Are there business ideas in Africa that investors and budding entrepreneurs can take advantage of?
The answer is pretty obvious and a definitive YES!
Africa is a growing continent that has great potential and natural resources. Because there are many business opportunities in Africa, most entrepreneurs are now venturing in the continent. They take this opportunity not only to gain money but also to improve the lives of the people in that region.
To be a successful entrepreneur in Africa, you have to look beyond the resources the continent offers, the gold, diamond, copper, oils, timber and many other resources. Instead look at the problems the content is facing and how to solve them.
This will not only earn you money and make your business successful. It also helps to create value and touch the lives of the people in Africa. In this article, we will look at the top 20 business opportunities that an entrepreneur can pursue and become successful in Africa;
1. Start Agribusiness In Africa
Across the world, most farmers are financially stable, but not in Africa.
There are huge business opportunities for graduated African youths in the countries: of Agriculture and Agribusiness.
And that was the conclusion of the 2-day African Youth Agripreneurs Forum that was held in April 2017 in Ibadan, Nigeria.
Helping the African Youth and other entrepreneurs achieve this objective is rarely implemented.
But wait, is agribusiness in Africa really worth the investment?
Studies have shown that agribusiness plays an enormous role in economic development. It contributes to a more significant portion of GDP, foreign exchange earnings, as well as employment opportunities in many developing countries.
The trend in Africa is pretty obvious. Agriculture accounts for more than 25% of the African Continent’s GDP and nearly 70% of all an .
Africa To Overtake Asia
According to the United Nations, Africa’s economic performance over the last decade has been remarkable, having reached an average growth of 5%. If this growth is maintained, projections indicate Africa’s GDP should increase approximately threefold by 2030 and seven-fold by 2050, outstripping Asia’s.
This makes it a massive opportunity for entrepreneurs who want to invest in Africa and in the field of agriculture.
It is no wonder why the World Bank Group increased its Annual Agriculture Investment from $4.1 billion to $6.1 billion. In Africa alone, the IFC is on a 5-year program to increase its investments in the agricultural sector to over $2 billion.
They can’t get it wrong, as they have a reason for that.
Africa imports most of her food yet most parts of the continent has favorable conditions for farming. Farming in Africa is practiced on a small scale by poor farmers who have no access to modern farming methods and no capital to improve their agriculture.
Investing in farming in Africa will not only earn you money but also create job opportunities for the locals as well as increase food production.
2. Housing As Business Opportunity In Africa
Africa is experiencing a high rate of rural to urban migration. The price is so high that most governments in the African countries are not able to construct enough housing for their citizens.
Rapid urbanization is pushing up demand for housing in Africa: A study by the World Bank indicates.
Each day, the various African cities become new homes to over 40,000 people, the majority of whom cannot find a roof over their heads.
The World Bank Group estimates that by 2030, three billion people, or 40 percent of the world’s population will need new housing units.
A study by the UN-Habitat also confirms that Africa’s urbanization population is estimated to reach 1.2 billion urban residents by 2050.
This translates into an urbanization rate of 58%. With this growth rate, The UN projected Africa to overtake Asia as the World’s most rapidly urbanizing region by 2025.
Where Most Investment Come from
The majority of housing investment in most African countries currently comes from government investment or domestic savings rather than finance obtained through international capital markets as is the case in developed economies.
The data below shows the price and size of the least expensive newly built house by a formal, private developer in select countries.
With the Sub-Sahara Africa generating nearly 4.5 million new residents in informal settlements each year, it becomes imperative for those entrepreneurs and investors who are targeting the housing sector to turn their eyes to Africa.
Kenya and Nigeria are key among the many African countries in high demand for housing. Kenya’s housing shortage is estimated at 2 million units, while Nigeria is in want of 17 million units.
The very high demand is only being met by a very scanty supply, making housing in these areas one of the best business ideas in Africa.
The high demand for housing leaves significant gaps that can be filled by entrepreneurs. Mortgage, cement production and building contractors are opportunities that can be explored by entrepreneurs.
3. Furniture Business In Africa
With the rising need for better housing in urban regions, furniture is a major element of housing.
The furniture business has been making tremendous progress in design and quality from Nigeria to Uganda and across other countries in Africa.
In South Africa alone, revenue in the Furniture & Home-ware segment amounts to US$310m in 2018.
