Thursday, 31 May 2012

The rate of return on foreign investment continues to be highest in Africa compared to other emerging regions. Africa has enjoyed huge benefits from the increase in commodity prices over the past decade, but that is just a part of the economic growth.

Two-thirds of the economic growth we are seeing in Africa is coming from other sectors including transportation, retailing, telecommunications and manufacturing. With this expansion in these African economies comes the ever increasing size of the middle classes and the rise of the urban consumer.

Citing the McKinsey Quarterly - Quote

'' Africa’s long-term growth will increasingly reflect interrelated social and demographic changes creating new domestic engines of growth. Key among these will be urbanization, an expanding labor force, and the rise of the middle-class African consumer.
In 1980, just 28 percent of Africans lived in cities. Today, 40 percent of the continent’s one billion people do—a proportion roughly comparable to China’s and larger than India’s (Exhibit 2). By 2030, that share is projected to rise to 50 percent, and Africa’s top 18 cities will have a combined spending power of $1.3 trillion.

 And urbanization is spurring the construction of more roads, buildings, water systems, and similar projects. Since 2000, Africa’s annual private infrastructure investments have tripled, averaging $19 billion from 2006 to 2008. Nevertheless, more investment is required if Africa’s new megacities are to provide a reasonable quality of life for the continent’s increasingly large urban classes.
Meanwhile, Africa’s labor force is expanding, in contrast to what’s happening in much of the rest of the world. The continent has more than 500 million people of working age. By 2040, their number is projected to exceed 1.1 billion—more than in China or India—lifting GDP growth.'' -

With the European and American economies stagnating and in some cases disintegrating, it is imperative for Africans in the diaspora especially and investors generally to take an in-depth look at what these African economies are trying to achieve in terms of development. Bring your built up expertise to bear and you will have just rewards.

There are still lots of obstacles and risks, no question, but the rewards are highly justified. One has to take a long term view, but with the increasing  investment flows into Africa it is wise and prudent to take the plunge and get involved.

Consumers big contributors to Africa’s growth

A woman checks on the children's clothing at a shopping centre. FILE PHOTO

By Daily Monitor Correspondent 

Posted Tuesday, May 1 2012 at 00:00
A new report by research firm McKinsey dubbed ‘The changing face of the African Consumer’ shows that consumers have become key drivers of Africa’s economy, which is expected to grow at an average of five per cent in the next 10 years.

The consumer market study that was carried out jointly with TBWA says steady growth of Africa’s population, expansion of the middle class and rising optimism about the continent’s future will play a crucial role in determining the continent’s fate.

“Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies,” said Damian Hattingh, an associate at McKinsey & Company.

He said that although natural resources remain important to the continent’s economy, an emerging middle class is crossing the threshold of pursuing basic needs to having discretionary spend.

“The consumer opportunities are real and have been reaffirmed.” The report shows that early entry into African economies provides an opportunity for global businesses to create markets, influence customer preferences, and establish brand loyalty.

“Profit margins in Africa are some of the highest in the world and as more players come into the market the gap will narrow down,” said Mr Hattingh. The Mckinsey study indicates that opportunities in for consumer goods companies are opening up fast in many African economies and are expected to fuel long-term growth. As Africa realises economic growth, the continent’s household spends are expected to expand and drive higher consumption in consumer-oriented sectors.

Economic growth in Sub-Saharan Africa remains strong and is expected to rise above the 4.9 per cent recorded in 2011, according to the World Bank. The continent’s growth, excluding South Africa, which accounts for a third of Africa’s GDP, is projected to be 5.9 per cent.

The McKinsey research, which began in September, 2011, surveyed over 15,000 consumers across 10 countries, concentrating on the cities that are known t o have a higher per capita spend.

The study mainly focused on groceries, apparel, telecommunications, financial and health services. It found that food and beverages offer the biggest opportunities for the consumer market in Africa as well as non-food consumer goods, including apparel. Healthcare and banking are also expected to grow rapidly in the region in the next decade.

