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3 Reasons Africa Should
Be On Your Global Expansion Radar

By October 22, 2018 February 8th, 2019 No Comments
Industry News: 3 Reasons Africa Should Be on Your Global Expansion Radar

The world’s second-largest continent by area may not be the first destination that springs to mind for companies looking to expand operations overseas—but it is absolutely worth the time to explore. Many African nations have in the last few years begun to bloom; economies are growing, education and literacy rates are on the rise, and countries across the continent are receiving more foreign direct investment attention. While Africa as a whole has no shortage of issues on which to improve, sub-Saharan Africa is improving across a number of metrics—and this is why Africa should be in the running for a global expansion destination.

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Reason One: Economic Growth is Quickening

In 2018, Sub-Saharan Africa’s economic growth rose to 3.1%, and is projected to reach 3.7% by 2020. Many sub-Saharan countries’ economies were negatively impacted by commodity prices plummeting and weakened currencies in 2016, but rebounded by 2.6% in the last two years, proving that these economies can withstand such hits. Nigeria, South Africa, and Angola generate the majority of sub-Saharan Africa’s GDP, coming at around 60%. Angola and South Africa are key members of the Continental Free Trade Area, a 54-nation strong trade deal that can help lift Africa’s poorest economies. The CFTA holds the potential to attract more manufacturers, providing much-needed production and operations in the region, as well as commodities diversification for both domestic and international consumption—and boosting Africa’s minute 3% share of global trade.

Reason Two: IT and Digital Transformation

While laptops and tablets are the norm in many countries, a respectable portion of African countries have more or less bypassed these larger electronics for mobile phones. These smaller devices give individuals and business owners alike access to mobile payment networks—many of which originated in East Africa. But it’s not just mobile payments that are adding to the digitization of the continent; software development is growing, too. American software company, Andela, received over $40 million in Series C investment from South African firm CRE Venture Capital, with the firm’s co-founder, Pule Taukobong stating that the investment isn’t just in the software produced, but in “Africa’s greatest asset:” its people. And, with Africa’s educated middle class growing, the demand (and expectation) for new, sophisticated products will only continue to rise—and create a new market for foreign and domestic companies.

Reason Three: The Need for Infrastructure, Connectors

If the UN’s projections are correct, 10 of the world’s fastest-growing cities will by 2035 be African. And for Africa to capitalize on and deliver its products to those within the continent and to ports for exportation, its infrastructure must be improved—and the opportunity for improvement is continent-wide.

To continue growth (and for smaller countries to realize their growth potential) everything from rail to roads to ports and power grids must be further developed. Africa’s blooming IT sector will surely contribute to this design and construction, but outside investment and foreign-owned companies can contribute significantly to this massive construction project. Currently, roads and rail lines are in disrepair and/or do not meet the growing demands of Africa’s economic growth. This has dire consequences for many sectors, but Africa’s farmers are hit especially hard, as nearly 50% of all fruits and vegetables grown on the continent spoil before reaching their market destinations. The solution to this and other transportation issues is apparent, and the opportunity to contribute to improve intra-continent trade is waiting.

Expand with an Experienced Partner—and Expand with Confidence

Sub-Saharan Africa’s economic growth is projected to continue, as African innovation takes aim at the many challenges stalling many countries’ economic growth. But for this growth to spread across the continent quicker and wider, foreign investment and projects will be key. If your company is looking to expand overseas into markets that offer room for continued, calculated growth, reach out to Velocity Global today to learn more about how our suite of global expansion services can make it happen. Our International PEO (Professional Employer Organization) solution can have you up and running in your new African market in as few as 48 hours—all without establishing an entity. We’re ready when you are.