Commodities rout fails to slow urban explosion in Africa
Africa's biggest economies have been hammered by the collapse in commodity prices over the past 18 months but there are still investment bright spots to be found.
In cities such as Lagos, Nairobi, Accra, Kinshasa and Johannesburg, growth remains robust and investors are prospering in the retail, financial services, technology and construction sectors.
This means investors can now readjust their strategy for Africa. Instead of taking a view on the continent as a whole, or choosing one country over another, they can seize opportunities city by city.
Sub-Saharan Africa is urbanising faster than anywhere else in the world and city dwellers have more money to spend.
"In the current economic environment, investors want areas where success is proven, growth is strong and will remain strong. Big African cities give you that," said Jacob Kholi, a partner at Abraaj, a private equity firm with $9bn under management.
"It has become even more important to focus on these key cities than before," Kholi added.
Nairobi is the most attractive destination for foreign investment, according to a 2015 report by PricewaterhouseCoopers, followed by Accra, with Lagos and Johannesburg equal third.
Consumption per capita in Accra is 1.6 times greater than the average in Ghana, 2.3 times bigger in Lagos than the average in Nigeria, and 2.7 times larger in Nairobi than nationally in Kenya, Abraaj estimates.
Lagos, one of the world's fastest growing cities and with a population of 20 million, expects economic growth of 7pc this year, twice the pace of the country as a whole.
Even South Africa, which is grappling with youth unemployment of over 40pc and could slip into recession this year, has areas where industry is booming.
"Looking around here, you wouldn't know things were so bad," construction worker Sifiso Zwane told Reuters in Johannesburg's wealthy Sandton business district. "Rich people will always find a way to make more money," said Zwane, with cranes filling the skyline behind him and billboards advertising new retailers like Krispy Kreme doughnuts and H&M.
This year, Kenya is set to unveil the Two River malls in Nairobi, the continent's largest shopping centre outside South Africa, with brands like Porsche, Hugo Boss and France's Carrefour already booking space.
"The economy still has opportunities," said Gabriel Modest, a jeweller who says demand for the gold necklaces and bracelets he sells remains strong. "Sometimes you have to treat yourself," he added, ordering a bowl of muesli and yoghurt at an upmarket Nairobi coffee shop.
In Lagos, plans are in place to develop the multi-billion euro Eko Atlantic city, a Dubai-style gated community that will boast chrome skyscrapers, business parks, palm trees and a marina. By 2025, Mckinsey estimates that more than 80 cities in sub-Saharan Africa will have populations of over one million, accounting for 58pc of the region's growth.
This rapid urbanisation means Africa's big cities will need more roads, hospitals and power stations, while growing numbers of new inhabitants will be buying consumer goods like instant noodles, washing powder and mobile phone cards. (Reuters)