WHAT IS INVESTMENT
It is always very important to clearly define widely used terms for better understanding. Investment, as it stands, can simply be defined as the process of putting in capital both human and monetary into a project with an aim of yielding profits sooner or later. In its economic essence as defined by Games Chen, an economist, an investment is ‘’an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed immediately, but are used in the future to create wealth’’. Regarding finance, Chen coins it as ‘’a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit’’.
Investment in Africa
Many countries in the African continent have made remarkable strides in attracting local and direct foreign investment, which eventually uplift their economic growth. The ‘black continent” is widely seen as an ‘unadulterated’ entity in terms of availability of natural resources. It therefore presents a larger opportunity for investors to rush for investments. Countries like Egypt, Mauritius, Rwanda, Kenya, and South Africa among others, have attracted many potential investors. A country like South Africa has recently seen an upsurge in the number of countries expressing interest in investment. Great economies including the USA, UK, Germany, Switzerland and the Netherlands have heavily invested in South Africa. Analysts have applauded the investment move saying it surpasses that of South Africa’s BRICS partners. Since assuming the leadership of South Africa, President Cyril Ramaphosa’s drive is to make South Africa an investment hub to the outside world.
East Africa tops the list of investment destinations for 2019
A recent report by South Africa’s Rand Merchant Bank (RMB) has presented some East African nations to the outside world as the most suitable region for potential investors. The 2019 ‘’RMB Investment Attractiveness index’’, which based its findings on how attractive a nation is and the business environment, revealed that Kenya, Rwanda and Tanzania presented a favourable atmosphere for investments. Even though countries like Egypt, Morocco and Ethiopia present a better investment hub for the continent, the RMB survey shows that the aforementioned East African countries have succeeded in maintaining a degree of political stability. In its analysis, the investment bank RMB saluted the degree of political stability Kenya has recorded under the leadership of President Uhuru Kenyatta after the 2017 contested elections, thus opening its doors for investment. Countries including Burundi, South Sudan and DR Congo are still lagging behind as far as investment is concerned, specifically Foreign Direct Investment due to the chaotic and turbulent scenes that have characterized the nations so far. Notwithstanding, some pundits have said the recent developments in DRC can start opening its doors for proper investments. The recent report has revealed Africa’s growth rate to move from 3.9 per cent in 2018 to just 4.1 per cent in 2019. Though to some, it is just a slight growth.
Flexible business destinations in Africa
Even though venturing into business is an economic risk, carrying out your commercial activity in a conducive and favourable environment makes it more enjoyable.In Africa, some countries have been labelled excellent destinations for doing business, not necessarily because of their natural endowments, but because of the favourable environment.
To be precise, African countries like Mauritius, Rwanda, South Africa and Seychelles, have recently been identified as perfect destinations for doing business. This can be justified by the visible developed infrastructure, quality health facilities, availability of both skilled and unskilled Labour, strong institutions and the availability of a better market for finished products.
Concisely, the African continent stands as a better destination for investment due to its natural endowment in natural resources, the presence of labour, Market among others. However, aspects like high debts level, political instability, corruption, poor infrastructure, governance deficiency and lack of financing have restricted the investment attempts across Africa. However, with the introduction of the African Continental Free Trade Area, African Presidents are at the verge of transforming Africa’s business atmostphere.
Article from AFRIC editorial.