Investments in Africa have yielded bigger profits for British companies than in any other part of the globe.The new finding is based on a report from the Overseas Development Institute (ODI), an organization that encourages firms to seek out business opportunities in the continent rather than focus on charity work.
The report focusses on investments in Ghana, Kenya, South Africa, and Nigeria. The authors attribute the focus on those countries to their young populations, industrial growth phase, and the growing middle class.
As of 2019, the rate of return on all FDI from developing African countries was 6.5 percent, far outpacing Latin America and the Caribbean whose returns were 6.2 and 6 percent respectively. The report was released on January 31st, at the exact time that the United Kingdom left the European Union. As part of the kingdom’s ambition to court new economic partnerships, the Britain-Africa investment summit was held last week.
Africa offers a large market opportunity from its 1.2 billion people and 15 of the world’s fastest-growing economies. By 2100, the population is expected to grow to 4.39 billion. The large youthful population presents an abundance of labor, best suited for investments in labor-intensive industries.
If we are to break down the investment viability numbers, the hourly wage in most African countries is a fraction of that of the Western countries. The large mineral deposits present a great opportunity for developing profitable value chains.
Downing Street wants to create a global Britain with new trading partners across the globe. With pressure mounting on PM Johnson to present a clear economic strategy for the future of the union, he will be prioritizing Africa in a way never seen before.
Data from the International Trade Center show that German and French exports to the continent far outweigh that of their British counterparts in terms of value. London seems to be taking a pro-active stance to build on its deep networks within the continent. The United Kingdom will champion for cooperation Africa in technology.