Africa is often overlooked when it comes to investing in foreign countries, yet with a sixth of the global population living there and an abundance of natural resources, many economists have tipped it to be a growth engine in the years ahead.

Two countries that are already worth considering are Kenya and Nigeria, with the potential to yield strong returns for long-term investors in the near future.

Several factors are combining at present and, if all goes well for the pair, these trends will turn into a tailwind that drives the African countries’ economic prosperity higher for some time to come.

Technology innovation

The pace of technology innovation is often mirrored by the pace of economic growth, and that means when an economy is lagging behind on technology, there are even greater gains to be made.

In the case of Africa, the continent’s fastest emerging economies could leap clear over older technologies and instead land directly on the newest tech that is also being used in advanced economies elsewhere in the world.

By doing this, African countries including both Kenya and Nigeria can rapidly close the gap on their counterparts on other continents, with their economies likely to benefit significantly as a result.

Population growth

Large populations also often mean economic prosperity – the three largest nations in the world in 2019 include the rapidly growing Chinese and Indian economies, with the already mature United States in third place.

The remaining BRIC countries, Brazil and Russia, rank sixth and ninth, with fast-growing Mexico rounding out the top ten, a clear sign of the link between people and prosperity.

Nigeria ranks seventh in the world by population in 2019, but by the middle of the current century this position is likely to climb – possibly to the top three most populous countries by 2050, when it is expected to be home to more than 400 million people.

Kenya is smaller, currently 27th in the world with just over 50 million people, but this too is forecasted to grow, and it’s worth noting that the economy here benefits from being a hub to neighbouring African countries too.

International investment

Africa is already attracting international investment – especially from China as part of the Belt and Road Initiative.

This is an initiative to provide trillions of dollars of foreign direct investment across Africa, Asia and Europe, with nearly 70 countries identified as possible recipients.

It aims to establish infrastructure in the recipient countries, including for example road, rail, ports and airports.

Nigeria has already benefited from Chinese infrastructure investment, putting in place more all-weather roads and gas-powered generators.

Meanwhile in Kenya, China funded the railway link between the capital Nairobi and the coastal port and tourist city of Mombasa.

The route opened in mid-2017 some 18 months ahead of schedule, cutting a substantial 7.5 hours from the rail journey between the two cities.

The perfect storm?

The confluence of these different trends has the greatest potential to drive economic growth in Nigeria, Kenya and other African nations.

For example in Rwanda, when doctors need additional units of blood, they are able to order it by text message and receive it by drone delivery.

The drone network, operated by US company Zipline, was the first national drone delivery system to be set up anywhere in the world – delivering not food or gadgets, but life-saving blood transfusions.

It’s an example of how Rwanda’s population demands, combined with cutting-edge technology and foreign investment, allowed the country to leapfrog into a world-leading position in the drone delivery infrastructure space.

With the perfect conditions forming for Nigeria and Kenya to follow suit in other technology areas, it could be the ideal time to look at the African economies in a new light when considering future investments for the medium to long term.


Disclaimer: The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.