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JOHANNESBURG – Investing in Africa differs significantly depending on the region. In terms of oil assets and key industries, Northern Africa is very similar to much of the Middle East in terms of size and scope.
The country of South Africa is considered to be a more developed market because of its robust mining industry.
Sub-Saharan Africa is still considered to be a closed market by foreign financiers. It comprises countries with less developed economies.
However, according to AskTraders.com, as markets in other parts of the world begin to mature, Africa as a region is viewed by many investors as an excellent frontier upon which to discover lucrative growth stocks.
Prospects
In 2022, as global economies still stutter out of the effects of the global pandemic, there are some compelling prospects for African stocks going forward. These countries are endowed with an abundance of natural resources, which range from oil and diamonds to gold and uranium. Many of them remain unexplored as a result of a low human population density, as well as a lack of infrastructure and financial resources.
This creates a strong environment for growth stocks to become more prominent in 2022, as international mining companies begin to prospect throughout the African continent.
Many African countries are enacting legislation that will make their stock exchanges more transparent and more diverse in terms of the securities that are traded on the exchange.
Added to this, many emerging stock exchanges in Africa are embracing financial technology businesses and collaborating with start-ups in order to automate their trading platforms and reduce the regulatory burden placed on publicly traded corporations, among other things.
New stock exchanges are also being established, with Lesotho set to become the first African country to list on a stock exchange.
Approval
Ethiopia's Parliament has also given its approval to a proclamation that will pave the way for the establishment of a stock market. As of 2021, the population of Africa will account for around 17 per cent of the world's total, with roughly 1.4 billion people residing in more than 60 countries.
As a result, consumer services such as telecommunications and banking gain a significant amount of market share. The rising consumer economies of Africa provide intriguing potential for global enterprises looking to expand their operations in retail and distribution.
Changing demographics and better business environments across the continent are only two of the causes that will contribute to increased household consumption, which is expected to reach US$2.5 trillion by 2030, according to projections.
Seven countries—Nigeria, Ethiopia, the Democratic Republic of the Congo, Egypt, Tanzania, Kenya, and South Africa—will soon account for half of the continent's population, and 43 per cent of Africans across the continent will belong to the middle or upper classes, according to the United Nations Development Programme.