• Novara Capital Group

TOP SECTORS IN AFRICA

Actually ,the investor relate Africa as a “final frontier” while emerging markets (China and India) are maturing. Africa has been growing in popularity among investors, has natural resources and a population near to 1 billion. (Kuepper, 2018). Today is the fastest growing continent with six of the world’s ten fastest growing economies. This behavior is for the political-economic relation that has strength the investors attraction supported by regulatory reforms, expanding workforce and and an increase in the middle-class consumers which are creating new business in services such as finance, telecoms, construction, tourism, etc. (Silwal, 2016).


The sectors were the investors should really look into are:


Agriculture


During decades, this industry has been on of the main source of income for the African economy (15% of their total GDP/ $100 billions annually) and it will bring income for the future, surpassing mining and metals. Africa has 60% of uncultivated land of the world, and water water resources that has not been tapped yet. Actually, Africa produces 10% of the global agriculture production, and there is a potential of expanding around 2 to 5% a year.


Governments are investing in this sector, especially in terms of the shift from subsistence farming to agro-processing (RMB 2016).


The challenges that this sector have are (Jayaram, 2010):


Benefits of scale are required for small farms that can be reached through new industry models. Access to financing and investment and business models that can significantly increase the level of investment from the private and public sectors. Material such as seeds, fertilizer and water. Programs to raise and increase productivity.


New farming models. For example, the governments is investing in this sector, especially in terms of the shift from subsistence farming to agro-processing (RMB 2016). Also, Africa has diverse agro-ecological conditions to create a green revolution.

If you are considering on invest in this Industry, The Canary Island has a maritime strategic location that connects Africa, Europe, and America, facilitating the import of material for the agriculture and the export around the world.


It is also a Free Trade Zone, what it means is not subject to customs duty:

● No special taxes on goods introduced to the Free Trade Zone.

● No import duties while the goods are in the Free Trade Zone.

● No IGIC (Canary Islands’ VAT) on the goods within the Free Trade Zone and services provided for them.

● Community measures on trade policies such as contingents or restrictions of any kind will not be applied.



Energy


Having six of the ten fastest growing economies represents that population is increasing. Currently Africa has one of the fastest growing middle-class consumer markets in the world, what it means population are urbanizing, IT infrastructure is improving and cell phones and mobile payments are more used (Silwal, 2016). With urbanization, the african society is facing high costs, low capacity and constant power outages, for this reason one of the goals is having reliable, sustainable and affordable energy.


Beyond this, there is need for a diversification in investments of power sources, as the overreliance on hydro energy draws vulnerabilities in their economies and result in hydrological conditions such as the droughts.


The opportunities in Africa are:


Geothermal explorations, estimated at 7 to 15 GW. Low-carbon solutions, it holds more than half of the world’s renewable energy potential. Solar energy, it has been untapped and underused.


The Canary Islands has experience in Renewable Energies especially through International Cooperation Projects where Africa was involved:


● Use of renewable energy to provide electricity to villages and isolated rural communities in West African countries.

● Development and implementation of small autonomous desalination plants powered by renewable energies

● Tenerife’s Technology and Renewable Energy Institute (ITER) is a leading organization in R&D and renewable energy systems application. It hosts the following facilities, which are all available on a rental system for companies willing to grow flexibly while benefiting from existing economies of scale:

● The Centre of Research Applied to Renewable Energies,Desalination and Cooling of the University of Nouakchott,Mauritania, backed by the Instituto Tecnológico de Canarias energy and sustainability management services.



Banking


Africa’s banks lag behind on innovation in financial services (Financial Times, 2018). The rise of Africas’ financial services sector has been quoted as ‘remarkable’ by the World Economic Forum. Many sub-Saharan Africans are having advancements in their financial services, nevertheless, not all countries in the country are growing at the same rate.

With an estimated population of 1.2 billion people and a growing rate of 2% per year, the opportunities in this sector are:


● Current products offering, improvement in the current portfolio offerings.

● Cross-border money from citizens working in Europe, Asia and America.

● Increasing product penetration.

● Bring unbaked people to the financial system .

● Innovative service and channel offering.

● Technology advancement.

● Big data management for better advice.


The Canary Islands are a great place to test new products in a small/medium significant market. It also has the infrastructure to host new start-ups and IT companies, in fact, is considered a potential hub and its goal are to become a global center for high technology and innovation.


Telecommunications


The African mobile-phone market has surpassed the 400-million-subscription mark. This market is increasing each year and is becoming more competitive, especially in voice and data services. This industry has an estimated annual investment of 15 billion USD. (Gaibi and Maske, 2018).


The opportunities in this sector are:


● Increasing market penetration in major cities of countries such as Côte d´Ivoire, Zambia and Gabon.

● Innovating in distribution, recharging practices and personalizing pricing models.

● Rural voice (About 50 percent of the growth in voice will come from rural areas).

● Improve industry practices and create new operating models.

● Mobile data-services.


The Canary Islands is cultivating powerful digital ecosystem, attracting digital nomads, start-ups and IT Companies from around the world who benefit from the Island´s desirable tax breaks. Besides, the Island enjoys of a state of the art telecommunications to guarantee global connectivity.


As an investor, the Canary Islands are strategic where you can use the potential of the African Market and the Island. That is the reason why companies decide to setúp there.

If you require further information about these sectors, how to set-up your company in the Canary Islands or, more investment options please contact our experts.

Novara Capital Group is an international tax & capital investment consulting firm. We specialise in Corporate Structuring, European Union Tax Incentives, IP Positioning, and Transactions / M&A. We provide intelligent corporate structures, advice, and an integrated service which cross delivers in businesses. We advise companies globally to accelerate international growth, optimise net profits, and enhance equity value leveraging Intellectual Property and Licences. Our in-house experts specialise in International Tax Law, Company Law & Cross Border Jurisdiction, Investment & Asset Management, Mergers & Acquisitions, and Operational Management.


Get in touch today to arrange an introductory conversation for more information.


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