"If you want to go fast, go alone. If you want to go far, go together." - African proverb
Africa is a continent with a lot of potential for growth and development. In recent years, several sectors have emerged as the fastest-growing industries in Africa.
The continent has more than one-quarter of the world's arable land, and eleven of its countries rank among the top ten sources for at least one major mineral. The revenue generated by companies in these sectors varies widely, with some generating billions of dollars in revenue. In this article, we have gathered the top 5 fastest-growing sectors in Africa and their potential for growth and development.
Agriculture is the largest economic sector in Africa, and it represents 15% of the continent's total GDP. Agriculture is important because it provides food for people and raw materials for industries. Africa has the potential to produce more agricultural output, but it currently produces less than 10% of its total output.
For agriculture we must pay attention to the Democratic Republic of Congo (DRC). They are employing two-thirds of the population (103.5 million people) into this particular sector.
The principal crops are cassava, yams, plantains, rice, and maize. The country has more available farmland than any other country in Africa, with an agricultural potential to feed close to two billion people. The agricultural sector in the DRC is dominated by subsistence farming, with households growing food mainly for their own consumption and selling the surplus. Commercial agricultural production remains limited, with most producers engaged in subsistence food agriculture. The main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa.
Companies like Afex Commodities Exchange and Twiga Foods help farmers sell their crops in Congo-Kinshasa. The International Fund for Agricultural Development (IFAD) is supporting national initiatives for agricultural recovery, food security, and youth employment both in rural areas and urban hinterlands. The DRC has plenty of potential in the agricultural sector, with vast arable land, tremendous biodiversity, and the second-largest tropical forest in the world. However, the country is handicapped by a poor internal transportation system, which impedes the development of an effective national urban food-supply system.
Africa's growth prospects are bright, and they differ not only country by country but also sector by sector. - McKinsey
Telecommunications is one of the fastest-growing industries in Africa. It involves the use of technology to transmit information over long distances. The telecom sector in Africa has opened up a plethora of business opportunities. Among all other continents, Africa has been the fastest growing mobile market during the past five years, with more than 170 million mobile users.
Mobile telephony has had a significant impact on economic growth, which in many African countries is twice as high as in developed countries. The growth in the telecom sector is not entirely surprising, considering that in 2004, only 6 percent of the African population owned a mobile phone. The price-drop on mobile devices and the introduction of low-cost phones for developing economies have carved an industry with huge potential. The telecom sector in Africa looks far more promising when compared with other continents. While other continents have reached a saturation point in the growth of revenue and subscribers, Africa opens up fresh opportunities and positive market trends.
The telecommunications industry has become highly competitive, and only the wise and tech-savvy enterprises can survive. The total number of telecom subscribers in Africa is expected to reach 613 million by 2025. The telecom industry in Africa is expected to be the fastest-growing industry over the next five years, with revenues of more than $6.75 billion based in Angola, Botswana, and other African countries.
MTN Group is a company based in South Africa that provides mobile phone and internet services to people in over 20 countries. Safaricom is a company based in Kenya that created a mobile money service called M-Pesa, which allows people to send and receive money using their mobile phones.
Banking and finance is a crucial driver of Africa's economic development. It involves managing money, including saving, investing, and lending. The banking and finance industry in Africa has grown rapidly, with infrastructure expenditures rising significantly faster in Africa than in the entire world.
The industry is expected to continue growing, with fintech players delivering innovative solutions to consumers and businesses. The spread of democratization in Africa, combined with increased digitization and evolving demographics, has generated greater opportunities for private sector growth. The African Development Bank (AfDB) is a trusted partner to many African countries and is currently undergoing a series of internal changes and shifting its strategy. The AfDB is targeting sectors where its expertise and investment can become more catalytic, such as providing on-lending to Small and Medium Enterprises (SMEs).
The banking and finance industry in Africa is expected to grow at about 10 percent per annum, reaching about $230 billion in revenues by 2025. The revenue of the banking sector in Africa amounted to $86 billion in 2022 and was projected to increase to $129 billion in 2023. The spread of financial technology (fintech) firms in Africa is spurring more innovation and investment opportunities.
