Before we get into it, earlier this week, a discussion broke out with us about the ongoing violence in different parts of the region and what our thoughts are about what this means for business. We feel a quick comment about the question is appropriate here. In a future piece, we will delve into it in more detail.
We do not deny that many countries in Africa have a sordid past, and that a few continue to struggle with these problems. In that light, we will draw a quick comparison between many of the countries in Africa and the United States. In its foundation, the United States had to shed an imperial power to gain its independence. Likewise, many of the countries in Africa have gained independence from an imperial power, and it only occurred late in the 20th century. After gaining its independence, the United States underwent internal conflict and a civil war, which is something we are seeing or have seen relatively recently in different African nations. Even after both of these events, the United States did not immediately emerge as a world super power in either economics or influence. We had to undergo a period of rebuilding and an industrial revolution prior to these events occurring. In both cases, our own growing pains were not without bloodshed and sordid acts as we moved forward and figured out who we were and who we wanted to be as a nation.
The difference here is that United States went through the bloodiest parts of its history as a growing nation long enough ago that it is not prevalent in our minds; however, with today's ever streaming media, we see many of these events in real time within many of the growing African nations. By no means are we condoning the violence, but we are saying that in the context of things, these countries are making a journey, not unlike many of our own in the Western Hemisphere.
As we advocate businesses look to Africa for future growth opportunities, we are not advising anyone to consider war torn countries as their next blue ocean. Yes, there are companies that make medical or other aid products that could help many of those affected by these events, but for the vast majority of businesses, these countries provide far more risk than reward. What we do advise is that Africa is home to a host of emerging economies growing at rates that are double or near double that of most of the Western Economies, and as these economies transition from third world to second world economies, like the United States did, there will be opportunities for new products and services. Likewise, as these economies transition from second world to first world economies, the opportunities will continue to grow. Lastly, we advise entering these stabilizing, transitioning economies as a strategic move that will allow access to some of the more unstable countries as they emerge from their internal strife and look to transition into second and first world economies.
With that, let's get into this week's positive happenings around the continent.
1. McDonald's Targets Africa for Expansion - This week McDonald's CEO, Don Thompson, announced that the corporation is exploring the opportunities that Africa has to offer, and clearly Nigeria is a large country with opportunity. Citing the economic growth of sub-Saharan Africa, which is projected to be double that of the rest of the world's, as part of its rationale, McDonald's will be working to expand it's small footprint in North Africa, Mauritius, and South Africa into parts of sub-Saharan Africa.
2. Africa Urged to Prioritize Agricultural Transformation - During a meeting in Addis Ababa this week, it was stressed that for Africa to sustain agricultural growth a successful agricultural transformation is necessary. "Agriculture transformation should still be high on the agenda and efforts should be exerted to include production and productivity to provide livelihood, raise income and create jobs and wealth.” For innovative agricultural companies, opportunities to help shape this transformation abound and are likely to increase in both the near and long-term.
3. Zimbabwe Given $23M USD Infrastructure Grant from China - According to China's Finance and Economic Development Minister, Patrick Chinamasa, these funds are earmarked for clinics, primary and secondary schools in resettled areas, and other items like meteorological equipment. This is another installment in China's help towards reaching the country's 5 year economic goal of achieving 7% growth.
4. Africa Focus of Future Development for Germany - German Development Minister, Gerd Muller, stated this week that for Germany, Africa is the land of opportunities. He stated that the continent will remain a development focus for the country that he would like to see more German businesses get involved. To this end, he also announced that Germany is working with Ethiopia to create a bamboo processing industry in the country. It is a public-private partnership working towards beginning export of bamboo from Ethiopia. He was quoted as saying "For us, Africa is the continent of opportunities, and we have to get the point across in Germany and Europe that this continent, which is 100 times bigger than Germany, is enormously dynamic."
5. Ford creates Middle East & Africa Business Unit - In an effort to stay ahead of the competition, Ford announced that it has created a Middle East & Africa Business Unit. Ford's CFO, Bob Shanks, said “We really want to get in on the earlier stages of that development compared to some of the other regions in the world.”
6. Africa - Where the Next Big Business Opportunities Lie, but Improved Healthcare still Needed - Many foreign investors are reporting that their ROI from Africa is higher than any other emerging region. With that, Africa still sees challenges in terms of health, which is another sector where transformation is needed. Helping to create solutions for healthcare can help bolster continued economic growth. Opportunities in healthcare present both social and business possibilities for companies to create long-term value.
As always, these stories represent only a small portion of the progress being made across the continent daily. We hope they help to illuminate the good going on across Africa. If your organization wants to blaze a new trail, consider Africa and its many opportunities. Need a hand setting your strategy or learning how to manage the associated risks? Contact Us to see how we can help your organization evaluate these opportunities and create your entrance strategy.
From everyone at Res Rei, we hope you have a great Valentine's Day. Enjoy your weekend and start your next week off thinking about how you can grow your company further.
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