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Answered: - Research paper; making a case for investing in Africa


Research paper; making a case for investing in Africa


Research Paper on Making a case for investing in Africa

 

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Table contents

 

1.0. Overview.................................................................................................................................. 3

 

2.0. Abstract ....................................................................................................................................3

 

3.0. Introduction ..............................................................................................................................4

 

4.0. Investment opportunities in Africa ..........................................................................................4

 

4.0.1. Mining .......................................................................................................................5

 

4.0.2.Tourism and Travel ....................................................................................................6

 

4.0.3 Infrastructure ..............................................................................................................9

 

4.0.4. Oil and energy .........................................................................................................11

 

4.0.5. Agriculture ..............................................................................................................15

 

4.0.6. Manufacturing .........................................................................................................16

 

5.0. Civil Society and democracy .................................................................................................18

 

6.0. Reference ...............................................................................................................................22

 


 

1.0 Overview

 

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2.0 Abstract

 

Product boom may be over, but African sub-Sahara is still experiencing growth,

 

something truly remarkable given that the continent is an exporter of raw materials. With the

 

adoption of sound economic policies in the last two decades and the reform in this sector, most

 

African countries have proven to be able to support the growth trajectory and beat the "resource

 

curse". Despite the challenges of imports, African countries are trying to prove that they can

 

resist the order of product super cycle and achieve more sustainable growth and inclusivity to

 

diversify the economy, increase productivity, and the adoption of policies to help the poor.

 

James, 2000). Five African countries are among the top ten fastest growing economies in the

 

world according to world bank .Overly, Africa accounted for the largest number of reforms, 75

 

of 230 reforms.

 


 

3.0 Introduction

 

Africa is an investment destination that's second most attractive in the world behind only

 

North America. Investors are looking for more developed markets like South Africa, Nigeria and

 

Kenya. Increased investment and industry will help unlock the potential for creating jobs and

 

reducing poverty in Africa. Foreign direct Investment (FDI) in the region reached a record $ 60

 

billion, five times lower than levels in 2000. For example, Chinese FDI in Africa rose to $ 3.5

 

billion in 2013 and almost all African countries are benefiting with the participation of China

 

today. In Ethiopia, the total inflow of foreign direct investment in 2013 amounted to 2 percent of

 

GDP. Inter-African investment is also on the rise, creating a vicious cycle that encourages more

 

foreign investment. Investors in Africa nearly tripled its share of FDI projects in the past decade,

 

from 8 percent in 2003 to 22.8 percent in 2013. The reason for this is simple. the world's eyes are

 

turned to the African market of one billion people, including a growing middle class. Investors

 

also see significant opportunities for investment in non-raw sectors of the South: financial

 

services, construction and manufacturing now accounts for 50 percent of Chinese FDI in Africa.

 

4.0 Investment opportunities in Africa

 

4.0.1. Mining

 

The mining industry worldwide is undergoing unprecedented changes, including an

 

increase in price volatility in commodity prices and rising exploration costs. Africa, which

 

produces more than 60 metal and mineral products, has great potential for exploration and

 

extraction of mineral resources. the continent is home to nearly 30% of total mineral reserves

 

around the world and a large part of the deposits of diamonds, vanadium, manganese, platinum,

 

cobalt and gold. Investors hope the new markets, especially in developing countries, which

 

represents a new investment frontier for big mining companies. In this situation, the African

 


 

mining sector offers a unique opportunity for investors both domestic and international. With a

 

large number of mineral resources belong to the continent, Africa's production accounts for only

 

8% of world production of minerals. Many of these products are exported in raw form. So, to

 

unleash the potential of mining, Africa must overcome the obstacles to the development of the

 

industry. Income from mining could help African countries to strengthen their comparative

 

advantages and achieve greater economic diversification (James, 2000).

