Which countries and industries are best to invest in on the African continent? This is a question that Dr Álvaro Sobrinho, CEO of Banco Valor – Angola’s most prominent frontier bank – says he is often asked.
In an article published on the online publication, How We Made It in Africa last week, Sobrinho says there are enormous opportunities across Africa for investors to make healthy returns, and to contribute towards the progress of the “world’s most dynamic continent”.
A businessman and philanthropist, Sobrinho’s investments cover the fields of telecommunications, banking, green energies, retail, infrastructure and education throughout the continent.
Here are Sobrinho’s five investment hotspots in which to invest this year, and his reasons why.
1. Tanzania – transport infrastructure and logistics
According to Sobrinho, the large east African nation has strong and consistent economic growth, 7% last year, and will undoubtedly be a rising force in the region in years to come.
“Dar es Salaam is rapidly becoming a hub city for businesses, with a growing population and market place,” Sobrinho says. “Discoveries of significant offshore natural gas offer huge potential rewards although developments have already shown difficulties with handling such projects. And with elections on the horizon it may take time for these to come to fruition. Instead, I’d point to a sector already seeing massive investment and with clear support behind it – transport infrastructure and logistics.”
Sobrinho says Dar es Salaam’s port is relatively efficient but feeling the strain of increased traffic. However,Sobrinho adds, it is undergoing significant upgrades to lessen cargo waiting times, and with a new $10 billion port at Bagamoyo, along with a handful of other investments in the sector which are already underway.
An estimated $19 billion of new roads and rail are also in the pipeline. Sobrinho says the development of the transport sector will offer new and exciting opportunities for public-private partnerships.
2. Angola – agribusiness
While oil revenues dominate headlines, Sobrinho says other attractive sectors that are contributing towards Angola’s continued growth seem to slip under the radar. Most prominently, he says agriculture offers significant potential for rapid but sustainable growth. “Let’s not forget the long and proud history of farming in the country, once the fourth largest coffee producer in the world,” he says.
According to Sobrinho, the government has announced plans to produce 2.5 million tons of cereals each year from 2017, up from 1 million, and increase cassava production by 25%. He says agribusinesses habe also begun a process of consolidation of some medium and large-scale agribusiness projects to seek efficiencies and improve joint production.
“And in addition, agirbusinesses are investing in new technology and research-based partnerships with countries such as Brazil. This will lead to an increase in the quality and yield,” Sobrinho says.
3. Mauritius – renewable energy
Sobrinho says Mauritius’ annual growth rate of around 3 to 3.5% seems relatively modest, but the business environment, stability and incentives to invest are amongst the best on the continent.
As well as having some of the lowest corporate and income tax rates in the world, and a favourable foreign tax credit system, Sobrinho says it’s also a gateway for operations on the mainland, in East Africa and beyond. On the island itself, he adds that there are a number of sectors worth consideration, particularly in renewable energies, including solar and wind projects.
4. Botswana – renewable energy
According to Sobrinho, the Baseline Profitability Index for 2014 puts Botswana at the top of the list for investment returns, not just in Africa but also the world.
“While other rankings dampen the excitement a little, there is no doubt the country has a growing reputation for stability and safety in terms of investment,” he says.
Sobrinho says that while mining opportunities will continue to expand, particularly in coal, there is a specific interest in renewable energies too, with Botswana currently importing 80% of its energy use.
“The government has plans for ultimate energy self-sufficiency, and the new innovation hubs and the focus on science and technology will also address the issue of local skills for such high-tech industries,” he adds.
5. Namibia – manufacturing
Namibia is constantly ranked as one of the top countries to do business in Africa, with a fast-paced economy and reduction in inflationary pressures. Sobrinho says the Namibian government has now placed special emphasis on the manufacturing sector. As such, Sobrinho says massive tax incentives have been introduced, including VAT, corporation tax, training, transport and logistics and building and planning.
“Away from the dominant manufacturing areas of meat and fish processing, as well as the well-established drinks industry, sectors including automotive production and textiles offer excellent opportunities for investors, especially given the potential to export regionally through Walvis Bay port and improving road networks,” he says.