This is expected to show an annual growth rate of 10.4%, resulting in a market volume of US$461m by 2022.
The furniture business never runs out of fashion. People buy new furniture all the time either as first-time buyers or because they can afford bigger and better designs/models.
Total furniture imports into Africa amounted to US$ 3.6 billion in 2013. Ten main furniture importing countries (each of them importing over US$ 100 million of furniture in 2013) are Angola, Morocco, Libya, Nigeria, Algeria, Kenya, Egypt, Ghana, and Sudan.
Over 60% of the total furniture market in Africa is satisfied by local manufacturers. Total Africa furniture production amounts to US$ 7 billion. 14% of locally manufactured furniture is exported, with main exporting countries : South Africa, Egypt, Morocco, and Nigeria.
The figure below shows the distribution of the consumption of the furniture produced in Africa around the globe.
Urbanization process is expected to be very rapid, particularly in Sub Saharan Africa and large urban areas will be the engine of economic growth with important implications for the increase in furniture consumption.
In recent years, huge investments have been made in real estate, tourism and hospitality industry, culture and entertainment, which have boosted demand for the furniture sector.
Starting businesses that makes affordable furniture and interior design will grow into a successful business in Africa.
4. Affordable Private Schools
Africa is experiencing a major deterioration in the quality of education in public schools. This is due to corruption, poor education funding and increased population. As a result, to ensure children get a better education, most parents in Africa are opting for private schools.
Establishing a private school is one of the business ideas in Africa that some entrepreneurs have already taken advantage of, and they are making a good return on their investments.
Education is the most powerful weapon which you can use to change the world (Nelson Mandela).
Many African countries could not meet the Millennium Development Goal (MDG) of universal primary completion by 2015.
There has been no progress when it comes to reducing the global numbers of the out-of-school children even after years of adoption of the Sustainable Development Goal 4 (SDG 4).
According to the UNESCO Institute for Statistics, total primary enrollment for Sub-Saharan Africa was about 101 million students, of which 10 percent (or 10 million students) were from the private sector.
Total secondary enrollment was 31 million students, of which 4 million representing 14% were from the private sector. The total tertiary enrollment was 3 million students.
The combination of investment and advisory services has been very effective in meeting the demand, including low-income families.
Cost Of Education
In Kenya for instance, annual tuition in some schools is as little as $60 per year (18 U.S. cents per day). In Ghana, many parents are sending their children to private schools as an escape from poverty.
Governments are relying increasingly on the private sector to help fulfill public policy objectives in education.
Demand for private schools in Africa is still high. This will help to promote accessibility to better education in Africa.
5. Affordable healthcare facilities
Africa is facing a significant challenge in the health sector. Public hospitals are poorly funded, and most doctors from the continent move to other developed continents.
Strong economic growth in recent years has helped reduce poverty in Africa to over 43% of the population.
As Africa’s population expands, reaching 2.5 billion by 2050. The region faces a critical challenge of creating the foundations for long-term inclusive growth.
Many countries in Africa still contend with high levels of child and maternal mortality, malnutrition is far too common, and most health systems are not able to deal effectively with epidemics and the growing burden of chronic diseases, such as diabetes.
This leaves Africa at a deplorable state regarding health facilities. With the rapidly growing population and significant cases of diseases, an opportunity arises for entrepreneurs to provide affordable health to Africans. This opens a great business opportunity for investors who are interested in the health sector.
There is a significant number of middle case residents who can afford good health care.
6. Great Business Ideas In Waste management
For a very long period of time, Africa has been facing major problems related to waste. The problems will continue to become more severe as the continents’ population continues to increase rapidly. In most African countries, waste is burned, openly disposed or buried. To avoid an environmental crisis in the future, an entrepreneur can venture into a waste recycling business and create useful products for resale.
7. Urban transportation Business
As more people continually move to the cities, there is a need to increase urban transportation. Poor infrastructure, inefficiencies, and congestion torment Urban dwellers as they commute within the city. Introducing efficient, comfortable and affordable modes of transport is a huge gap for the African nations that can earn entrepreneurs millions of money. There is no doubt that urban transportation is one of the huge business ideas in Africa. An example of this mode of transport is Uber.
Drones in Africa, are mostly used to track terrorists and take good professional photographs. However, drone technology is being used in the African continent to enhance farming and to deliver humanitarian aid. Drone technology is still a new concept in Africa that can be explored further by entrepreneurs.
