Lesego Malatsi - SouthAfrica.TO

THE GREAT and the good of the
business world recently gathered
at The Grand Connaught Rooms in
London at an Economist Conference
entitled ‘The High-Growth Markets
Summit – The World of Opportunity.’
The term ‘high-growth markets’ is
now considered the ‘PC’ term for
‘emerging markets’. Amid heated
debates and divided opinions,
Africa featured high on the agenda.
A number of high profile business
leaders including Strive Masiyiwa,
founder and chief executive officer
of Econet Wireless Holdings,
Frank Braeken, Unilever executive
vice-president for North Africa,
Middle East and Central Africa
and Ncube Mthuli of the African
Development Bank debated the
prospects for the continent.
They identified a number of key
themes driving Africa’s place in the
world’s rising high growth markets.
Beyond natural resources
Africa is no longer a resources
story. Rapidly rising income
is pushing up the potential for
consumption in Africa with a very
large emerging consumer base
across the continent. This, say the
experts, is providing some very
interesting investment opportunities
in under-researched and generally
poorly understood markets.
Frank Braeken of Unilever
commented: “There is a growing
realisation that the future of Africa is
based around a consumer rather than
mining. This is a consumer that has
been under-served and over-charged.
“It is very ironic that the African
consumer pays more for consumer
products than any other – toothpaste
and washing powder are twice more
expensive than in Asia, telecoms
space consumers are overcharged
and to build a house on the continent
is more expensive than in China.”
But with incomes growing
consistently, the continent’s
emerging middle class provides
new oppurtinities for both domestic
and international business to
grow – and increasingly the world
is sitting up and taking notice.
Improving democracy
Africa has witnessed a sea change in
politics in the last 25 years. In 1985,
84 per cent of the continent belonged
to one-party states/dictatorships.
Today, more than 90 per cent are
multi-party democracies, which
means more accountable government
and much less war and civil unrest.
Of course there have been the
uprisings across North Africa but
these have essentially been driven
by the citizens of these countries
pursuing democracy and a free
future. Peaceful democratic transfer
of power is becoming the norm
even though violence makes better
copy. So while Ivory Coast's bloody
post-election standoff was headline
news, the elections in Nigeria,
widely praised as the fairest in
decades, attracted far less attention.
Strive Masiyiwa of Econet Wireless
Holdings said: “When Mandela came
out of prison only 7 countries out
of 54 held democratic elections. By
2006 only seven countries where not
holding democratic elections – most of
these were North Africa and now we
have the Arab uprising to answer for
this.” He added that Nigeria – which
accounts for a large part of Africa's
population – has not witnessed a
military coup for the last 15 years.
Urbanisation & demographics
Africa is now nearly as urbanised
as China, with the continent's
cities growing faster than Asia’s.
Urbanisation drives accessibility
and analysts see this as a positive
although Braeken maintains that
the biggest caveat remains the
affordability of consumer goods.
“Businesses expect much
higher yields to compensate for
the risk of operating in Africa
but this will not be sustainable
over the long term,” he said.
Beyond urbanisation another
factor playing in Africa’s favour is
its fantastic demographic profile
- around half of the continent's
billion-strong population is of
working age. This is a huge contrast
to European countries, Japan and
even China, whose one-child policy
is storing up demographic trouble.
Africa’s labour force is expected to
more than double by 2040, keeping
its dependency ratio low and
ensuring that the various age-related
concerns prevalent in the West will
not be a problem for years to come.
The power of the diaspora
While poverty is still endemic, the
continent enjoys huge private capital
flows back thanks to many expatriates
from Africa working abroad. Where
the continent was once an exporter
of capital and intellectuals, many
of these individuals are to return
to Africa and are improving the
quality of management teams. Many
CEOs of companies are Harvard/
Oxford educated, improving
levels of corporate governance.
“We should not underestimate the
impact of the diaspora,” said Ncube
Mthuli of the African Development
Bank, pointing out that the amount
of capital flowing into the continent
from expatriates is equivalent
to Aid received (around US$45
million) but the difference is that
this is targeted money whereas
Aid can be “all over the place”.
But as Strive Masiyiwa said: “I
love the money from Diaspora – but
I would rather they came home.”
Better leadership
Linked to diaspora is the emergence
of what the panel of experts dubbed
a ‘new kind of leadership’ on the
continent. “African expatriates
going back are bringing a new
quality of leadership to the
continent,” said Mthuli. Braeken
said Rwanda is a good example
INDWE NOVEMBER 2011 41