When Nigeria recalculated its gross domestic product this April, it confirmed what many investors already suspected - that West Africa's giant had overtaken South Africa to become the continent's largest economy. As is too often the case in Nigeria, the bad news quickly overtook the good. Since then, the headlines have been dominated by tragedy.
It is easy to pretend that there are two separate Nigerias - one a thrusting consumer powerhouse and one socially divided and pocked by violence and poverty. For business, which relies on the success of the former, acknowledging the latter can be difficult, but they are two sides of the same coin.
Business Action for Africa and the Initiative for Global Development have launched a report in Abuja, in the margins of the World Economic Forum on Africa: “The New Africa – Nigeria: From Growth to Opportunity” (download it here). The Report argues that business will have a central role in breaking the cycle of inequality in Nigeria.
In Nigeria, and across Africa more widely, businesses have recognised that they have a social obligation and a commercial imperative to think about their impact on their host communities, leveraging their supply chains to ensure that they buy locally, sharing the benefits of their investment across a wider web of stakeholders.
We'd like to hear your views on How can business tap into the opportunities that Africa presents, while also maximising its contribution to long-term economic growth and broad-based socio-economic impact?
What do you see as the main business opportunities in Sub-Saharan Africa?
Sub-Saharan Africa faces a number of socio-economic challenges – what is the role of business in tackling these?
What role can others - in government, society, academia and business networks - play to maximise the contribution of business?
Please share your thoughts below!
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Welcome to this live chat! We're joined by a great panel to explore the questions How can business tap into the opportunities that Africa presents, while also maximising its contribution to long-term economic growth and broad-based socio-economic impact?
1. What do you see as the main business opportunities in Sub-Saharan Africa? There is a huge untapped business opportunity in the African clean tech sector. Consider the existing energy poverty on the continent: According to IFC, there are about 600 million people in Africa with no access to grid electricity, a number expected to rise to about 700 million by 2030. Access to improved cooking technologies that can benefit public health and the environment is also limited. 70% of energy poor are women and girls . This means that by creating new business opportunities and training support which deliberately engage women, we can make a big difference on eliminating the widespread energy poverty while tapping the potential of this huge market. Solar Sister is one such social enterprise connecting green power with women power. Through a market based and gender inclusive business model, we are bringing clean energy to Africa. Since 2009, Solar Sister has recruited, trained and mentored more than 600 women entrepreneurs in Uganda, Tanzania and Nigeria to bring life transforming clean energy ( portable solar lights, mobile phone chargers, improved cookstoves) to over 100,000 people. Scaling the impact of such innovative approaches, and smart public private partnerships can make a big difference in transitioning Africa from energy poverty to energy prosperity. Energy being so fundamental to development, this can create a ripple effect on the growth of many sectors.
To some extent this depends on what part of the continent you are in, and can vary a lot from country to country. That said, a few sectors definitely stand out.
On the one hand there are established ones like extractives and telecoms. But retail is showing strong growth, especially the drinks market, and even the creative industries are coming into their own. Agriculture is another important one to look out for with the current momentum behind it.
Having just been at WEF Nigeria, I think the business opportunities are now much more widespread than they were - so it's not just natural resource-dominated but genuinely consumer-led as well
As an additional note - on some level there is an argument to be made that literally any sector is an investment opportunity at the moment, given the lack of private sector development across the continent. But it's important to differentiate between "potential" and markets that are actually ready for investment.
In the natural resources sector (which of course is not the only growth sector), the main opportunity lies in promoting transparency, to support communication along the supply chain. Sub-Saharan Africa suffers from discrimination and the misunderstandings generated by those currently relaying most local information (fear mongers and scoop seekers). The lack of transparency usually benefits detrimental operators, and addressing it can increase overall accountability. The communication tools and technologies we now have at our disposal can serve that purpose.
For Stan Chart, the opportunity in Africa is immense. Analysts suggest that Africa’s banking market will be worth over $60bn by 2015, similar in size to India’s today. Africa's consumer market is already as large as India's - with the rapid development of an urban middle class. We see ever more interest from our investors in Africa, as it will continue to offer strong returns and high levels of growth at a time when other markets are struggling. While the details vary significantly from country to country, the specific sectors we are most excited about are agricultural finance, retail banking and financing infrastructure and power.
For me, there are fantastic opportunities for business across a range of sectors, but agriculture is the backbone of the economy in so many African countries. I believe that the greatest opportunity lies in transforming the agriculture sector through investment, particularly in value addition and processing on the continent, enabling large scale investors and companies to achieve significant returns, but also to create a more dynamic sector where SMEs and small-scale farmers also benefit.
We see the business opportunities through a lens of employment creation and aim to invest wherever the private sector is weak, where jobs are scarce and where fully commercial capital is less plentiful - to Lanre’s point it’s hard to generalise, but this means avoiding the sectors that are more established and looking at where there’s a relative lack of capital. Manufacturing, for example, has great potential.
What do you see as the main business opportunities in Sub-Saharan Africa?
The main business opportunities in Sub-Saharan Africa lies within the opportunities around Small and Medium Enterprises. The key promising sectors for African SMEs based on our research at W-Holistic Business Solutions (http://w-hbs.com) include:
I agree with Richard - the opportunities have diversified considerably over the past 5-6 years. Consumer-facing sectors - retail, consumer goods, telecoms, financial services, pharma etc are all experiencing rapid growth in investment. Infrastructure clearly offers huge opportunities. Renewables and Automotive are emerging opporuntities. Agriculture will probably see the biggest growth in investment in the coming decade.
I guess in amongst trumpeting the opportunities, we must also be cognisant of the related challenges in doing business across this massive, fragmented and often underdeveloped continent. It is in addressing these challenges (and realizing the opportunities) that business can often have a major impact on economies and communities.
Richard, I agree - at the launch event for the New Africa Report (audio available via this link), there was a wide-ranging conversation about opportunities - both in terms of building new business (agribusiness, power, etc) and in terms of doing business better (local sourcing, etc).
Michael - I think participants would benefit from seeing your Africa Attractiveness Survey and the other work of your Africa Business Centre - I think you've been doing a great job of describing the diversity of opportunities across the Continent. Can you share some links?
This is a really important point. Much discussion of investment on the continent focuses on potential, which is largely symbolic without the appropriate environment and processes to realise it. While things are definitely moving forward, sub-Saharan Africa remains the most difficult place in the world to do business.
Nowhere is the conversation about how to link the bottom line to development impact more relevant.
There are number of business opportunities in Africa :
Some of the key sectors are : agriculture, manufacturing , food processing, contraction/real states , unique tourism distinction, computers software engineering /design, trade related business, energy development and many more ......
OK - let's move onto the second question. Sub Saharan Africa - recognising the huge diversity across different countries - offers significant opportunties for business, as many have highlighted. In taking those opportunities, what role can / should business play in tackling regional and national socio-economic challenges?
I accept this to a degree Lanre, but talk of "the most difficult place to do business" has deterred investors unnecessarily in the past. Yes if they plunge in without any local expertise they may well get burnt, but not if they have reliable partners. Businesses like Stan Chart - we have over a century of experience of operating in most of our African markets, with 99% of our 8,500 staff in the region being African - can help other businesses manage some of the challenges and pitfalls. It's an important but neglected role for multinationals operating in the region, as multipliers of FDI.
Although our perspective in these is deliberately a glass half full one, and primarily on the improving and changing investment landscape, we try not to shy away from some of the key challenges. I'm very pleased with how the latest one has shaped up, so please do look out for it!
