Africa - the continent of opportunity

Once a continent that foreign investment shied away from, Africa has become an investment hotspot as more and more investors are attracted by the sub-Saharan region’s Gross Domestic Product (GDP) growth of more than 5% over that last three years.  In fact, some of the main markets such as Nigeria and Kenya have seen increases of more than 50% in their GDP over the past year.

“While it was a relatively untapped region over a decade ago, with economies too badly managed for there to be any real opportunity for companies with integrity, there has been a massive shift towards encouraging foreign investment in Africa and the continent is on the move. Today many large businesses are seeing the potential that the continent is currently yielding and are eager to expand into the region and take full advantage of the opportunities that are presenting themselves,” says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that recognising the growing potential within Africa, RE/MAX of Southern Africa has been working at aligning the brand for the African growth explosion. RE/MAX enjoys a strong presence in the southern African region with offices in South Africa, Namibia, Botswana, Zimbabwe, Mozambique, Swaziland, Lesotho and Mauritius. The real estate group has now expanded their reach even further north, opening RE/MAX franchises in Tanzania, Kenya, Uganda, Morocco, Tunisia and Egypt.

Things began to change in Africa between 1995 and 2005 when macroeconomic reforms assisted in taming inflation and opened the African economies to international trade. Over the past ten years Africa supplied goods to six of the world’s top ten economies. “With the increase in international trade and the current positive economic growth on the continent it is predicted by The Economist that in the next seven years, more than half the households in Africa will have enough income to purchase way more than just the essentials and will be able to splurge on luxury items,” says Goslett.

According to Goslett another draw card for investment is the fact that a large portion of the African population is below the age of 20, which means that within the next thirty years, Africa will have a larger working-age population than China.  “A growing work force will in turn result in more money being spent and more opportunities for investors wanting to break into the African market. As more people become of working age and move out of their parent’s homes, there will be a greater need for infrastructure, transport and housing,” says Goslett.

He says that the opportunities and potential are there, but what Africa lacks is the financial resources, which has largely opened up the continent to foreign investors seeking a far better return than what they can achieve in their home countries. “As the country with the continent’s biggest economy, South Africa has always been seen as the gateway into the rest of Africa. But, the current rate of growth locally is also a lot slower than some of our neighbours, which has led to many South African companies expanding into the rest of the continent,” says Goslett.

He notes that according to an article by Mckinsey and Company, in a comprehensive study based on the publicly traded companies, mostly in manufacturing and services in operation in Africa for the period 2002 to 2007, it was found that these companies experienced an average return on capital that was around two-thirds higher than that of comparable companies in China, India, Indonesia and Vietnam.

“RE/MAX will continue to expand into untapped regions of the African continent, positioning the brand as the estate agency of choice around the globe. As more investment pours into African economies and more buyers are able to purchase property, there will be a need for professional, reputable estate agents who are able to accommodate the growing numbers of property transactions,” says Goslett.

Globally the RE/MAX brand is currently represented by over 90 000 associates who work from around 6 300 offices in more than 90 countries worldwide including Brazil, China and India.

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