began to pursue the right policy. It started to organize trade missions, and, thus, the interest of the business community to cooperate with the country increased. Meanwhile, changes in the political situation led to the sharp increase in administrative barriers to foreign companies seeking to conduct their business there. Even despite the fact that in recent years Guinea launched the process of the liberalization of the economy again, investors do not want to risk.


To conclude, nowadays, the investment process in African countries is slow. Despite this fact, Africans increasingly use market-based approaches and the international community to help them implement economic reforms and interact with the private sector. It is aimed at stimulating the economic growth. These days, foreign companies and governments must develop strong partnerships with African countries to create new opportunities for trade and investment for the benefit of both Africans and peoples from other states.

Africa will not become a prosperous continent in one day. It will take patience and persistence on the part of both reformers of the economy and international investors. African leaders need to conduct numerous economic reforms. Coordination with the international financial institutions is also necessary to alleviate the stress that inevitably accompanies the movement towards the market economy.

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