It showed a large share of the household wallet goes to groceries (30 per cent) with 10 per cent going into clothing, six per cent in telecommunications and the rest to other needs. This is higher than the BRIC (Brazil, Russia, India and China) countries where 23 per cent is spent on groceries, 10 per cent on clothing and four per cent on telecommunications. “We are seeing increased spending across most consumer categories, in the region,” said Ade Sun-Basorun, an associate with McKinsey.

Food and consumer goods are expected to account for $185 billion by 2020, according to the report. Of these goods food and beverage, which currently stands at $406 million, is expected to grow to $543 million during this period. The study showed that Africa has a high Internet penetration more than Brazil, India and at par with China. Of the ten countries studied Kenya and Senegal have the highest penetration in the region. Affordable data and smart phone penetration are the main drivers in Kenya while cyber café prevalence has driven accessibility in Africa.

The study showed that on average most people in the region are using both computers and mobile phones to access the internet with social networking leading the activities online. Majority of Africans access social network sites by phone (57 per cent) compared to 55 per cent on computers. Africa’s growing population, which will account for 40 per cent of the global population growth going forward, is expected to help grow the consumer market in the region. The region has a young population, with 50 per cent being below the age of 20. With the young being the consumers of the future, McKinsey sees an opportunity for consumer-based companies to start understanding this generation and talking to them. The youth want products that define the right image, and follow the latest trends including technology and clothes, the study shows. Mr Hattingh said the research will also help change some of the perceptions out there including that Africa is a dumping place for cheap goods and consumers are happy as long as the price is right.

Consumers’ interest
Research showed that people in the region do not want cheap, “they want quality that is well prices,” he said. “The brands do not have to be international, they can be local as long as they are of good quality and well-priced.”

Kenyans, with 17 per cent, said they would buy local as long as the quality is good followed South Africa at 12 per cent, Nigeria and Ghana at 11 per cent. This is seen as an opportunity to build local brands, of good quality and price. The report is the second of its kind by McKinsey and was done to get into the minds of African consumers in a bid to understand their attitudes, behavior and how they make consumer decisions.

The organisation is looking start doing annual surveys to understand the opportunities in the region. The findings, which will be released in a full report next month, are expected to guide players in the consumer industry on the opportunities and what the market is looking for. It is also expected to influence policy makers on how to encourage consumer growth and opportunities in a sector that can be one of the highest employers.

By Ismail Musa Ladu 

Posted Monday, January 2 2012 at 00:00
After years of sending remittances to relatives and friends, Ugandans living and working abroad think it is time to do more—venture into business back home..

According to Uganda investment authority there are plenty of opportunities that Ugandans in the diaspora-can seize in order to make a better contribution to the country’s socio-economic growth.

Uganda has consistently attracted Foreign Direct Investment in East Africa over the past years, attracting about $250-300 million annually, according to the World Bank. 
In 2009, Uganda attracted FDI of up to $ 799 million due to the country’s good investment environment, liberalisation, strong resource base and government’s support towards private sector growth.

“People in Diaspora can invest in tourism, ICT, agriculture—especially in value addition, service industry, oil and gas and health services,” the Uganda Investment Authority director in charge of investment promotions, Issa Mukasa said in an interview. 
The decision by Ugandans in the diaspora to invest at home is believed to possess the double advantage of creating employment and supporting families.

Although remittances, amounting to $768 million in 2010 and $778 million in 2009 more than all donor commitments put together or even higher than one single export, investing in business back home makes sense for it is much more rewarding in the long run.

“With the hard economic times in the diaspora, Ugandans living abroad should invest at home if they are to sail through hard terrain in Europe unhurt,” Mr Mukasa said.

