Jon Lubwama
Africa, the second-largest continent in the world, is a diverse and dynamic region that has been attracting global investors for decades. However, there is a noticeable trend that most investors tend to focus on Anglophone Africa, leaving Francophone Africa largely untapped. This article aims to shed light on this phenomenon, explore the reasons behind it, and highlight the potential of Francophone Africa as a promising investment destination.
Investment Trends in Africa
Africa's investment landscape is dominated by Anglophone countries, with nations like Nigeria, South Africa, and Kenya leading the pack. According to the African Private Equity and Venture Capital Association (AVCA), these three countries accounted for 50% of the total private equity deals in Africa between 2014 and 2019.
Several factors contribute to this trend. Firstly, the English language, being the global lingua franca, makes it easier for international investors to conduct business in Anglophone countries. Secondly, these countries have relatively more developed financial markets, which provide a conducive environment for investment. Lastly, the historical ties between Anglophone Africa and the Western world have facilitated the flow of capital into these countries.
The Case for Francophone Africa
Despite the dominance of Anglophone Africa in attracting investments, it would be a mistake to overlook Francophone Africa. This region, comprising 21 countries where French is spoken, presents a wealth of opportunities for discerning investors. Here are some compelling reasons why investors should not ignore Francophone Africa:
1. Population: Francophone Africa is home to over 300 million people, representing a vast consumer market. The region's population is also one of the youngest in the world, with a median age of 19.5 years. This youthful demographic is a potential powerhouse for economic growth and innovation.
2. Economic Growth: Many Francophone African countries have been experiencing robust economic growth. According to the World Bank, six of the ten fastest-growing economies in Africa in 2019 were Francophone, including Côte d'Ivoire, Senegal, and Burkina Faso. This growth is driven by factors such as infrastructure development, natural resource exploitation, and increasing domestic consumption.
3. Emerging Startups: Francophone Africa has seen a surge in innovative startups, particularly in the tech sector. These startups are solving local problems and creating value in areas such as fintech, agritech, and e-commerce. For instance, Jumia, the first African tech startup to list on the New York Stock Exchange, was co-founded by a French entrepreneur and has a significant presence in Francophone Africa. Other notable startups include Baobab+, a solar energy company operating in Senegal and Côte d'Ivoire, and Gozem, a ride-hailing app in Togo and Benin.
4. Improving Business Environment: Francophone African countries have been making strides in improving their business environments. The World Bank's Doing Business 2020 report highlighted Togo and Djibouti as two of the top ten most improved economies for ease of doing business. These improvements are attracting more foreign direct investment (FDI) into the region.
5. Untapped Opportunities: Francophone Africa is less saturated with investors compared to Anglophone Africa, offering untapped opportunities. Sectors such as agriculture, manufacturing, and services are ripe for investment.
Challenges and Opportunities
Investing in Francophone Africa is not without challenges. These include language barriers, regulatory hurdles, political instability, and inadequate infrastructure. However, these challenges are not insurmountable and can be mitigated with proper due diligence and local partnerships.
Moreover, the African Continental Free Trade Area (AfCFTA), which came into effect in 2021, presents a significant opportunity. This agreement aims to create a single market for goods and services across Africa, boosting intra-African trade. Francophone Africa, with its strategic location and diverse economies, stands to benefit immensely from this initiative.
In conclusion, while Anglophone Africa continues to attract the lion's share of investments, Francophone Africa should not be overlooked. This region offers a vast consumer market, robust economic growth, a burgeoning startup scene, an improving business environment, and untapped opportunities. Investors who venture into this region stand to reap significant rewards while contributing to Africa's economic development. As the African proverb goes, "The best time to plant a tree was 20 years ago. The second best time is now." The same can be said for investing in Francophone Africa.