Sizing the potential of Africa’s untapped riches

Imagine, for a moment, you had the opportunity to buy stock in Ford just before it pioneered the first assembly line.

The car company had significant pent-up demand that existing infrastructure could not meet, making the potential opportunity for sales many times greater than actual sales in that day.

It just needed a bit of capital to achieve outsized returns.

This is the opportunity in Africa today — a pivotal market with potential much greater than actual output today.

A market like this needs just a bit of private investment to get the ball rolling.

Africa is the most fertile investment ground in the world today.

Besides untapped oil, gas, and mineral opportunities across the continent, there is plenty of opportunity in other sectors and industries, as our Africa Wealth Cheque Report shows.

“The aim of the Africa Wealth Cheque Report was to identify and estimate how much natural, economic and human capital wealth is within the continent, in essence to quantify the beginnings of the asset side of Africa’s balance sheet,” says Hubert Danso, vice chairman and managing director of Africa investor. “We wanted to catalyse debate about how wealthy as opposed to how poor the continent is, and signal tipping points for African governments and global investors seeking growth opportunities.”

The result? There is a potential $1.67 trillion of annual production opportunity in six key sectors (energy and minerals not included).

Saying it another way, leveraging existing assets in Africa, incremental investment may expand the addressable market approximately twofold.

In addition, current proven stocks of extractable energy resources in Africa (oil, natural gas, coal, and uranium) are estimated to be worth between $13 trillion and $14.5 trillion.

Emerging no-brainer

There is no other region in the world with such a vast, open market.

“What makes Africa unique is that incremental dollars invested into the continent will begin to unlock a previously inaccessible market of equal or greater size than Africa today,” says Mamo Mihretu, a partner in TAG. “Potential returns in this type of environment are extraordinary.”

Emerging markets guru Mark Mobius, executive chairman of Templeton Asset Management, says there is a growing realisation that Africa’s resources must be tapped if the needs of China, India and other fast-growing emerging markets are going to be met.