I strongly echo the views of the Uganda Investment Authority director, a sentiment i have already alluded to. Its a no-brainer to invest in Africa, if you are a property developer for instance beach front or lake front developments are highly profitable and desirable, its a question of doing your research. The service sector is exploding with Africa's middle and upper middle classes demanding high quality services and willing to pay for delivery of western standards. Telecommunications is also booming all over Africa and those with specialist knowledge and can customise the technology for the African market will find a great base for success. 

Wednesday, 30 May 2012

Thought i'd drop some cool pix of a vibrant, happening Africa.  See you there!!

Hennessey launch at brew bistro in Nairobi, Kenya courtesy of flickr

Is this cool or what!!  Mara Serena Lodge - Maasai Mara N. Park

image hosted on flickr

The vibrant city of Luanda, Angola - skyscrapercity

Pemba Beach Hotel and Spa- Mozambique
image hosted on flickr

Costa do sol- Maputo, Mozambique     image hosted on flickr                        yummmmmmmmmm!!!    

Singita Faru Faru Lodge - Tanzaniaflickr
Named best hotel in the world  in 2011

Read more:

Travel + Leisure just declared Singita Grumeti Reserves in Tanzania' Serengeti National Park to be the best hotel in the world.

It received a score of 98.44 out of 100 on a list based on reader surveys.

The hotel, which is made up of two lodges and a tent camp, offers unparalleled luxury in the thick of the wild.

It is located on the migratory route traversed annually by more than a million wildebeest, providing guests with incredible photo opportunities from their bedroom windows.

Despite its remote location, Singita's guests are treated to five-star service and accommodations.

Rooms in the tents and villas start at around $1,095 per person per night; rates include daily game
drives, food, and drink

The beautiful capital of Tanzania, Dar es Salaam - skyscrapercity

Tuesday, 29 May 2012

Hi People, still buzzing from the binky my son's pet rabbit, Bolt (named after Usain Bolt) just did. It was so high up it was incredible!! Talking about speed and delight African countries are growing fast economically as well as in size and so infrastructural development is so important in keeping up with the pace of growth and aiding in the expansion of these economies.

The building up of infrastructure in any economy drives employment creation and sparks the charge for further investment. These are capital intensive projects and the offshoot of these projects whether they be building bridges, highways, transportation systems, schools, hospitals or whatever the case may be is that they create more jobs and therefore more people are earning money to pay for goods and services and hopefully taxes!!  A good example of infrastructural development is Lagos State in Nigeria, where the government has created the Lekki Free Trade Zone and is in the full swing of construction, with mainly Chinese, European and South African investors. It will be a completely new urban development with an international airport in a very desirable area of Lagos by the ocean. For more information check out LFZDC

In another development on the infrastructure front the Lagos State government is set to begin the second light rail project.

 Lagos set to begin second light rail project

May 27, 2012 by Rasheed Bisiriyu 

The Lagos State Government has begun talks with the preferred bidder of second light rail line, a 32km Agbado-Marine rail, known as the red line.

This followed the advanced work already attained on the first line, a 27km Okokomaiko-Marina (blue line), being constructed by the China Civil Engineering Construction Corporation.

The Director- General, Public Private Partnerships, Lagos State, Mr. Ayo Gbeleyi, made this known during an interactive session with a Japanese trade mission to the state.

A statement by the PPP office on Friday also reported the director-general to have expressed the commitment of the state government to the provision of public infrastructure.

He said negotiation was ongoing with the firm, which he did not name, on the development of the 32km light rail metro transportation (red line).

Gbeleyi said the contract would cover the provision of rolling stocks as well as the operation and maintenance of the line when commercial closure was eventually attained.

Gbeleyi, who is also a special adviser to the state governor, said the project would considerably ease traffic congestion in Lagos metropolis when fully on-stream.

According to him, an average of 400,000 passengers would be conveyed daily.

“Also, the project is expected to generate over 8,000 jobs through direct and indirect employment opportunities,” he added.