Fintech has the potential to help increase financial inclusion further. Overall, the banking and finance industry in Africa offers impressive growth opportunities and is expected to continue growing in the coming years.
"African economies are moving in the right direction." - Akinwumi Adesina
Infrastructure has seen a raise in compound annual rate at 17%. This is up from three billion dollars ($3 billion) in 1998 to twelve billion dollars ($12 billion) in 2008. This happened in just 10 years. Infrastructure includes things like roads, bridges, airports, and buildings. An upsurge in infrastructure has attracted investors and companies both locally and globally.
Namibia for example, is a country in southern Africa that has the best road infrastructure in Africa. This means that they have good roads that are well-maintained and easy to travel on. The government has invested a lot of money in building and maintaining these roads, which helps people travel and do business more easily.
The Road Fund Administration (RFA) is responsible for the maintenance and development of Namibia's road network. The RFA invests in road infrastructure, and since its inception, it has invested N$30 billion in road infrastructure. Companies that make roads in Namibia include Roads Contractors Company Ltd, IB Cement Industries (Pty) Ltd, and Namibia Water Proof Cement. These companies generate millions of dollars in revenue. The investment in infrastructure, including roads, is expected to improve transportation and trade in Namibia and boost economic growth in the country.
Let us give you some infrastructure projects happening in Africa that are changing the continent.
Second Niger Bridge Project: This is a major infrastructure project in Nigeria that involves the construction of a second bridge over the Niger River. The project is expected to cost $2.8 billion.
Kikonge Hydropower and Irrigation Project: This is a major infrastructure project in Tanzania that involves the construction of a multipurpose energy project that will provide electricity and irrigation to the surrounding area. The project is expected to cost €2 billion (approximately $2.2 billion).
The Marine Drive Project in Ghana: This is a major infrastructure project in Ghana that involves the construction of a coastal highway that will connect Accra to the port city of Tema. The project is expected to cost $1.5 billion.
Oil & Gas
Africa is home to some of the world's largest oil and gas reserves. Oil and gas are important resources in Africa. They are used to produce energy, fuel transportation, and power industries. Africa is home to five of the top 30 oil-producing countries in the world. The oil and gas industry remains a primary driver of the continent’s economic growth and development.
According to Statista, crude oil and natural gas production is distributed widely in Africa but heavily concentrated in the West and North. The continent has 125.3 billion barrels of crude oil reserves and 17.55 trillion standard cubic meters of natural gas. The oil and gas industry in Africa has experienced significant growth in the last decades. Half of its 55 countries have proven natural gas reserves, and 17 countries already produce gas.
According to S&P Global Platts, almost 40% of global new gas discoveries in the last decade were in Africa. The oil and gas industry in Africa is expected to continue growing in the coming years, with many new projects being developed. For example, Mozambique LNG is a state-of-the-art facility being built on the Afungi peninsula in Cabo Delgado province.
The project aims to tap into the approximately 75 trillion cubic feet of recoverable natural gas said to lie in Offshore Area 1. The project aims to deliver those natural, sustainable, and cleaner gases to various markets. The oil and gas industry in Africa is a major contributor to the economy, and the revenue generated by companies in this sector varies widely, with some generating billions of dollars in revenue.
Sonatrach is a company based in Algeria that explores for and produces oil and gas. They have operations in Angola, Chad, Equatorial Guinea, and Nigeria. They help provide energy for transportation, heating, and electricity. The company is also engaged in the exploration, production, and marketing of hydrocarbons. In 2020, the company's revenue was $33.5 billion.
These sectors are expected to continue growing in the coming years, with many new projects being developed. With the world's youngest and fastest-growing population, the continent is emerging as a magnet for consumer markets and products.
As Africa continues to grow and develop, it is important to invest in these sectors to unlock the continent's potential and create a brighter future for all Africans.
"We must unite now or perish” -Kwame Nkrumah, First President of Ghana
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This article was written by Dan Kipoy (Researcher for Momentum Consulting)