Africa is a rising continent for business travel

January 15, 2014 |

Businesses are increasingly finding excellent investment opportunities in various African companies due to booming economic growth and blossoming tech hubs.

The most obvious sign of a boom in global travel – for both business and pleasure – to Africa is the increasing presence of international hotel chains, which are more recognizable to Western travelers. According to W Hospitality Group's 2013 Africa Pipeline Study, at the start of 2013, about 207 hotels were in the development pipeline, which was equal to about 40,000 new guest rooms.

Of these new hotel developments, 130 were located in Sub-Saharan Africa, while only 77 were in Northern Africa, which represents a shift from previous trends. For example, the countries of North Africa saw between 72 and 79 new international hotels each year from 2010 to 2012, but in Sub-Saharan Africa, this number rose from 80 in 2010 and 84 in 2011 to 129 in 2012.

It's likely that international hotel chains are hoping to grab business both domestically – from several African countries' rising middle classes – and internationally – from the growing numbers of companies engaged in business travel on the continent.

Economic growth in Africa

According to a 2010 McKinsey & Company report, real GDP on the African continent rose by 4.9 percent each year from 2000 through 2008, which was twice the pace of growth in the two previous decades. In fact, African countries, including Timor-Leste, Sierra Leone, Eritrea and Zambia, take half the spots on The Economist Intelligence Unit's 2014 projections for the world's fastest growing economies.

Reasons for growth

There are various reasons that U.S.-based businesses might consider international travel to African countries for business aims. According to McKinsey & Company, here are some of the factors accounting for Africa's economic growth:

  • The end of armed conflicts in some countries, which has restarted economic growth and provided the vital stability for new business development
  • Energized opportunities for growth, including the opening of trade, strengthening of legal and regulatory systems, provision of necessary social and physical infrastructures for businesses and lowered corporate taxes
  • Boom in commodities and surge in commodity prices, including oil, minerals, other raw materials, grains, retail and wholesale, telecommunications, manufacturing and transportation
  • Urbanization – 40 percent of Africa's 1 billion people live in cities
  • Expansion of the middle class (and thus the consumer) as well as labor force expansion