According to him, construction work is rapidly progressing on 27km blue line (from Okokomaiko to Marina), with construction works on the first Phase from National Theatre to Mile 2, while the contract for the construction of the second phase from Mile 2 to Okokomaiko has been awarded to CCECC.

He also said negotiation for the operation and maintenance of the rail line, including rolling stocks, had commenced.

The state government had given end of this year as the completion time for the blue line; no date had been fixed yet for the red line.

He assured prospective investors of secured and profitable investment in the state.

Gbeleyi said the state required infrastructure investment of about $50bn and thus looked beyond internally generated revenue, debt issuance programme and multilateral financing to public-private partnership as a public finance instrument of bridging infrastructural gap.

He also said the state was gradually broadening the PPP market in the country, with successful projects such as the Bus Rapid Transit, Eti-Osa-Lekki-Epe Road Concession, Independent Power projects, shopping malls and urban markets, as well as the management and maintenance of a number of health facilities.

He said that the state government had put in place the necessary legal and regulatory framework to make PPP thrive.

Commissioner for Commerce and Industry, Mrs. Sola Oworu, urged the Japanese investors to take advantage of various incentives such as tax holiday, 100 per cent foreign ownership and repatriation, as well as waivers on all import and export licences, to invest in Lekki Free Trade Zone.

Lagos Light Rail Courtesy of

Monday, 28 May 2012

The rapid emergence of African economies is very heart warming to see, and with ever increasing populations and a growing skilled workforce multinational businesses are starting to look at setting up manufacturing concerns. African entrepreneurs both within the continent and in the diaspora need to be part of the growing expansion and not wait until things become over competitive.

Taking a look at Ethiopia we see an economy that is growing at a rapid pace with Ethiopians in diaspora returning home to be a part of the huge potentials. They have a huge mining industry and massive tracts of arable land. The Ethiopian Investment agency reports that FDI to Ethiopia is increasing.


06 May 2012

Addis Ababa, May 5 (WIC) – The Ethiopian Investment Agency (EIA) said Foreign Direct Investment (FDI) flow to Ethiopia has shown a remarkable increase in the last nine months.

Agency Corporate Communications Director, Getahun Negash, attributed the increase to the improvement in the financial sector, promotional works and smooth licensing process.

Getahun told WIC that some 95 per cent of the country’s capital budget, about 61 billion birr, is covered from the FDI.

Chinese and Indian companies take the lead in the FDI activities of Ethiopia, he said, adding companies from Saudi Arabia, Yemen, Israel, UAE, Europe and the USA are also investing in the country.

A number of investors are also coming from African countries such as Sudan, South Africa, Nigeria, Egypt and Kenya. The African investors, as Getahun stated, are engaged in agro processing and manufacturing sectors.

More significantly, the returnee Ethiopian Diaspora from Europe and America are engaging in various investment sectors, he further indicated.

He said the agency issues licenses for foreign investment projects based on the feasibility of the projects and the priorities of the Growth and Transformation Plan (GTP).

Manufacturing, agriculture and service are among the sectors that the GTP gives priority, he said, adding selection of foreign investors will also be done on the basis of the job opportunities they will create, their export potential and their engagement in an import substitution.

According to Getahun, since September 2011, 123 companies with over 11 billion birr combined capital have started operation, thus creating job opportunities for over 31, 000 employees.

The Ethiopian market is ready for private equity funds and i know there are Africans, including African Americans, who have the know how and are already involved in private equity in Europe and in the States who can set up private equity funds. Its a question of being aware of the opportunities and yes there are risks but there are huge profits to go with the risks.

