Africa holds great potential as we move forward into the 21st Century. In recent years, U.S. policy initiatives have recognized Africa’s growing significance.
In 2014, President Obama welcomed leaders from across the continent to Washington for the first US-Africa Leaders Summit, the largest event any U.S. President has held with African heads of state and government.
This past September he discussed the importance of continuing to make it easier to do business in Africa during his remarks at the U.S. Africa Business Forum in New York City.
The African Growth and Opportunity Act (AGOA), first enacted in 2000, has been renewed to 2025, enhancing US market access for Sub-Saharan African countries.
Yet, in general, Africa’s many positive indicators can sometimes be overlooked. Here are three fundamental facts that are important for the next U.S. President to keep on the radar screen in the years ahead.
Africa is a vast and young market
A billion people live on the African continent, with the population expected to double by 2050. Currently some 200 million Africans, about 20 percent of the population, are between the ages of 15 and 24. Africa’s young people form a growing labor force, “a highly valuable asset in an aging world,” according to a report by the McKinsey Global Institute.
McKinsey says that while the global workforce is shrinking, Africa’s working-age population is expected to reach 1.1 billion by 2034, larger than either China or India. Africa’s young demographics portend economic strength, in that a working-age population is associated with favorable rates of GDP growth.
Africans have money to spend, presenting a major investment opportunity
Today, African consumers and businesses spend a total of $4 trillion. By 2025, McKinsey projects that household consumption will reach $2.1 trillion and business spending $3.5 trillion — a total $5.6 trillion in business and investment opportunities.
In general, American companies are not taking advantage of these opportunities. According to the Brookings Institution, only one percent of US foreign direct worldwide is in Africa, and half of that is in extractive industries of raw materials.
The economy is about more than oil
While growth has slowed among oil exporters and some North African countries, the rest of Africa has posted accelerating growth. The International Monetary Fund projects that Africa will be the world’s second-fastest growing economy in the next few years. McKinsey counts 400 African companies with revenues of more than $1 billion and says these companies are growing faster, and are more profitable, than their global peers.
In terms of natural resources, Africa exports 10 percent of the world’s oil and gas, 9 percent of copper and 5 percent of iron ore. Even with today’s low commodity prices, much of Africa’s production continues to be cost-competitive, so the resources sector is positioned strongly for when demand recovers.
There are other factors contributing to Africa’s favorable outlook, such as rapid urbanization and the economic impact of new technology. As the next US President takes office, it’s valuable to keep in mind that all these trends add up to Africa’s big picture — and point to a bright and positive future.
Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, hospitality, technology and real estate sectors throughout Africa. ABO’s mission is to create global value for developing countries in Africa, while contributing to their economic development.