 

Investors are looking for better opportunities, and Africa, with its vast mineral potential

 

offers an attractive environment for investment in the mining sector. However, to attract

 

investment in the sector, the authorities have to deal with the risks and other constraints faced by

 

investors, including deregulation for prospecting and tax law firm. In turn, this will encourage

 

the industrialization of production, thereby increasing the share of industry in the diversification

 

of the economy. Lower the cost of mining and the presence of multinational companies will

 

increase. High cost of production in developed countries has forced multinational companies to

 

seek investment opportunities in Africa, which provides a relatively low cost of production. For

 

example, BHP Billiton, the world's largest mining group, has canceled about $ 40 billion of

 

projects in Australia, mainly because of higher costs, including labor costs (K?hler et al, 2001)

 

These costs have resulted in a greater presence of multinational mining companies in Africa. This

 

includes the world's largest companies, as well as companies BHP Billiton, Rio Tinto, Anglo

 

American and Xstrata. more than 200 companies of Australia now employ more than 650

 

projects in 37 African countries.

 

The emergence of large Asian investors in the mining sector also provides additional

 

opportunities for diversification of investment in African countries. In particular, China and India

 

recently increased their investments in the metals and minerals on the continent. This investment

 


 

is necessary to increase production of mining and processing of value-added. They also serve as

 

an incentive to increase the development of infrastructure, especially in energy and transport, in

 

order to meet the growing demand from investors an acute need for the industrial sector of the

 

mining industry. Most African mining production is exported as raw material. This reflects the

 

low level of industrialization of the mining industry in the continent (K?hler et al, 2001). Faster

 

structural reforms can benefit from mineral processing and value-added products related to

 

mining. However, this will require involvement from mature markets, technology and expertise

 

to improve the quality of mineral products. Improving the quality of mineral products exports,

 

African countries could generate additional revenue which would have been distributed in other

 

sectors of the economy. It is very important to create new jobs and improve the living conditions

 

of the people.

 

4.0.2. Tourism and Travel

 

Corporate Council on Africa recently sponsored tourism Africa. This unique event was

 

held from September 30 to October 2, 2002 in Atlantic City Convention Center in Atlantic City,

 

New Jersey. This exhibition and conference focused on entrepreneurs and companies, both of

 

which are planning to start or expand transportation, tourism and gaming businesses related to

 

the African continent. The main objective of this first of its kind conference was to consider the

 

role of tourism and gaming sector in economic growth and development in Africa. This event,

 

which is co-sponsored by the African Travel Association (ATA) has definitely provided me with

 

a good opportunity to learn more about the travel, tourism and game African capacity; the

 

identity of agents, representatives and distributors; explore joint partnerships and strategic

 

partnerships.; and the promotion of foreign direct investment in Africa in relation to the

 

gambling and tourism industry.

 


 

According to World Tourism Organization's statistics, Africa was part of the world where

 

the tourism industry and tourism has made great strides since 1990. International arrivals and

 

tourism increased by 7.5%. During this decade, the number of tourists who decided to visit

 

Africa doubled, going from 16 million people to 31 million. In the same period there was an

 

increase of fifty percent for a total number of tourists worldwide in 1998, according to TTC.

 

However, despite these achievements, Africa accounts for only less than 5% of world tourism.

 

With increased sensitization in the number of visitors from countries such as Egypt, Kenya,

 

Zambia, Mauritius and Morocco, the average growth rate of 2% of the continent is less than

 

7.5% of the world and well below the East Asia at 14% and 6.2% in Europe.

 

Following, the unprecedented measures of laws on the African Growth and Opportunity

 

Act (AGOA), entrepreneurs have a great opportunity to take advantage of the positive trends in

 

intent America to help African countries to continue to successfully graduate from emerging

 

market opportunities global economic due and commercial enterprises and increasing

 

investment. AGOA, hoping to eliminate barriers to free trade and economic opportunities for

 

American entrepreneurs who want to work with them. Africa is very promising economic region

 

in the world where people with business experience can be a strategic market advantage. In

 

particular, this historic piece of legislation should be aimed at travel and tourism industry, with

 

direct participation and involvement of a large number of Americans and Africans alike. Second,

 

in order to take advantage of this unique situation, the investor must be willing to explore the

 

many investment opportunities are becoming more educated about the types of possible tourist

 

attractions in Africa, and then to actually learn to identify specific areas that you should consider

 

investing your money . According to industry experts, there are three major trends in the tourism,

 

which will be largely on the market in the future for Africa - adventure travel, tourism and

 


 

cultural heritage tour.

