Africa: Reduction in Poverty Boosts Investments

By Christian Hiller von Gaertringen

One day, a Kenyan farmer told me: “We are not poor,” he said. “It’s just that we do not have money.” And this was true for many years in Africa. Many people could make a living unless they had to shoulder financial outlays, in other words they lived at a subsistence level as it was always difficult to market the products of their farms at a fair price.

For many centuries, land was abundant in Africa as the continent was largely underpopulated and still is. With an area of 322,000 km², Ivory Coast is roughly the same size as Germany (357,000 km²). Fifty years ago, in 1976, Ivory Coast had around 7 million inhabitants, and today it has 33.5 million. This represents considerable growth, yet it is still only a fraction of Germany’s population (83.5 million).

Population is still growing in Africa in spite of declining fertility rates. As the fastest-growing continent, Africa’s population expanded by over 580% to 1.5 billion from just 228 million in 1950, and it will reach 2.5 billion in 2050. This growth is largely taking place in cities (urbanization has risen from about 36% to 45% over the last two decades or so), where the lack of money actually leads directly to poverty. Africa’s fertility rate declined from a peak of 6.7 births per woman in the 1970s to 3.9. This is still high and combined with a significant decline in mortality rates will push the population growth.

The good news is: Poverty is going down in Africa. This is conclusively shown by World Bank data available on the Poverty and Inequality Platform (PIP). In 1990, 61.6% of the population in Sub-Saharan Africa lived under the 3$ poverty line (in 2021 purchasing power parity terms), in 2025 the figure had dropped to “only” 45.2%.

Significant regional differences

That said, the regional differences are still huge: In 2025, 52.1% of the population in Eastern and Southern Africa is considered as poor according to the above definition, with the figure being lower at 35.7% in West and Central Africa. While some parts in Africa made strong improvements in fighting poverty, other regions suffer from severe setbacks, specifically in the Sahel, in Sudan, DRC, and both sides of the Horn of Africa.

Nobody can deny it: Poverty is still a huge problem for Africa and will remain a major cause of social tensions. Should African economic growth rates actually get anyway near the potential, social inequalities will increase further, as future gains in prosperity will continue to be unequally distributed. Some will be among the winners, while living conditions will worsen for the lion’s share of the population.

In an astonishing number of areas, the decline in poverty creates investment opportunities. In this blog, we demonstrate how investors in Africa can strategically leverage the decline in poverty and the resulting gains in prosperity. We won’t beat around the bush. Instead, we will identify 10 specific areas where investors can do tangible good and make money at the same time.

What awaits you behind the paywall:

• Why poverty in Africa went down.

• How poverty reduction creates investment opportunities.

• How investors can jump on this bandwagon.

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