Africa, home to 54 countries and some of the world’s fastest growing economies, can sometimes be a complex place for international companies to conduct business, but for those with an adventurous spirit it holds plentiful (and most-often hidden) prospects.
By Nicolette Pombo-van Zyl, editor of ESI Africa
The World Bank forecasts sub-Saharan Africa’s economic growth to reach 3.1% in 2018, and to average 3.6% in 2019–20. The continent’s three largest economies, Nigeria, Angola (see page 14) and South Africa have shown a moderate pace of economic expansion.
The World Bank’s chief economist for Africa, Albert Zeufack, draws attention to the need for a boost in productivity accelerating growth by fully embracing technology and leveraging innovation across the continent.
This is, in my view, achievable as various governments are warming to technology, such as allowing for net-metering, vigorously tackling non-technical losses, and providing favourable regulation for mobile money solutions (see page 54).
There is an aspiring middle-income group emerging in Africa that is open to taking the entrepreneurial route to secure their futures and careers. For international companies exploring these markets the challenge is in defining the middle-income household’s needs and by association, their ROI.
Market research company Ipsos found a clear disparity across different markets in terms of what consumers can buy, citing Nigeria’s Lagos where $4.60 would buy 10 litres of petrol, whereas in Uganda’s Luanda the same amount would cost $11.50 (140% more).
However, at the same time, Africa is equally home to some of the biggest unelectrified rates, where national electrical grids are under extreme stress and hampered by aging infrastructure. Any incremental GDP growth step forward is bound to deliver a stimulus to the job market and contribute to urban, rural, agricultural and industrial development.
Consider this: the direct jobs potential for off-grid or decentralised renewable energy solutions worldwide is significant – estimated by the International Renewable Energy Agency (IRENA) at 4.5 million by 2030, including everything from entrepreneurs and technicians, to installers and distributors (see page 18). Now add: low electrification rates, high renewable resources (predominantly solar, wind and biomass), keen entrepreneurial spirit, and instrumental policy change, which is backed by political will in some countries (see page 33 for an example) – these are the ingredients to catapult international companies’ investment in the continent’s energy and power industry.
Quoted by McKinsey in its Africa’s overlooked business revolution, Tidjane Thiam, Ivorian-born CEO of Credit Suisse and former head of insurance company Prudential, believes that with an upward economic growth trajectory anticipated, companies that get in early and shape the right strategy can sustain double-digit profit growth over decades.
“There is an element of breaking ground, but the long-term rewards will be very high.” This sentiment resonates with the electric vibe currently underway across Africa’s cities where utility-scale generation projects, off- and micro-grid development, reinvigorated policy direction, and innovative financial models are establishing fertile ground for international firms to cultivate. ESI
When can I expect the next issue of ESI Africa?
The digital copy of Issue 1 2019 will go live on 26 February 2019.