 

According to the TTC, the fastest growing trend in the tourism sector in the world is

 

adventure travel. The African continent is in possession of some of the largest deserts, beaches,

 

tropical forests and mountain ranges in the world and invites adventurous tourists come to visit,

 

explore and enjoy. Most of the activities of adventure tourism, however are mainly aimed at

 

tourists who want to break away from stereotypical holiday. Classic examples of this kind is a

 

trip to climb Mount Kilimanjaro, which is popular with visitors who love rough safari in

 

Tanzania, balloon riding and / or bungee jumping from the Victoria Falls in Zimbabwe. As for

 

the nature lovers, there is also a spectacular natural environment and a wide range of animals and

 

plants in the world, including many settings intact to be discovered.

 

One can say that there are almost too many possibilities for one to experience a full life.

 

In all parts of the world, the greatest threat to the environment and ecology of the organisms that

 

live there are complex human activity itself. With this in mind distracted by the unique nature of

 

many natural areas in Africa, many joint efforts are being made to preserve these natural wonders

 

have spread as little as possible on the environment. This commitment goes beyond the

 

conservation of wildlife and the needs of the national economy, local residents and delicate

 

natural environments within key areas of the African continent.

 

Tourism aims to maintain this delicate balance, working responsibly with African

 

ministries of tourism, tour operators and community-based initiatives that activities related to the

 

use of building tourism and wilderness. Classic examples of this kind from the plans for the

 

conservation of the wildlife of the world famous Serengeti in East Africa in the Okavango Delta

 

in Botswana, eco-system of the sole and exclusive Madagascar. But the real story of Africa is

 

that it's a lot of people, stretching far back in time that is stored only in the oral tradition of

 


 

stories and legends. Surprisingly Africa is no longer referred to as the "black continent" and is

 

now recognized as the cradle of mankind. It is a country where great empires and civilizations

 

rose and fell, and even more injustice visited upon his people through the infamous slave trade in

 

the Atlantic and Indian Oceans. Africa is a land of great natural and human resources, which for

 

centuries had committed to the struggle between European countries who want to gain access

 

and control of these treasures often at the cost of terrible experience for native people.

 

4.0.3. Infrastructure

 

Investment in infrastructure is essential for economic growth in Africa. While there has

 

been significant progress in the development and quality of infrastructure in the continent, there

 

is still a clear deficit. Needless to say, this deficiency has consequences, including sanctions in

 

the ordinary course of trade and export. But funding for the development of infrastructure in

 

Africa is cheap. According to 2008 in Africa infrastructure country diagnostic study of the World

 

Bank, the continent needs about $ 80 billion in infrastructure financing needs. Of course, the

 

financial capacity of individual governments is limited; There are opportunities for private

 

investors to cooperate with African governments for the development of children up to the

 

implementation of the infrastructure, for example, by investing in reliable systems for electricity,

 

water, road and rail.

 

Infrastructure is a hot topic in Africa, and this is true and obvious examples of lack of

 

electricity. Instant same conclusion that the Dallas Cowboys' & T Stadium in Arlington, Texas,

 

uses more electricity on game days throughout Liberia. inefficiencies continue to suffer from

 

sectors such as agriculture, to make it clear that there are huge opportunities for investment in the

 

continent. In 2010 the World Bank has estimated that the lack of infrastructure hinders economic

 

growth in Africa, 2 per cent per year and business productivity by 40 percent One study suggests

 


 

that more detailed income for infrastructure investments could reach 50 percent, to considering

 

the growth of the GDP accounts, during the World Economic Forum found that every dollar

 

spent on infrastructure yields anywhere from 5 percent to 25 percent (Shaw, 2004).

