Africa is open for business – and offers high returns

As the Africa Progress panel has outlined in a recent policy paper, Africa – Investment Ready, rapid change in the last decade has turned Africa into a region ripe with opportunities for investors willing to participate in, as well as profit from, the continent’s development.

Steadily increasing stability is reducing the risks that have long deterred investors. Over the next few decades, there will be a surge in the number of young people. As the ratio of people of working age to dependants rises, economic growth could get a further boost – a demographic dividend. Multiparty democracy is now firmly established. Africa is pulling itself out of the conflict trap – the vicious circle in which conflict hampers growth, and low growth breeds conflict.

All of these factors have contributed to a steadily improving business environment, helped by a range of global and regional initiatives aimed at improving transparency and stemming corruption. These have benefited the natural resource sector, in particular, just as a wave of oil and gas discoveries confronts a new group of countries with the need to manage resource contracts and revenues wisely. At the same time, striking growth rates in countries that lack such resources, such as Ethiopia, are pointing the way to a more stable, more prosperous future in which growth is built on a more diversified base.

African countries need investment partners to help them confront and exploit the particular mix of challenges and opportunities they face. With youth unemployment already high, Africa needs to create jobs fast. The private sector is now the major source of jobs for Africans. Expanding trade and investment is vital to ensure sustained and equitable job creation.