The African continent has some of the world's fastest-growing economies, but some are seeing hard times because they rely on crude oil. Since the crude oil price has now dipped below $50 a barrel for the first time since May 2009, the African oil-producing countries are facing some serious financial difficulties.
Nigeria, which has been ranked the 13th largest oil producer in the world and the top producer in Africa, saw its oil earnings decrease 40.3% between 2014 to 2015. So much in fact that Angola dethroned Nigeria as Africa's largest oil producer, as reported by Business Insider back in May. However, Angola is also feeling the impact. When the oil price dropped more than 50%, Angola's currency lost 37% of its strength against the dollar. FocusEconomics reported that from 2014 to 2015, the export annual variation had drop 44.9% due to the lower oil earning. Moreover, because Angola relies so heavily on imports the falling oil prices led to rising inflation rates.
Even though the oil crisis negatively impacted many African countries' economies, with every crisis comes opportunity. Many African countries have been discussing diversification and economic transformation, but none of the changes have been implemented. Decreased oil prices brings opportunity and motivation to African countries, making now the right time to diversify markets.
There are many opportunities to diversify, but three that stand out are tourism, industrialization and agriculture.
Tourism
Africa is the world's second-largest continent and contains some of the world's greatest tourist destinations. Many African countries are developing their tourism industries so that the world can experience everything Africa has to offer. Angola, the seventh-largest country in Africa, has more than 1,000 miles of beautiful coastline, ideal for sunbathers, swimmers and water sports enthusiasts. As reported by Macauhub.com, the Ministry of Hotel and Tourism claims that by 2020 Angola will triple its tourism revenue by hosting 4.6 million tourists. South Africa, the southernmost sovereign state in Africa, has earmarked tourism as a key sector with excellent potential for growth. According to SouthAfrica.info, by 2019 the overall occupancy rate in South Africa will rise to an estimated 58.3% from 54.4% in 2014. Five star hotels are expected to achieve a high of 80% occupancy in 2019.
Industrialization
For the past forty years, Africa did not have the best experience with industrialization. But now, it is time for Africa to focus on just that. Industrialization will improve Africa's productivity and capability and will foster growth of other sub-industries such as education and healthcare. When the industries grow it creates local value by creating more development opportunities and increasing profits. Moreover, it will also reinforce Africa's globalization. With the rising labor costs in East Asia, the multinational corporations will start looking elsewhere. Industrialization will help Africa increase productivity and become more attractive to multinational corporations.
Agriculture
African agriculture is at a turning point. Just like traditional big-donor countries such as China and Brazil, African countries are increasing their expenditures on agriculture with the support of new policies and resources. According to CNN, Africa has the largest share of the world's uncultivated land, with rain-fed crop potential. United Nation research shows that by 2050, the world population is projected to reach 9.7 billion. By raising productivity and modernizing agriculture, Africa has the potential to feed 9 billion people because it has 65% of world's remaining arable land. The future of the African agriculture market is bright because the continent has a lot of natural resources and agricultural conditions that other continents do not have.
Africa's oil history lasts over a period of several decades, and in some countries, the history is even longer. Many African countries have relied on this natural present for too long, and now it is the time for them to look elsewhere. Decreasing oil prices will push Africa to the top of the global economy because the countries have so many business opportunities that are waiting for future investors.
Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, technology hospitality, and real estate sectors. ABO's mission is to create global value for developing countries in Africa, while contributing to their economic development.