Africa is a continent of 54 countries with a high variation in population, development levels, growth rates and stability. In 2019, Africa had a total population of 1.9 billion people, with the most populous countries being Nigeria with nearly 190 million people, followed by Ethiopia and Egypt with over 90 million people each, while most other African countries have less than 20 million people each. Africa is a very young continent, with 77% of its population below the age of 35 and the average age being just 19 years old, compared to 29 years in India and 37 years in China. Additionally, Africa’s population has been projected to get younger at a rapid pace. However, the growing needs of the world’s youngest and fastest-urbanizing continent present many opportunities for businesses and entrepreneurs.

Although 17% of the world’s population is in Africa, it only accounts for 3% of the world’s GDP, with just nine countries contributing to a third of Africa’s total GDP. However, GDP growth in Sub-Saharan Africa has been at an average of 5% per year since 2000, while the average GDP growth rate of the continent is just slightly lower. Africa’s GDP grew between 2000 and 2010 at an average annual rate of 5.4 percent but slowed down due to Arab Spring in 2011 and oil price collapses in 2014 and is recovering at present. If current economic growth rates continue until 2030, Africa’s poverty rate will decrease to 23%, following its decrease from 54% in 1990 to just above 41% at present.

Additionally, six of the fastest-growing economies in the world in 2018 were in Africa, while Ghana occupied the top spot. Five of the 10 most improved countries in the World Bank’s 2019 Doing Business index were from Africa, with sub-Saharan Africa accounting for one-third of all reforms recorded globally. More than 400 companies in  Africa have reported of an annual revenue of $1 billion or more and these companies are growing faster and are more profitable than comparable companies worldwide.

Two out of every five children will be born in Africa by 2050. Africa’s population has been projected to increase to 1.7 billion people by 2030, then approximately double from its current population by 2050, and finally double again between 2050 and 2100, to reach 4.3 billion people, which would be 39% of the world’s total population at the time. Even if substantial decreases are seen in the fertility level, rapid population growth will still take place.

The rise in population will be accompanied by rapid rises in the rate of urbanization, which will be driven by rural-to-urban migration. Already, an average of 24 million people are added to cities in Africa each year and this trend is expected to continue until 2045 at least, resulting in a 3-fold increase of Africa’s urban population by 2050, with 1.34 billion people living in the Urban areas of Africa by then.

A 2016 McKinsey & Company report has predicted the availability of $5.6 trillion in African business opportunities by 2025. These opportunities will include, but will not be limited to the food, beverage, pharmaceutical, financial service, healthcare and education sectors.

The rise of a large number of mega cities will create the need for high levels of development of physical, political, economic and societal infrastructure. Physical infrastructure development will be required to prevent overcrowding and informal accommodation, while waste management will have to keep up with other physical infrastructure development to prevent environmental dangers. Based on 2010 estimates, at least $46 billion in additional spending will be required each year for Africa to adequately upgrade its energy, water and transportation networks. Africa has also doubled its annual investment in infrastructure since 2000 and currently invests around $80 billion a year.

The increase in population size and urbanized population will also result in major increases in consumption. Household consumption is expected to reach $2.1 trillion by 2025, as a result of an annual growth rate of 3.8% annually until 2025. By 2030, just three countries, Nigeria, Egypt and South Africa are projected to account for almost 50% of household consumption in Africa. However, following the same trend, smaller countries are also expected to increase their GDP and consumption. Business spending has been projected to follow a similar trend by increasing from $2.6 trillion in 2015 to $3.5 trillion in 2025.

Since 60% of global uncultivated arable land is found in Africa, agriculture is also a potential sector for investment and business opportunity. Africa has the potential to increase its cereal and grain production two to three fold through intensified agricultural productivity, while horticultural crops and livestock production also show similar potential.

Africa contains 10% of the world’s oil reserves, 40% of its gold, and 80% of its platinum, the continent most certainly has an abundance of natural resources. However, the continent has continuously struggled to use these resources towards sustained economic development. Many investment opportunities exist in this sector, but since 2000, commodities have only accounted for 30% of Africa’s GDP, therefore the importance of these resources should not be overestimated. In Africa, oil and gas are abundant in unexplored, high-potential regions, which is matched with a growing unmet demand for energy. The domestic gas market in Africa has been projected to grow by 9 percent a year, while 70 percent of gas consumed is expected to be domestically sourced by 2025.

Information Sources:

• Africa’s population will double by 2050 – economist.com, 26^th March 2020
• This region will be worth $5.6 trillion within 5 years - but only if it accelerates its policy reforms – weforum.org, 11^th February 2020
• The children’s continent: keeping up with Africa's growth – weforum.org, 13^th January 2020
• What’s driving Africa’s population growth. And what can change it.  - theconversation.com, 17^th November 2019
• Spotlighting opportunities for business in Africa and strategies to succeed in the world’s next big growth market – brookings.edu, 11^th January 2019
• Africa: fastest growing continent – un.org, undated 

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