Plunge In Commodity Prices Expose African Cities To Investors
The fall in commodity prices on the international market has left many investors seeking alternative investments in Africa were most economies are supported by the export of metals, oil and agricultural produce such as coffee and cocoa.
According to a Reuters report, investors on the continent have now turned their focus to other sectors including retail, financial services, technology and real estate.
Major African cities such as Lagos, Johannesburg and Nairobi are expected to receive more foreign investment, despite their countries’ economies struggling under reduced export revenue from their top commodities.
“In the current economic environment, investors want areas where success is proven, growth is strong and will remain strong. Big African cities give you that,” Jacob Kholi, a partner at Abraaj, a private equity firm with $9 billion under management, told Reuters.
“It has become even more important to focus on these key cities than before.”
During the boom years most African countries saw their middle class jump with favourable income levels. Sub-Saharan African registered an average 5 percent growth rate over the last decade fuelled mainly by commodities exported from the region to China.
More than 80 cities in Africa will have populations of more than one million, according to consulting firm Mckinsey.
Kenya’s capital Nairobi was ranked the most attractive real estate investment destination in 2016 by Knight Frank,which said the city was likely to to witness an increase in property investor interest.
A 2015 PriceWaterCoopers surveyed also ranked the city as one of the fastest growing in Africa alongside Kinshasa in the Democratic Republic of Congo and Luanda in Angola.