TCM Blog - The best time to invest in Africa is now
That there is still much to be gained in mutual trade is demonstrated by the fact that only 18 percent of African exports are traded within the continent, compared with nearly 60 percent for Asia and 70 percent for Europe.
African countries have agreed to cut tariffs to zero on 90 percent of goods. The free trade area should encourage both specialization and higher value-added exports.
More trade also helps in cranking up industrialization because a market with 1.2 billion consumers in a properly functioning free trade area will attract investors. Africa needs more manufacturing, from canning fruit to assembling mobile phones. Luckily Africa’s youthful population contributes to an abundancy of labour, which is one of the region’s highest potentials for labour-intensive industrialization and lowers production costs.
Yet there are many obstacles for a trade zone. The greatest is effective implementation. The African Union has a history of grandiose pronouncements but poor follow-through.
However, there is also confidence that it will work. According to the IMF, Africa's growth prospects will be among the highest in the world between 2018 and 2023. Yet, despite the promising outlook, African stocks are relatively cheap.
Finally, to quote President Cyril Ramaphosa of South Africa during his opening speech at the Africa Summit in London last month: "there has never been a better time to invest in Africa".
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