Emerging economies: Euromonitor spies investment opportunities in African markets

By Caroline SCOTT-THOMAS contact

- Last updated on GMT

Related tags: Africa

Many African economies are growing faster than those in Europe
Many African economies are growing faster than those in Europe
Market research firm Euromonitor International has pinpointed five ‘frontier’ economies in Africa that it says could hold investment potential on the back of increasing wealth – as growth outpaces that of many stagnant economies elsewhere.

While South Africa and Nigeria are relatively well-known large markets for international investment in Africa, Euromonitor says that Kenya, Ethiopia, Ghana, Tanzania and Cameroon have relatively strong economies, large populations and good growth prospects – although there are still skills and infrastructure challenges in many parts of these countries.

Writing on the Euromonitor blog​, country insight managing editor Media Eghbal said: “Strong economic growth, young populations, a swelling middle class and untapped consumer spending potential are making Sub-Saharan Africa a key investment opportunity.”

Several of these countries have ambitious goals to improve their economies over the coming couple of decades. The Kenyan government, for example, has a Vision 2030 plan, under which it aims to become a middle-income newly industrialised country by 2030, and Cameroon plans to become an upper middle-income country by 2035.

Ethiopia has the second largest population in the region after Nigeria, and the fastest average annual real GDP growth in Sub-Saharan Africa from 2007 to 2012, at 8.7%, albeit from a low base.

Meanwhile, Euromonitor said that Tanzania’s agricultural-based economy is “performing below potential”.

In addition, Eghbal pointed to strong export ties with Europe as a potential risk to African economies as the European market continues to struggle. More than half (57.4%) of Ghana’s exports went to Europe last year, while 46% of Cameroon’s exports were destined for Europe.

“Despite risks, these frontier markets will offer attractive long-term investment potential as their economies develop from a low base, outperforming many stagnant, crisis-hit advanced economies,”​ Eghbal wrote.

Related topics: Market Trends

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