Faculty Insight: Investing in Africa

Findings from a new study may offer cautious hope for Africa’s struggling economy. An Ursinus professor offers her viewpoint on why investing in Sub-Saharan Africa can yield rewards. 

What comes to mind when you think of Africa? Maybe it is the continent’s uniquely beautiful landscape and remarkable and endangered wildlife; or, perhaps it’s the challenges faced by many African countries, such as widespread poverty and malnutrition and more recently, the headline-dominating 2014 Ebola virus outbreak in parts of West Africa.  

Africa’s economy, too, has struggled over the last several decades. However, findings from a new study may imbue cautiously optimistic hope for a continent that has experienced its fair share of challenges.

According to the Annual Trends and Outlook Report (ATOR) released earlier this month by the Regional Strategies Analysis and Knowledge Support System (RESAKSS), most African countries that today are considered low income will transition to middle income by 2050. The findings have sparked renewed media interest and dialogue about Africa from an investment standpoint.  

Enter Ursinus faculty member Ann Karreth, assistant professor of politics. Fairly new to Ursinus College, she joined in Fall 2014 after teaching in the undergraduate and master’s program at the Josef Korbel School of International Studies at the University of Denver. She earned her doctorate in Political Science and International Studies in 2013 from the University of Georgia’s School of Public and International Affairs.

Karreth’s research focuses on ethnic diversity, political behavior and development outcomes, with a regional emphasis on the African continent. While not an economist, Karreth recently shared some insight on the economic future of Africa, as well as the political variables that would affect potential investments:

“Investing in Sub-Saharan Africa can be risky, but there can also be high rewards in this emerging market region.  Since African countries are starting from a small economic base, returns on investment can be quite substantial.  The strongest economies in Africa—including South Africa, Nigeria, and Kenya—have a burgeoning middle class with young populations; as their economies grow, the demand for goods and services will only increase. The greatest risk to investors in Africa is political instability in a number of countries, especially in the Great Lakes Region and parts of North Central Africa.  The safest investments are those made in countries with stable democracies—where property rights are respected and where the risk of civil unrest is low.”

Karreth teaches an array of courses in comparative politics, including courses in African politics as well as political behavior and political economy in developing countries.