9. Exportation Of Local Products In Africa
Africa exports a few local commodities that they produce. However, they export a lot more items both non-food and food. Entrepreneurs are now venturing in the exportation of products produced locally in Africa. They are making global brands from items that Africa is not exporting at the moment. An example is a rare type of Shea butter that is used in beauty products.
10. Providing Funding For Startups In Africa
Most people in Africa have entrepreneurship skills but lack capital to implement their business ideas. Investors are now venturing into this market by providing capital to upcoming entrepreneurs in Africa.
11. Fin-tech as Business Idea In Africa
Fin-tech is technology that helps people to use technology to access financial and banking services. In Africa, most people have no access to financial services whereas a big population still uses cash. Introducing fin-tech makes it easier for most people to access financial services.
12. Film And Videos
The highest percentage of Africa’s population is young people. This provides a good ground to explore the filming industry in Africa. The young people are creative and talented. There are movies produced in Africa and made a big hit globally.
13. Fashion Industry In Africa
Most of Africans depend on second-hand clothes from the western nations. Starting up a local fashion industry will create job opportunities for the locals. Fashion industry market will attract a big population of middle-class citizens. Read more about how people are using the Mitumba as great business ideas in Kenya.
14. Sport Betting
The betting industry is regarded as a controversial topic in most African countries. However, sports betting in Africa is making millions of money. Many young people are enthusiastic about sports making the betting industry market promising.
15. Renewable energy Business In Africa
Most people in Africa have limited access to electricity, and many of them depend on firewood and charcoal for domestic use. This endangers the depleting forest cover in Africa. Entrepreneurs can venture in the business of providing renewable energy to the wide market at an affordable price.
16. Urban logistics
Rural-urban migration in Africa has resulted in congestion in the big cities. This creates inconveniences and moving around the city can be a frustrating mission. However, there are a few of entrepreneurs who are filling the gap by offering services of house-to-house delivery. This saves people time and energy to move around shopping.
17. Automobiles Business Opportunities
As urban transportation continues to become a nightmare to many African residents, most people in Africa are now getting their modes of transport.
The automotive industry is a relatively complicated one, but with sub-Saharan Africa’s rapidly expanding market and automotive trade deficit of $16.3 billion, it is important that ways are found to efficiently attract investment especially into parts of the sector, which are more appropriate for lower-income countries.
The African market has excellent growth prospects. The market is expected to offer high returns to players who are willing to seriously enter the region.
The Trend In West And East Africa
Mahindra & Mahindra Group of India, primarily a maker of sports utility cars, has established a manufacturing facility in Ghana to serve the West African market, due to the rising middle-class population in the region. Post-2020, the Africa automotive market is expected to become a luxury and start being a necessity.
April 2018: Nissan planned to start assembling vehicles in Kenya, bolstering government plans to develop a regional auto-manufacturing hub in East Africa’s biggest economy.
The level of infrastructure is also increasing in Africa, which is likely to aid the automotive market of the region. West Africa is expected to drive the growth till 2023, whereas Ghana and Nigeria are expected to be the key players.
Ghana aims to become a developed country by 2030, and even if the target is met halfway, the Ghanaian automotive market is anticipated to grow at a tremendous pace, as the economic growth is directly proportional to the growth of automotive markets.
The economies of Kenya and Tanzania are also undergoing rapid growth. Moreover, the automobile industries in these countries are expected to witness good growth rates.
As a result, major car companies are setting up their business in African countries.
18. Procurement and Logistics
In Africa, there is a gap for large-scale procurement and logistic services. The demand for this services is very high by international organizations or even local entrepreneurs. Venturing in this business will give entrepreneurs a chance to serve the ever demanding field.
19. Study Platforms For Students In Africa
Students in Africa still rely on limited libraries that are accessible to a few populations of people. However, most young people own smartphone that they can use to access an e-library. There are few e-resources that students can use for their studies. Entrepreneurs can make money online by taking advantage of this business idea in Africa.
20. Financial consultancy firm
Africa is a developing nation with most people seeking to venture into businesses. There is a big business opportunity for entrepreneurs who can offer market research and investment advice for young entrepreneurs growing in Africa.
If these business ideas in Africa are pursued with a motive to develop the continent rather than exploit its citizens or the resources, then they can earn one a lump sum profit and make the business successful.