Africa will present US$5.6 trillion in business opportunities by 2025, a rise on last year’s estimate of $4tn, according to a report from consultants McKinsey.
Household consumption across the continent is expected to grow at 3.8 per cent a year until 2025, reaching $2.1tn, while spending by businesses in areas such as product development and human resource training is expected to grow to $3.5tn by 2025, said the consulting group.
“Africa is the last frontier, we need to develop energy production, the communications sector, agricultural lands and animal husbandry among other sectors,” said Cheick Modibo Diara, the chairman of Africa Legal Network, an alliance of law firms across the continent, and the former acting Malian prime minister between April and December 2012.
He was speaking on the sidelines of the third Africa Legal Network (ALN) annual international conference in Dubai.
Even as companies talked about the investment opportunities in Africa, analysts said investors should be realistic about challenges on the ground.
While there are investment opportunities in countries such as Nigeria, Rwanda or Ethiopia, there are markets that lack infrastructure, power supply or governance, which can be a roadblock, said Jendayi Frazer, the managing director of pan-African commodity exchange company AFEX and a former US assistant secretary of state for African affairs.
AFEX operates exchanges in Rwanda and Nigeria and will open one in Kenya.
“This fragmentation [in the market] is what I am worried about,” Ms Frazer said. “People are often attracted by the overall continental numbers but the reality is different. We tend to oversell the continent and when [the investors] don’t find the market, they leave.”
Retail and tourism are areas where some UAE companies have made a presence.
The Dubai retailer Majid Al Futtaim expects to anchor Nairobi’s latest mall as it looks to tap into Africa’s potential. The conglomerate will open its indoor entertainment venue Magic Planet at Two Rivers Mall when it soft launches on November 18 as well as Vox Cinemas in June. It will also bring a 10,000 square metre Carrefour supermarket to the mall.
The mall, which will have a gross leasable area of 67,000 square metres, is about 70 per cent let, said James Mworia, the group chief executive of the mall developer Centum Investment.
“We are positive about the turnover and footfall as there are not any more malls in the pipeline in Nairobi,” he said. Mr Mworia was speaking on the sidelines of the conference in Dubai.
Abu Dhabi’s Rotana expects to start operating Kin Plaza Arjaan property in Kinshasa, Democratic Republic of the Congo, this year. It has projects under various stages of development in Marrakech in Morocco, Luanda in Angola, Nouakchott in Mauritania, Dar es Salaam in Tanzania and Lagos in Nigerian that will add 1,289 rooms to its portfolio.
“Some of the challenges with Africa are the political unrest in some areas, visa regulations and the drop in oil prices to name few,” said Makram El Zyr, the corporate vice president for development and research at Rotana.
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