There’s a story of two salesmen sent to conduct research on the market potential of shoes in Africa.
The first salesman briskly declared: “There is no potential here — nobody wears shoes.” But his colleague had an entirely different opinion: “There is massive potential here — nobody wears shoes.”
This humorous story applies more than ever to Africa today.
Some investors still have stereotypical images of Africa etched in their minds, while others see untapped business opportunities and are moving in fast.
A new Africa has emerged from the ashes of the past and is gaining momentum. Many appear to have taken little notice of this quiet revolution. There is growing optimism everywhere.
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Rwanda, which was, only two decades ago, torn apart by genocide, is one success story. It is fast becoming an investors’ delight, and is 45th in the World Bank’s ranking of ease of doing business.
Similarly, the economy of Ethiopia, once a global metaphor for famine, has been growing at a rate in double-digits for the past five years. This growth has attracted Ethiopians abroad, who are coming home with expertise and capital to develop their country ranked as the 10th largest livestock producer in the world.
A middle class with increased purchasing power is growing. This has provided an incentive for fast-moving consumer-goods companies, which are scrambling to invest in Africa. The increase in population growth of Africa (estimated at 1 billion people) and an abundance of natural resources also make Africa a viable proposition.
The Chinese, who were smart enough to move in early, are reaping the rewards. They are building factories, roads and railways. In the past eight years alone, foreign direct investment has helped to create 1.6 million new jobs in Africa. Capital investments are projected to reach $150 billion in 2015. Western companies, including GE, are now taking an interest.
African companies are not sitting back idly, however, as they are behind a growing percentage of foreign direct investment. Big South African retail shops, such as Shoprite, Massmart and Spar, and telecoms companies MTN Group, Etisalat of the Middle East, and Airtel of India have all gained a foothold in Nigeria, which has had unprecedented growth in the number of subscriber-based fixed lines, from 500,000 in 2001 to 98.4 million as at October 2011. This growth is the fastest anywhere in the world.
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In 2010, Boston Consulting Group named 40 African companies that have the potential to rival Fortune 500 companies based on their size, geographical spread and turnover. Our conglomerate Dangote Group is one of them.
The key to doing business in Africa lies in understanding the environment. There are peculiar challenges: multiple taxations, low levels of infrastructural development and security issues. Corporate governance is receiving greater attention, too. A new crop of African entrepreneurs has emerged, and is changing the stereotypes about Africa and Africans. Come and meet them.