 

In light of both social and investor opportunities,, there has been a wave of new

 

investment in infrastructure on the continent. For example, 58 percent of workers polled in West

 

Africa industry Pricewaterhouse Coopers said they plan to increase their investments by more

 

than 25 percent of the infrastructure in the coming period, and this figure Eco South East (53 per

 

cent) and South Africans (40 percent). Africa currently accounts for only 2 percent of the global

 

infrastructure market. In 2012, Ernst & Young found that there were more than 800 works in

 

infrastructure investment in Africa, with a total value of $ 700 billion. At PwC estimates that

 

annual spending on infrastructure in African countries south of the Sahara alone will reach $ 180

 

billion by 2025 in comparison, Europe has spent $ 741 billion in 2012, mainly on roads, railways

 

and airports.

 

This means that the probability of opportunities is large, if you know where to look. Two

 

key areas are transportation and power. Both are in the team, a great general budget of investors

 

and PwC survey, 36 percent and 30 percent, respectively. Yields on roadwork events have the

 

potential to be stunning - not only for investors but also for the people of Africa. research looking

 

integration of the market, according to the road of development has proved to be refusing food

 

can be connected directly to the paved road. It's an intuitive sense, of course: better roads linking

 

markets and towns have reduces the cost of doing business, lower prices. This effect may be

 

particularly strong for agriculture (related to food security here). Like 40 percent of harvested

 

crops rot before they go to market, and then you can imagine how more efficient transport

 

network may affect the industry. "The biggest need right now is in the energy sector," said du

 


 

Toit. Sub-Saharan Africa, with a population of 800 million (2007), currently produces about the

 

same amount of energy, such as Spain, which has a population of 45 million people.

 

As overwhelming lack of supply is an important issue in the development and cost of

 

doing business. In Liberia, only 1 percent of the population has power access. Even in South

 

Africa, there is room for improvement; while 83 percent of the population has access to

 

electricity, blackouts are common. Of course, it attracts a lot of interest in the region. In addition

 

to the local (Py noted that the government "will more or less always been involved in the

 

infrastructure sector"), foreign bodies and his country are suffering. For example, the US has

 

recently established a nutrition program in Africa to bring electricity to large parts of the

 

population of Africa, and the World Bank recently made a $ 5 billion for energy infrastructure.

 

Private investors are lining up for Africa is considered the most exciting emerging

 

markets in the world in a survey of private equity firm Ernst & Young. It is the influx of dollars

 

of investment means that competition between private investors and global warming is high.

 

"Competition is really growing," said du Toit. "But not to the extent that our ROI (return on

 

investment) have a negative impact." He notes that his fund is still a co-investor with many of its

 

competitors, which means that the possibility still significantly exceeds the number of investors

 

in the space. It is also worth noting that, in general, increased interest for investment in African

 

infrastructure could benefit private investors and not to harm you (Amin, 1976).

 

4.0.4. oil and energy

 

Renewable energy

 

Mathematics for the future of clean energy in Africa is quite promising. The first of its

 

kind is in Rwanda where solar farms provides electricity for 15,000 homes. Scale solar and wind

 

projects are under construction in Morocco and Kenya. Thanks to the technology costs continue

 


 

to fall, centralized and decentralized renewable projects as they become more and more

 

attractive, especially when compared with expensive diesel generation, which provides more

 

power in the rural areas of the continent. However, hundreds of millions of Africans - including

 

more than 75 percent of the population in countries such as Ethiopia, Sierra Leone and Uganda are still living without electricity (Amin, 1976). The difference is particularly striking in the

 

countries of sub-Saharan Africa, accounting for 13 percent of the world's population, but a

 

whopping 48 percent of the global population without access to electricity. continued

 

dependence on energy solutions that continent in the past largely because of money or lack

 

thereof.

