Why Africa Saw its Biggest Surge in Micro-Investment During the Past 12 Weeks

Micro-investing apps have taken investing to the next level without taking away from traditional investing.

Investing in general does not seem to have a particularly good reputation amidst younger generations and the general consensus is that it is for “old, rich people”.

But this collective mind has began shifting drastically in recent times, with the advent of technology, smartphones and phone apps that allow you to do just about anything remotely.

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Investing can now be done from the palm of your hand, from anywhere in the world and at any time. Micro-investing apps have taken investing to the next level without taking away from traditional investing.

With the emergence and the spread of Covid-19 on a global scale, numerous businesses were forced to shut their doors and people were restricted to their homes due to strict lockdown and quarantine procedures in an effort to curb the spread of the virus.

Thus, 2020 saw the majority of populations being confined indoors, and with having to work remotely and having a significant amount of time that would otherwise have been hard to imagine a year ago, a lot of Africans have turned to options such as micro-investments.

Due to uncertainties surrounding the return of normal economic activities in addition to stress related to the threatening of income, whether short- or long-term, people have been looking at additional, or alternative, ways through which they can secure income.

Others have turned to investing, micro-investing and forex trading as a hobby to make use of the time that they now had to explore their options more sufficiently.

Thus, the African continent, especially has seen a substantial surge in especially micro-investments, due to the remoteness through which it can easily be done by making use of either their computers at home, or more often, their smartphones and tablets.

Why the sudden surge in Africa?

Small beginnings, low fees, and accessibility

Despite the misconception that investing is only reserved for those who have substantial amounts of capital and disposable income, some form of disposable cash is still necessary to start towards micro-investment.

Micro-investments allows the African investor to invest small amounts, often automatically by making use of mobile-based platforms. It does not require a lump sump consisting of all the investor’s savings to become a successful micro-investor.

This is a way to secure an alternative long-term income which can be especially useful in such times when there exists a lot of uncertainty, and while putting these small amounts away, investors can still have access to returns on a monthly basis in the meantime.

Simultaneously, through micro-investment, being able to invest small amounts at a given time, and frequently doing so, has its advantages, but another benefit of shifting towards micro-investments is that the fees are not as exuberant as with other investment types.

There are numerous mobile applications available today that do not require outrageous fees, and they are comprehensive, easy to use and offer an array of features that cater for the needs of every African investor.

Some of the best micro-investment applications (and their features) include, but is not limited to:

  • Robinhood – which does not require an account minimum, is designed for investors who like having their own control over their micro-investments, is easy to use and does not charge anything when trades are executed.
  • Acorns – Acorns charges as low as $1 per trade but there is no account minimum and the micro-investing process is completely automated along with the benefit of it being completely beginner friendly.
  • M1 Finance – This micro-investing app has a $100 account minimum, but investors have the benefit of not paying trading fees and trading is commission free with automated rebalancing.

With the technology and software section, in addition to the trading industry showing significant strength, especially during the pandemic, it is easy to see why more African micro-investors have emerged into the market.

There are numerous micro-investment opportunities for Africans

Micro-investors in Africa do not need to scour the global investment market for opportunities in which to invest their hard earned money. There are numerous micro-investments spread across their home continent.

Numerous financial markets have seen severe dips and crashes over the past few months with the ongoing pandemic, but African countries are rich in resources along with great opportunities that have investors, even abroad, scrambling for a piece of the proverbial pie.

Operating remotely a lot more, African micro-investors have had their eyes closer to home with the global economy tipping the scale on which markets delicately balance and rightfully so as the following countries offer numerous micro-investment opportunities:

  • Southern Africa – there are numerous opportunities for raw commodities, agricultural investments, and the mining sector puts South Africa in the position of the largest producer of gold, platinum, and chromium on a global scale.
  • Africa has a large population that represents around 14.72% of the global population and this creates the ideal opportunity for consumer goods such as telecommunications, banking and more.
  • Despite the oil markets seeing numerous dips and crashes, as demand has started increasing systematically, African micro-investors have started looking to investments in Northern Africa which has extensive crude oil reserves.
  • Micro-investments in ETFs and mutual funds have seen an increase as African investors have tried to diversify their portfolios and balance weaker shares with investments in the SPDR S&P Middle East & Africa ETF, or GAF.

Micro-investments in Africa offer some of the highest returns when compared to other continents on a global scale.

Investing in Africa is also paired with some risks, as all investments are, especially with political and economic factors worked into the equation, but this has never quite stopped African investors as they know the risk involved, along with the rewards that come with it.

Final Thoughts

With uncertain times and even more uncertainties that exist in employment and stable income, there has been a substantial surge where micro-investments are concerned, especially on the African continent.

With the reopening of various economies, African micro-investors have had more ample opportunity to cast their investments toward industries and sectors that have shown significant strength, and which are set to emerge from this pandemic even stronger.

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