Executive Briefings

Sub-Saharan Cities Called 'New Frontier' for Foreign Direct Investment

Sub-Saharan African cities represent the new frontier for multinational businesses, according to research from Euromonitor International.

Richly gifted with natural resources, Sub-Saharan Africa has profited from surging global raw material demand. The region is seeing a growing proportion of foreign direct investments into the manufacturing and services sectors, with investment inflows amounting to $41bn in 2014. Furthermore, Sub-Saharan Africa has a young expanding population -- it surged by 31 percent to 957 million during 2005-2015, with a median age of 18.2 years in 2015.

“Benefiting from favourable demographics and urbanisation, cities play a vital role in Sub-Saharan Africa’s economic improvement,” says Christy Tawii, senior research Analyst at Euromonitor International.

In line with a booming economy and despite being the least urbanised region in the world, Sub-Saharan Africa is projected to see its urban population surge by 74 percent from 2015 to 2030, the fastest growth globally. Between 2015 and 2030, 53 percent of the absolute growth of Sub-Saharan African cities’ consumer expenditure will come from Lagos, Johannesburg, Pretoria, Cape Town and Durban.

Despite the positive growth expected from these cities during the forecast period, there are threats to overcome. “No matter the investment focus, companies must remember that Sub-Saharan African cities evolve in an environment where hard and soft infrastructure is still being formed and strengthened. Therefore, explicitly devising strategic plans to deal with intensifying local competition, lack of modern retailing outlets as well as logistics bottlenecks are a must for overall success. In light of these challenges, an investment with a longer-term perspective will enjoy high returns,” says Tawii.

Source: Euromonitor International

Richly gifted with natural resources, Sub-Saharan Africa has profited from surging global raw material demand. The region is seeing a growing proportion of foreign direct investments into the manufacturing and services sectors, with investment inflows amounting to $41bn in 2014. Furthermore, Sub-Saharan Africa has a young expanding population -- it surged by 31 percent to 957 million during 2005-2015, with a median age of 18.2 years in 2015.

“Benefiting from favourable demographics and urbanisation, cities play a vital role in Sub-Saharan Africa’s economic improvement,” says Christy Tawii, senior research Analyst at Euromonitor International.

In line with a booming economy and despite being the least urbanised region in the world, Sub-Saharan Africa is projected to see its urban population surge by 74 percent from 2015 to 2030, the fastest growth globally. Between 2015 and 2030, 53 percent of the absolute growth of Sub-Saharan African cities’ consumer expenditure will come from Lagos, Johannesburg, Pretoria, Cape Town and Durban.

Despite the positive growth expected from these cities during the forecast period, there are threats to overcome. “No matter the investment focus, companies must remember that Sub-Saharan African cities evolve in an environment where hard and soft infrastructure is still being formed and strengthened. Therefore, explicitly devising strategic plans to deal with intensifying local competition, lack of modern retailing outlets as well as logistics bottlenecks are a must for overall success. In light of these challenges, an investment with a longer-term perspective will enjoy high returns,” says Tawii.

Source: Euromonitor International