HK conference hears of African opportunity

17  January 2013

Africa’s fast-growing economies can provide huge opportunities to Asian investors, especially those from the Chinese mainland, experts have told the Africa Investment Summit being held in Hong Kong.

Delegates heard that countries on the continent’s East and West coasts offer the biggest potential, being places where they can get access, in particular, to offshore oil and gas projects.

Africa currently holds a significant share of the world’s resources, including 89 percent of its platinum, 74 percent of its chrome, 60 percent of its diamonds, and 12 percent of its proven oil reserves, according to a report delivered during the event by Hong Kong’s Alquity Investment Management Ltd, the fund management company.

“Africa has a lot of resources, but we need the funds to exploit them, (and Asian countries such as) China have the financial capacity to help African countries to develop (their resources),” said Jose Chinjamba with the National Private Investment Agency of Angola.

“We received loans from China which helped us (in developing projects), and Chinese workers are involved in construction activities,” added Chinjamba.

“China’s involvement (in Africa) is very important.”

Guy Lundy, deputy chairman at Wesgro, the official investment and trade promotion agency of the Western Cape, a province of South Africa, said that he believes the biggest investment opportunities in African lie in offshore oil and gas exploration, but also transportation between the east and west coasts, and even ship repair services for exploration companies.

But there is more to Africa than natural resources, and the continent is also open to all kinds of business investment opportunities, delegates were told. Since 2000, with the exception of 2009, sub-Saharan Africa has recorded an average 5 to 7 percent GDP growth annually, and only Asia has done better globally.

Experts reported that apart from Brazil, Russia, India and China, or the BRICs, Africa is expected to be the next growth engine of the world economy in coming decades.

Lundy said that Africa’s consumer industry, as well as its housing sector, can offer good investment opportunities too, as the middle classes continue to expand rapidly.

According to the Hong Kong Trade Development Council, around 60 million African households have an annual income of $3,000, and that’s expected to increase to 100 million by 2015, almost the same as in India now.

Echoing Lundy’s words, Carole Kariuki, chief executive officer of the Kenya Private Sector Alliance, also suggested that Asian investors look closely at Africa’s real-estate industry.

“In Nairobi alone, there is an annual shortage of about 40,000 units in the local housing market,” said Kariuki.

She pointed out that Africa has a large labor force, delivering high levels of productivity, but labor costs remain low, which should prove attractive in labor-intensive industries, such as house building.

Home to more than 1 billion people, Africa is also the region with the world’s youngest population.

Around 60 percent of people in Africa are under the age of 25, compared with the average 30 percent in developed countries.

Africa does have its shortcomings, Lundy said, warning Asian investors that it can be hard traveling the continent, as historically most of its transportation infrastructure was built to link its resource-rich inland cities and ports, and not different countries.