Africa is the fastest growing and most profitable region in the world today. Six of the 10 fastest growing economies in the world are in Africa. Some say it’s risky to do business here – but we say risk and reward are inseparable siblings. Many African entrepreneurs and investors are solving real problems, creating jobs and more flourishing society in the continent, while taking away huge returns as a result. If you are an African living in a country in Africa or want to invest in the continent and looking for lucrative business opportunities to invest in right now, this article is for you. Here are 7 lucrative business opportunities in Africa right now.
Table of Contents
1. Solar and Other Renewable Energy
The African continent has an inexhaustible source of solar energy, with an average of 300 days of sunlight every year. As the world moves speedily towards environment-friendly energy source, there is huge potential for a transition from traditional fuel to clean energy in Africa.
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Many businesses like Lumos global, M-Kopa Solar are springing up over the past decade offering renewable energy solutions. But there is room for enormous growth in the market for solar panel, batteries and inverter manufacturing, sales and installation. Battery recycling is another lucrative spin-off from the solar energy ad0ption and massive demand for batteries. In Nigeria, for instance, selling your used battery is almost as easy as buying a new one. Buyer is ready to buy them off.
In the transportation system, since bikes are a major form of transportation for a large part of the population, there is a huge opportunity and a strong market for electric motorbikes in the cities and rural areas. This is a global multibillion-dollar business and Africa is still relatively new to the idea. Electric vehicle company ‘Ampersand’ has been in the e-mobility market for four years and is now helping Rwanda shift from gas-driven motorbikes to electric motorcycles. In Nigeria, Metro Africa Express – MAX, a motorcycle hailing company, built its first electric motorbike in 2019, backed by Yamaha. There is a lot of opportunities and money to be made in the renewable energy section.
2. Waste Management
Garbage handling isn’t something you find interesting, right? Well, you might want to think again. Did you know that in the USA and Europe, waste collection and recycling is a multi-billion dollar industry? For decades, waste disposal has been a huge problem in Africa especially in urban areas – and this problem is overdue for a solution! According to a World Bank Urban Development Series report, Africa currently produces about 70 million tons of waste every year. With its rapid urbanization and growing economies, waste production in Africa will exceed 160 million tons by the year 2025. This is where waste management and recycling finds its place among the big opportunities in many countries in Africa.
Some businesses are already springing up in this space, using garbage to produce renewable energy and usable materials and quickly making a huge impact like Wecyclers in Nigeria, Repurpose Schoolbag in South Africa and Yeli in Uganda.
In South Africa, AgriProtein is a business that grows maggots from waste collected from markets, households, and businesses. The maggots are processed into a highly nutritious protein supplement that substitutes fish meal in animal feed. Wait for it… The company has raised up to $30 million in funding. In Ethiopia, the solution is to convert waste into electricity. There are other opportunities to recycle waste material to produce usable household materials.
3. Intra-Country Tourism
Ivorian Minister of Tourism, Siandou Fofana, earlier this year presented a strategy document aimed at making Côte d’Ivoire Africa’s fifth biggest tourism destination from 2025. The strategy will rest on nine new flagship projects and would require a $5.8‑billion investment.
With the corona virus outbreak, the tourism industry came to a halt. International travel has been banned for months. We are not sure for how long, but we can be sure that this will come to an end and people will start travelling again. However, before the world fully opens up for international travel, countries will first be open for internal movement. People, who have underrated domestic tourism will now have the option of exploring tourist locations within their country, expanding opportunities for local tourism in Africa.
Also, there is a vast number of people across market segments in the continent who can hardly afford to travel out of their country for holidays, breaks and sightseeing. Almost every country in Africa has a number of locations that these people are unaware of within the country that can count for aspiration while being cost-effective. The good thing is that developing local tourism services can easily expend to attract international tourists when movement restriction is lifted.