Schulze Global Starts $100 Million Equity Fund for Ethiopia

Ethiopia’s first private-equity fund will see investments of $100 million in the Horn of Africa nation, said Gabriel Schulze, chief executive officer of Beijing-based Schulze Global Investments, which is managing the fund.
“The market is ripe and ready for private equity capital,” he told reporters in the capital, Addis Ababa, today. “We believe Ethiopia presents opportunities across the board.”
CDC Group Plc, the U.K.’s development finance institution, will invest $15 million in the fund, while the Schulze family will commit $10 million, said Schulze. It will reach its limit of $100 million by September, he said.
The $100 million will be put into as many as 22 Ethiopian companies in agriculture, manufacturing, education, health care, real estate, energy and tourism, Schulze said.
Government policy and development of private industries makes Ethiopia ready for the investments, he said.
“In the past five years there’s been a noticeable development in private sector support and foreign investor support,” Schulze said.

The Ethiopian government must be commended for making the country attractive for foreign direct investment and it is also trying to balance giving away chunks of its mining licences and land to foreign businesses as well as encouraging domestic and regional investment.

oh and if you just want somewhere exotic and peaceful to relax with your family or friends try staying at the Babogaya ViewPoint Lodge about an hours drive from Addis Ababa. Rustic and charming.

Wednesday, 9 May 2012

There are quite a number of  African millionaires scattered around Africa and the diaspora and the numbers are increasing but not at the rate at which it is rising in Russia for example. We need to encourage entrepreneurship at all levels, because it leads to quick development of economies increasing employment and spending power.

The number of Billionaires in Africa is low compared to other continents and yet Africa is resource rich with fast growing populations with an expanding middle class. Aliko Dangote, the richest man in Africa has invested heavily in Nigeria and Africa and is reaping immense  rewards-

People have to take the leap of faith that successful entrepreneurs take and step out of their immediate environments. You will find countries that are probably more commercially viable than your present location with governments actively encouraging you to invest with very beneficial terms whether it be tax incentives for example.

I reckon places like Mozambique in Southern Africa by the indian ocean should be looked at, it has tons of potential whether it be infrastructure, the service sector and of course the mining sector in which she is immensely blessed. Its a beautiful part of the world that is in the process of rebuilding its entire infrastructure. Mozambique has an abundance of fertile land for large scale farming with a ready market in South Africa and Asia and with her large gas deposits recently discovered direct foreign investment is starting to roll in.
 Pemba in Mozambique - courtesy of flicker

So whats happening where you are in Africa, please let us know...

Friday, 4 May 2012

I am incredibly passionate about Africa, indeed like most Africans I feel like 'pulling my hair out' sometimes when one follows the politics of the continent and all the shenanigans that go with it, yet most Africans who are well educated, middle to upper middle class (whatever that means), with a reasonable disposable income living in Africa or in the diaspora know fully well that the portrayal of our continent by the western media in most instances are unrecognisable or exaggerated. Don't get me wrong there are compounding problems in Africa and our leaders need to get together most urgently to deal with the myriad of issues facing the continent of Africa, but what i do not subscribe to is this portrayal of Africa as a basket case, far from it Africa is thriving and developing at a rate of knots. The African economies are emerging and for them to continue to develop we need to start putting the word out amongst ourselves as Africans and those with African heritage around the world to alert us to the growth of these countries, why we should come and invest in these countries, what part of the economy needs boosting, the hidden gems(too many) all around Africa in terms of tourism for example.

There is a large percentage of Africans living in Africa with huge disposable incomes looking for where to invest their monies but are not aware of whats going on in other African countries around them. The same goes for Africans in the diaspora and others with African heritage including African Americans. I would like to use this platform to encourage Africans to contribute their knowledge of positive developments in and around their various African countries and share them. Knowledge they say is power, people can inform us about what sectors are booming and transforming their countries i.e potential opportunities in tourism, tell us about ongoing projects, fashion industry, manufacturing etc. Tell us why people should come and visit or invest in your country. Contributions from economists would also be highly appreciated.  I believe there is a lot of scope for us as Africans to build up our assets and wealth by investing in our African economies with fantastic returns as well as helping to increase the standard of living for the peoples of Africa. We need to tap into the abundance of opportunities unquestionably available in Africa and the only way we can do that is to be fully aware of those opportunities from Angola to Zimbabwe.