Day 8 – Q 1.The availability of abundant natural resources in Africa makes it an attractive investment destination. Yet Africa hasn’t developed to its true potential. Why? Examine in detail.
1. The availability of abundant natural resources in Africa makes it an attractive investment destination. Yet Africa hasn’t developed to its true potential. Why? Examine in detail.
अफ्रीका में प्रचुर मात्रा में प्राकृतिक संसाधनों की उपलब्धता से यह एक आकर्षक निवेश गंतव्य बन जाता है। फिर भी अफ्रीका अपनी वास्तविक क्षमता के अनुसार विकसित नहीं हुआ है। क्यूं? विस्तार से जांचें।
Even in the twenty-first century, Africa – the cradle of mankind – conjures in the minds of many people images of backwardness, disease, ignorance and poverty. There appears to be little appreciation of the fact that Africa is the second largest continent in the world and, with a population of about 1.2 billion, the second most populous.
The outlook for Africa is positive, it has stirred the interest of countries like China, India and other fast-growing emerging markets, which require increasing resources for their growing economies, as well as countries like Russia and Brazil, who look to expand their enterprises into global operations. South Africa, acting as a representative for the continent through the World Cup, has shown that it can host an international event to international standards, and experts believe this bodes well for the region’s future investment prospects.
Availability of natural resources in Africa:
Africa as a whole has some of the world’s greatest deposits of natural resources, and only a fraction of those resources have been tapped so far. It is not only Africa’s mineral resources that appear attractive but also its agricultural potential and the abundance of water that we think may decide the rise and fall of nations in the future. In addition, the continent has a young and growing population, and its people could improve their education and skills to become a major asset to expanding manufacturing and mining enterprises.
The African continent is an extremely well-endowed continent in terms of natural resources, including oil, gold, coffee, uranium, bauxite, diamonds and several others. Such wealth of resources has made it an attractive investment destination for several countries facing depletion of natural resources.
Will Africa ever become a major investment destination?
- Countries like Nigeria, Egypt, Kenya, Botswana, Ghana, Morocco, and Tunisia, for them liquidity is the key concern for most investors, so markets that are the most liquid could attract greater investment flows.
- While markets in some African countries are developing quite rapidly, experts think they have a long way to go before their potential is fully realised. In the meantime, private equity investments present an alternative channel for direct foreign investment, which is needed as a starter.
Reasons for Africa haven’t developed to its true potential yet:
African governments need to realise that they have to create the relevant local economic environments to make their countries destinations of choice for foreign investors. There are obstacles: specifically the poor development of health, telecommunications, roads and other infrastructure.
- There are historical reasons as they have been colonised for centuries by the major western powers, which they have not been able to provide education, skills and basic infrastructure.
- Sub-Saharan Africa has the lowest literacy levels, when compared to any region. This impedes their capital formation and human resource development to a great extent.
- Capital wants security and growth, which still outsiders see Africa as a prime crime continent, Presence of terrorist groups in Africa who extract the resources for themselves to fund the civil war.
- Business need more leaders that are in politics primarily to do something for their people and their country, and not because it is a ticket to personal power and wealth.
- Business need African governments to remember the core reason for governments to exist – the provision of things best achieved on a communal basis: infrastructure, services such as health and education, security and rule of law.
- Build the roads and ports, generate and distribute the electricity, cut the red tape, and then sit back and be astonished by the economic growth that will follow.
For the mutual benefit of both the foreign investor and the African landowner there is a strong case for investment. Finally, it needs to be stated that by investing in Africa one would be making enormous contribution towards lifting hundreds of millions of fellow human beings out of ignorance, deprivation and poverty.
Best Answer: Ankur