With clouds of economic meltdown thundering all over the world, investors are having a tough time to take their decisions. With news of so many companies seeking bailout from the government and the stock markets collapsing continually, the investors world-over can get skeptical about their decision to invest in a particular economy or in a particular market. With so many markets failing, investors have been looking on to those untouched and unexplored markets with high potential. In such a situation, Africa has highlighted itself as the next big market that promises unprecedented growth in the near future.
One would think that on seeing the economic scenario across the developed nations, investors cannot even think of zeroing down on Africa as their next destination for investment. Analysts would think that international investors would rather wait for the situation to get stable, and then invest in the favorite markets. Anyone having the above-mentioned notion can be proved wrong straightaway. Yes, Africa is one continent where stock markets have been booming and investors have been focusing on sub-Saharan Africa in the recent times. Surprisingly, Africa has a market capitalization of over and above $100 billion and its stock markets are considerably larger when compared to what Russia and Central Europe were when they were opened to foreign investors in 1990s.
Sub-Saharan Africa consists of nearly 48 countries with population of well over 800 million people; and this region does not include Middle East or Northern Africa. This population is nearly three times the population of United States and this is a great factor to make it a big market. However, South Africa is considered the most developed economy in this region, and accounts for nearly one-third of GDP of Sub-Saharan area. Number of stock markets in this area has multiplied with new stock markets in Ghana, Uganda, Zambia, Swaziland, Malawi, etc. Just to let you know the potential and growth of this area, the market capitalization of stock markets in Africa jumped from $113 billion to $245 billion from 1992 to 2002, which can be considered as outstanding by any standards.
The region is experiencing tremendous growth in terms of penetration of mobile phones and development of banking systems. Furthermore, the region has noticed increased foreign investment along with loan disbursement in the last decade. In addition to all this, countries like Ghana, Botswana, Mozambique, Kenya, Tanzania, Nigeria, Zambia, and Uganda were ranked as "emerging markets" by International Monetary Fund.
Undoubtedly, Africa still has a long way to go, but its progress in the past few years has been outstanding. It is definitely the next stop for investors who want to reap handsome returns. After all, you need to be optimist.
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