4. Value Added Farming
According to the United Nations, Africa’s agribusiness industry is expected to be worth $1 trillion by 2030. The continent has a huge domestic market, owns 60 percent of the world’s unused arable land, and has abundant labour resources, and a favourable climate in most parts. Still, Africa spends over $30 billion on food imports annually. This is in part due to low local production as well as due to lack of value-add on products before export.
The most profitable export is not in raw materials but in value-added products. For instance, Ethiopia is the fifth largest producer of coffee, around 60% of its foreign income comes from coffee, with an estimated 15 million of the population relying on some aspect of coffee production for their livelihood. They are maximizing their production by expanding from farming to roasting and packaging coffee, adding value to the crop within the country, at every step of the production chain. There is a sweet spot in adding value to locally-sourced commodities and then exporting the finished products. Value added agribusiness has huge potential to maximize profit from farm produce.
Crowd farming is another agribusiness model that is gaining acceptance across the continent. Agric-tech startups get the public to contribute towards large scale farming projects at an attractive interest rate. The business mediates with and trains local farmers to adopt best practices for maximum yield. The shared responsibility reduces the potential risk and increases the chance of success. As the population in Africa doubles in the coming decades, the business opportunities in agribusiness space are likely to produce a group of millionaires.
5. Tech-Aided Education Services
There is a lot of opportunity in education services. And the lockdown due to the corona virus outbreak has further strengthened the opportunity in technology-aided education services. A report by the World Bank, titled The Unexplored Potential of Trade in Services in Africa, highlights new commercial opportunities opening up in areas such as franchising and the twinning of academic programmes, which allows students to earn credits for courses from universities outside their country at a fraction of the cost.
You’ve probably seen those adverts promising the opportunity to get a UK university degree from the comfort of your home. African students spend billions of dollars every year studying abroad. These online education services function as a franchise or partnership with local entrepreneurs to offer similar education to what you will get at a university abroad without needing to worry about travel and associated expenses.
Not only that, but there is also equally huge opportunities in online learning solutions, tools and technology services for primary, secondary, tertiary and corporate institutions. There huge money to be made from online education services in Africa as we speak.
6. Healthcare Services
During the corona virus outbreak, a pharmaceutical laboratory in Senegal created the cheapest testing kit, and a team of researchers produced a prototype for the cheapest ventilator using 3D printing technology. In Ghana, a company delivered blood samples from rural area to laboratory in the city using drones. In Nigeria, Lifebank – a startup that develops smart ways to deliver critical blood supplies to hospitals in busy cities – raised $0.2 million to support and expand its operations. Tech driven health care solutions are hitting the market. These are few of the creative ways people are creating health care solutions.
According to the IFC, Africa’s $21 billion healthcare market could double in size in a decade. Before the corona virus outbreak, a growing number of Africans were seeking medical help overseas, in places like India and Europe. This growth in outbound medical tourism costs Africans millions of dollars yearly. But the travel restrictions have emphasized the need for governments to look inward to develop its health care system. Across the continent, more entrepreneurs are exploring creative alternatives to solving Africa’s significant healthcare problems. Their efforts will not only transform the continent’s healthcare industry but will unlock millions of job opportunities in the process.
7. Fintech
The finance industry has created more millionaires in the world than any other industry according to Global Wealth report. In sub- Saharan Africa, only about 34 percent of adults have bank accounts or access to formal financial services after more than 5 decades of banking. However, with the spread of mobile phones and the Internet across Africa, entrepreneurs are now leveraging technology to deepen financial access in ways the banks never have. There is a wide range of opportunities that are opening up in Africa’s financial services for online savings accounts, bill payments, online shopping payment, bulk disbursement, international remittances and even access to local and global investment opportunities.
Africa is a continent that significantly rewards problem-solvers, and provides a rare opportunity in today’s world to make a lot of money while doing a lot of good. It is evident that entrepreneurship holds the keys to Africa’s transformation; not global pity, and certainly not foreign aid. The opportunities are there for those who are ready to take the risk. And with high risk comes high reward.
