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Africa’s Big Cities Offer Investors Hope

Africa’s Big Cities Offer Investors HopeAfrica’s Big Cities Offer Investors Hope

Africa’s biggest economies have been hammered by the collapse in commodity prices over the past 18 months but there are still investment bright spots to be found.

In cities such as Lagos, Nairobi, Accra, Kinshasa and Johannesburg, growth remains robust and investors are prospering in the retail, financial services, technology and construction sectors, Reuters reported.

This means investors can now readjust their strategy for Africa. Instead of taking a view on the continent as a whole, or choosing one country over another, they can seize opportunities city by city.

Sub-Saharan Africa is urbanizing faster than anywhere else in the world and city dwellers have more money to spend.

“In the current economic environment, investors want areas where success is pro ven, growth is strong and will remain strong. Big African cities give you that,” said Jacob Kholi, a partner at Abraaj, a private equity firm with $9 billion under management.

“It has become even more important to focus on these key cities than before,” Kholi added.

Nairobi is the most attractive destination for foreign investment, according to a 2015 report by PricewaterhouseCoopers, followed by Accra, with Lagos and Johannesburg equal third.

Consumption per capita in Accra is 1.6 times greater than the average in Ghana, 2.3 times bigger in Lagos than the average in Nigeria, and 2.7 times larger in Nairobi than nationally in Kenya, Abraaj estimates.

Lagos, one of the world’s fastest growing cities and with a population of 20 million, expects economic growth of 7% this year, twice the pace of the country as a whole.

Even South Africa, which is grappling with youth unemployment of over 40 percent and could slip into recession this year, has areas where industry is booming.

 Wide Opportunities

This year, Kenya is set to unveil the Two River malls in Nairobi, the continent’s largest shopping center outside South Africa, with brands like Porsche, Hugo Boss and France’s Carrefour already booking space.

“The economy still has opportunities,” said Gabriel Modest, a jeweler who says demand for the gold necklaces and bracelets he sells remains strong.

In Lagos, plans are in place to develop the vast multi-billion-dollar Eko Atlantic city, a Dubai-style gated community that will boast chrome skyscrapers, business parks, palm trees and a marina.

By 2025, Mckinsey estimates that more than 80 cities in sub-Saharan Africa will have populations of more than one million, accounting for 58% of the region’s growth.

This rapid urbanization means Africa’s big cities will need more roads, hospital and power stations, while growing numbers of new inhabitants will be buying consumer goods like instant noodles, washing powder and mobile phone cards.

Financialtribune.com