Does the US Offer a Good Investment Opportunity for Africans?

Here in Kenya and across many parts of Africa, economic growth is helping to expand the middle class. This is a demographic that is more economically comfortable and has greater resources that can be used for discretionary spending.

According to the African Development Bank, around 45% of Kenya’s population fit into the middle-class in 2011, and that figure is expected to have risen in the decade since. Across the continent of Africa, it is believed that around 25% of the entire population now falls into the middle-class bracket.

With middle-class status comes additional responsibilities and considerations. Most people in the middle class begin to think about savings, pensions, and investments. Even if they don’t want to follow a career in finance, these financial elements are important to sustaining their lifestyles into the future.

And while there are many investment opportunities close to home, some people may look to markets overseas, either for better returns, diversification, or to protect against currency devaluation.


One of the most popular international markets for investment is the United States. The country has enjoyed some of the best rates of growth among developed economies since the 2008 financial crisis. It’s also home to many of the world’s biggest companies, but does this still make it a great investment opportunity for Africans?


Room for More Growth

The laws of gravity apply to physical objects and the stock markets. What goes up must eventually come down, and most stock market indices in the US have enjoyed one of the longest bull runs in history.


The S&P 500 has more than quadrupled in value since January 2009, while the Nasdaq Composite has grown seven times larger over the same period.


For anyone that began investing over a decade ago, that means they will be considerably wealthier now than they were, but it’s almost certainly not going to just keep going up like this for another 10 years.


That said, there are some areas of the US economy that show signs that they have plenty of room to keep expanding. One of these is the iGaming sector, which is made of companies that offer sports betting, poker and casino games over the internet.


Online sports betting has only really been possible in the US since late 2018 after a law banning it was struck down by the Supreme Court. Since then, nearly two dozen states have legalized iGaming within their borders and more are expected to follow suit soon.


The market for this is fierce, big brands like DraftKings are using promo codes and bonus offers to build large market shares, helping them to acquire tens of billions of dollars in revenue.


Tech companies like Microsoft, Apple, and Google also seem to still have a lot of room to grow as they continue to post bigger and better financial results.

Does the US Offer a Good Investment Opportunity for Africans


Currency Stability

The United States dollar is the global reserve currency. This means that central banks in other countries hold large quantities of it as part of their “foreign exchange reserves”. Since the mid-20th century, the dollar has been the dominant currency and is used for most international transactions.


In spite of many people that criticize modern monetary policy for creating inflationary pressures on the dollar, it remains much more stable than the money minted in other countries.


Since 2009, the value of the Kenyan Shilling has declined by almost 50% against the US dollar, making international transactions more expensive for Kenyans. This does not mean the shilling isn’t strong, it is one of the most stable currencies in the region and is even used outside of Kenya in neighboring nations.


While there’s no guarantee that this trend will continue as the shilling has been relatively stable in recent years, holding some assets in US dollars could help to protect your investments from being devalued.


A Good Bet?

Unless you have a crystal ball, there is no way of knowing for certain about whether any particular investment is a good choice or not. Past performance is not a guarantee of future success, so you can’t look at historic trends alone, but many indicators do suggest that investing some assets in the US could provide some long term protection against inflation and currency fluctuations, as well as exposure to markets that have room to grow.


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