 

There is simply not enough investment in permanent flow of capital in clean energy

 

projects in Africa. Shortage of private investment capital institutions, such as the US and

 

European pension funds, which manage trillions of dollars, is particularly striking. For projects

 

such as a 510-megawatt solar project in Morocco and wind project of 300 MW in Kenya,

 

investors have provided critical funding for the start of construction - the first phase of 160 MW

 

of projects in Morocco will be commissioned later this year

 

Despite the great power of solar energy potential estimated at 8.8 million MW in the

 

countries of sub-Saharan Africa alone, according to the McKinsey management consulting firm,

 

renewable energy installations does not occur in nearly the speed needed "Participation of the

 

private sector is important and central to the effective delivery of new services in Africa,"

 

concluded a recent report by McKinsey Power Africa. In the African countries of sub-Saharan

 

Africa alone, an additional $ 450 billion of investment in the energy sector is necessary to reduce

 

blackouts in half and achieving universal access to energy in urban areas by 2040, according to

 

the report, Africa Energy Outlook. Mini-grid and off-grid systems, especially those that use solar

 


 

energy, hydropower and wind energy, hold a particularly strong commitment to bring greater

 

energy in rural areas, the IEA report concluded.

 

An example of direct foreign investment efforts in the renewable energy sector is the

 

power Africa initiative started by Obama's administration and implemented General Electric.

 

African countries south of Sahara. More than two-thirds of the African population in sub-Saharan

 

Africa without electricity, and more than 85 percent of those living in rural areas do not. African

 

force to create enormous potential power of Africa, including new discoveries of huge reserves

 

of oil and gas, as well as the potential for the development of clean energy, hydropower, wind

 

and solar. This will help the country to develop the newly discovered resources responsibly, to

 

build from energy production and transmission, as well as expanded coverage of the mini-grid

 

and off-grid solutions.

 

According to the International Energy Agency, the countries of sub-Saharan Africa will

 

require more than $ 300 billion investment to ensure universal access to electricity by 2030..

 

With a series of six original member countries in its first phase, Power Africa initiative will add

 

more than 20,000 megawatts of electricity that is cleaner and more efficient. The program aims

 

to supply electricity to at least 20 million new households and commercial organizations in the

 

grid and mini-grid and off-grid solutions. It will improve the ability of energy resources,

 

allowing partner countries to meet their basic needs in energy, and achieve greater energy

 

security.

 

Oil and gas

 

New discoveries of oil and gas in Africa will increase by a significant increase in oil and

 

gas sector of the continent in the next 20 years despite low oil prices. Note that six of the top 10

 

discoveries in the world in the oil and gas industry in 2013 were made in Africa, with more than

 


 

500 companies, currently studying deposits in the continent. On a parallel meeting on the theme

 

"Oil and Gas of the legendary African growth", chaired by Ade Adeola, Managing Director,

 

Regional Head of oil and gas, Africa and the Middle East, Standard Chartered Bank, said that,

 

despite the low oil prices, Africa will see a significant increase in oil and gas production over the

 

next few decades.

 

Recent discovery of oil and gas in West Africa, East Africa attracted all the excitement in

 

the economic growth and development of the African continent. Analysts and stakeholders see

 

these results as potential to revolutionize African growth story.

 

Since more than eight percent of world oil reserves are in Africa, the continent is still one of the

 

hot spots in the world of oil and gas, it was said at the conference. For example, Africa currently

 

supplies about 12 percent of world oil reserves and has largely untapped reserves estimated at

 

more than eight percent of the world's proven reserves. According to PricewaterhouseCoopers

 

opinion, Senior Advisor in the world for the energy sector, these stocks have increased over the

 

past two decades, from 5.8 per cent in 1991 and 7.6 per cent in 2001, and this trend is expected

 

to continue.

 

From proven...

 


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