African farming is the new frontier for brave investors
As prices of agricultural land in developed nations have soared recently (farmland prices in the UK have increased 270% over the past decade), private equity firms, pension funds, and high net worth family investors are braving the high risks and looking to invest in agriculture in sub-Saharan Africa, which in some cases can yield 15%-20% in five to seven years. Granted, early investors can buy in at a low price, and through improvements can create custom, large-scale operations that will be well positioned to supply the growing demand for food from emerging markets in Asia and Africa, however there are risks and hurdles to be met. Lack of infrastructure, transportation, power, and water, and social, and land title difficulties are all issues that investors must be aware of. In addition to these tangible risks, there is also the ‘public spotlight’ factor holding back investors as non-governmental organizations (NGO’s) monitor investor’s activities in the region. Despite these considerations, the growing middle-classes of Africa and Asia provide significant opportunity for future growth and returns for willing investors.
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