History has not been kind to the economic progress of Africa. As a result of exploitative colonization, political instability and violence, and the development of a global trading network which relies almost entirely on sea-transportation, many landlocked countries of this continent have struggled for decades to be players in the world economy. Even for the countries which have been internationally connected through globalization, such as South Africa and Nigeria to foreign powerhouses, African economies find themselves in highly vulnerable positions when global challenges such as Brexit arise. However, the tendency of African companies to be "high risk" is also what makes them potential "high reward" investments. Despite all odds, many countries are finding great success across a multitude of industries, and it may soon be time to stop underestimating the potential of African growth.
In the last year, average growth of real GDP steadily rose around 4%, which was aided in part by foreign direct investment. This trend is expected to accelerate with new frontiers in technological advancement--particularly with the growing usage and efficiency of electronic payment systems. While unemployment remains a precarious trend in most African countries, the labor market is expected to grow alongside the rapidly increasing labor force, due to the presence of a historically young population. As evidenced in the last 15 years, 53 million new stable jobs were created, growing at a rate 1% higher than the labor force growth. By the year 2034, the continent will have the largest working age population in the world.
Currently, the top five largest economies in Africa are as follows (in order): Nigeria, South Africa, Egypt, Algeria, and Angola. The biggest contributors to GDP in these countries are extremely diverse, including but not limited to agriculture, services and industry, tourism, non-oil energy, fisheries, construction and manufacturing sectors, and of course, oil production and mining. The later two realms include many of the top trading ADRs on the United States Exchanges, such as AngloGold Ashanti
Between now and 2020, the International Monetary Fund predicts that Africa will be the second-fastest growing region in the world with annual growth of around 4.3%. Whether bought directly or indirectly, some risk can be mitigated via the use of exchange trade funds. Despite major setbacks, the resilience of the continent's economy may exceed economic predictions with emerging markets, urbanization, and technology--allowing for optimism from the perspective of investors.
