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DealMakers AFRICA Q2 2023


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Investment in Africa: Exploring the continent’s growth potential

Mish-al Magiet

Africa, the world’s second-largest and second-most populous continent [1], has long been seen as a land of untapped potential. However, in recent years, a wave of economic growth and development has been sweeping across the continent, making it an increasingly attractive destination for global investors, poised to benefit from its vast natural resources, youthful population, improving infrastructure and burgeoning middle class. This article will delve into the reasons why Africa continues to hold immense promise, and explore the growth potential that awaits those who are willing to venture into this exciting market.

Africa’s economic landscape has been transforming rapidly in the past decade. According to the African Development Bank’s (AfDB) African Economic Outlook 2023 report, several African countries have consistently recorded impressive GDP growth rates, outpacing global averages. 

Mish-al Magiet

While growth on the African continent was impaired by the residual effects of the COVID-19 pandemic, “the continent performed better than most world regions in 2022, with the continent’s resilience projected to put five of the six pre-pandemic top performing economies — Benin, Côte d’Ivoire, Ethiopia, Rwanda and Tanzania — back in the league of the world’s 10 fastest-growing economies in 2023–24”.[2] Growth on the continent has been driven by a combination of factors, such as increased political stability, economic reforms, and a growing consumer base. Furthermore, the continent’s middle class has tripled to 313 million people over the last 30 years, according to the AfDB, which will significantly drive consumption and demand for goods and services.

Africa is rich in natural resources, including oil, gas, minerals and arable land. The continent boasts significant reserves of minerals such as gold, diamonds, copper, cobalt and platinum, among others. With the global demand for these resources on the rise, Africa presents a tremendous opportunity for investors in extractive industries. Additionally, the continent’s vast agricultural potential remains largely untapped, making it an attractive destination for investments in agribusiness and food production. The potential for agri-investment on the continent can be seen by the fact that world cereal yields have increased nearly three times since 1960, but Africa has only increased yields by 90%. As Africa’s population growth outpaced cereal productivity over this period, this has resulted in significant demand locally, with continued potential to secure global off-takers.[3] 

Africa is the continent with the youngest population in the world.[4] This demographic advantage presents both a challenge and an opportunity. By harnessing the potential of its youth through education, skills development, and job creation, Africa can unlock its productive capacity and drive economic growth. Investors can tap into this growing pool of talent and leverage it for innovation, entrepreneurship and productivity gains in various sectors, including technology, manufacturing and services.

Africa is experiencing rapid urbanisation, with the number of cities on the continent having more than doubled in the last 30 years from 3600 to 7600, with their cumulative population increasing by 500 million people.[5] This urban growth is accompanied by a rise in consumer demand, as a growing middle class seeks access to better housing, healthcare, education and consumer goods. The continent’s rising urban population presents significant investment opportunities in infrastructure development, affordable housing, retail, e-commerce and financial services.

Historically, Africa has faced infrastructure challenges, which hindered its economic growth. However, significant progress has been made in recent years to address these gaps. Governments and international partners are investing heavily in building transport networks, energy systems and digital infrastructure across the continent. These investments not only create opportunities for infrastructure-focused investors, but also unlock new markets and facilitate regional integration.

Africa has witnessed a remarkable surge in technology adoption and digital innovation. With limited legacy infrastructure, the continent has leapfrogged into the digital age, embracing mobile payments, e-commerce and digital services. Tech hubs are emerging in various cities, such as, Lagos, Cairo, Nairobi, Cape Town and Kigali, fostering a vibrant startup ecosystem.[6] Investment in African tech startups has been steadily increasing, with annual investment between 2015 (US$185 million) and 2023 (US$3,3 billion) having grown by 1,694%.[7] Sectors like fintech, agritech, cleantech, edtech and healthtech offer attractive prospects for investors, while it is clear that platform and software businesses are becoming increasingly important to investors.[8]

Many African countries are implementing reforms to improve their business environments and attract foreign direct investment. Simplified regulations, streamlined bureaucratic procedures and enhanced legal frameworks are being put in place to make it easier for investors to do business. Furthermore, improved political stability and governance across many African nations have created a conducive environment for investment. Governments are increasingly implementing pro-business policies, streamlining regulations, and enhancing transparency. Additionally, regional economic communities, such as the African Continental Free Trade Area (AfCFTA), being the largest free trade area in the world by country participation, are promoting intra-African trade and integration, further bolstering the investment climate and encouraging cross-border trade and investment, with the goal of creating a single market of over 1.3 billion people and a combined GDP of approximately US$3,4 trillion.

Despite the growing interest, Africa remains largely untapped, with vast opportunities for investors. Numerous sectors are ripe for development, including manufacturing, tourism, renewable energy, infrastructure, financial services, healthcare and agriculture. Markets like Egypt, Morocco, South Africa, Nigeria, Kenya and Rwanda, among others, are attracting significant attention from investors looking to capitalise on their potential.

Africa’s potential as an investment destination must not be underestimated. The continent’s growing population, expanding consumer market, rich natural resources, improving infrastructure, technological advancements and improving governance provide a solid foundation for investment opportunities. While challenges for investors exist, such as regulatory complexities, infrastructure gaps and political risks, these can be mitigated by partnering with local businesses, conducting thorough due diligence, and adopting a long-term perspective.

Investors who recognise Africa’s potential and are willing to embrace its unique opportunities stand to reap the benefits of being early movers in the next big frontier. Africa’s rise is not a question of ’if’, but rather ’when’. The time to invest in Africa is now, as the continent continues its transformative journey toward sustainable development, economic growth and prosperity.

Mish-al Magiet is a Director | PSG Capital


  1. Population in Africa 2020, by country, published by Lars Kamer, June 22, 2023.

  2. African Development Bank’s African Economic Outlook 2023 report.

  3. David Ndii, December 2022,

  4. According to the United Nations.

  5. OECD/UN ECA/AfDB (2022), Africa’s Urbanisation Dynamics 2022: The Economic Power of Africa’s Cities, West African Studies OECD Publishing, Paris,

  6. According to the World Economic Forum, Nigeria, Egypt, Kenya and South Africa receive 92% of Africa’s investment in technology, which accounts for a third of the continent’s start-up incubators and accelerators. The significant investment in these African countries has led to emerging tech hub cities in each of these countries.

  7. The African Tech Startups Funding Report 2022,

  8. Lay and Tafese (2023) based on Crunchbase data. (


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