Reports show that Africa is currently the most profitable continent in the world. How possible is this? Well, out of the 10 fastest growing economies in the world, 6 are in Africa. This means that there are several industries to invest in.
While some folks think it is risky to invest in Africa, there’s a saying that goes thus, “no risk, no reward.” To get the best of your investment, then you need to focus more on the most profitable industries. In this post, we will show you 5 industries to watch out for in Africa as a business owner.
Fastest Growing Industries in Africa
Starting a new business from scratch and growing it is a huge challenge. However, as an African business owner, you can get a head start if you know the right industries to invest in. To help you start up a profitable SME in Africa, here’s a list of the fastest-growing industries in Africa.
Renewable Energy
There are several sources of renewable energy, the chief of which is solar energy. For many years, Africa has suffered energy issues. But this is changing owing to huge investments in the renewable energy sector.
Africa boasts an average of 300 days of sunlight yearly. This will be key as we move towards producing green energy. Several businesses are beginning to spring up in this industry all over Africa. Examples include M-Kopa and Lumos Global. They have created a huge market for the manufacture and sale of solar panels and batteries, inverters, and installation.
Investing in this sector at any stage of the value chain should be profitable. This is because many parts of Africa are still having issues with electrical power and are seeking a sustainable substitute.
Waste Management
Not everyone finds handling garbage an interesting task. However, when you consider how big the industry is, the idea becomes more appealing. Already, in Europe and the United States, waste management is a billion-dollar industry.
One problem that we have faced for several decades on the African continent is waste disposal and management. Africa produces close to 70 million tons of waste yearly according to the World Bank. The report projects that this amount will more than double by 2025.
Many businesses are diving into this space already. Examples of such businesses include Repurpose Schoolbag (South Africa), Yeli (Uganda), and Wecyclers (Nigeria). One of the major players in this industry currently, AgriProtein, collects waste from businesses, households, and markets. Then it grows maggots from the waste before processing them into nutritious protein supplements for animal feed.
Inter-Country Tourism
The outbreak of the new coronavirus brought the tourism industry to its knees everywhere in the world. While everyone thinks that this is bad for the industry, it may be good news for the African business owner. How is this possible?
Countries will soon open their borders to international travellers for several reasons. When this happens, so many people will be willing to travel after being locked down for so long. This opens up a whole new world of possibilities for any SME in Africa that is willing to invest.
Africa is blessed with several interesting tourism locations. From lush meadows to tall mountains and vast wildlife, there is so much to see in Africa. If we are able to develop these locations to international standards, it becomes easier to attract international tourists. In essence, investing in inter-country tourism at the moment is a futuristic project that should be a worthwhile investment.
Value-Added Farming
Once upon a time, agriculture was basically planting of crops and rearing of animals for human consumption. Today, it is all of this and a whole lot more. The African agribusiness industry should be worth over $1 trillion in the next 10 years according to the UN.
Africa owns about 60 percent of the unused arable land in the world. This makes Africa a huge market for agricultural products. Despite all these resources, African countries still spend more than $30 billion importing food every year.
Many African entrepreneurs have figured out how profitable this industry is and are already investing. Most of the investments are being made in value-added products instead of just raw materials. Several business models are cropping up to sustain this form of agriculture with contribution from each level of the value chain.
Another business model gaining popularity in the agricultural sector is crowd farming. So many agri-tech companies are rising in different parts of Africa. This business model helps SMEs in Africa interested in agriculture invest in large-scale farming. With shared responsibility, it is easier to mitigate risks while improving production.
Fintech
More millionaires have come out of the finance industry than any other industry worldwide. It is interesting to note that just a little over 34 percent of adults in Sub-Saharan Africa have bank accounts. Many of them don’t even have access to any formal financial service.
One thing that is more prevalent than regular banking services in Africa is mobile phones. Because of this, many entrepreneurs are shifting into fintech. These solutions involve leveraging technology as a means of deepening access to financial solutions. What this implies is that more people at the grassroots now have access to financial services.
Examples of such services include bill payments, online savings accounts, bulk disbursement, and online payment platforms. These individuals even have access to different investment opportunities, both global and local.
Investing in this industry means that an African business owner is exposing their business to a world of possibilities. The opportunities here are huge as more and more people are getting acquainted with the idea of fintech.
Wrap-Up
The African continent is blessed with so many problem-solvers in the form of African business owners. Another important resource on the continent is its vast population. Mix both factors and you have a rare opportunity at making so much money from investing in Africa. We have shown you five industries you should watch out for as an African business owner. Drop any others that you know in the comments section.