Category Archives: Africa

Africa

Retail market outlook in Nigeria

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Nigeria has some of the biggest opportunities for the retail sector in Africa. However lingering concerns over select risk factors, including tariffs imposed on the industry, may affect investment in the near to medium term.

Currently, more than 80m of Nigeria’s 170m citizens live in or close to urban areas, a figure that is set to rise in coming years as the economy moves away from its traditional rural base. This shift to the cities, and the rise of a broader middle class, represents a vast pool of customers for retailers.

According to a report released in July by research firm McKinsey Global Institute, Nigeria’s consumption could rise to $1.4trn a year by 2030, from its present level of $388bn a year, an average annual increase of 8%.

This rise in consumption will be driven by higher income levels, with the report forecasting 35m households to be earning more than $7500 a year by 2030, greatly expanding the middle-income bracket. This increased affluence is expected to result in 7.1% annual growth in sales of food and non-food consumer goods. The rise of non-food goods such as personal care products will record an even sharper rate of growth, with sales rising by 10.6% a year through to 2030, compared to 6.8% for food.

First-mover advantage

Another report prepared by international management consultancy A T Kearney earlier this year tipped Nigeria, along with Gabon, as offering the best retail investment opportunities in Africa. Kearney’s African Retail Development Index ranked Nigeria second overall for retail potential, saying it had rapidly evolving retail dynamics and demographics, with many other global retailers planning to set up shop.

“There is no time to spare entering these markets before these first movers gain an advantage as they establish their brands early and secure loyal customer bases,” said the report.

The opportunities in Africa more broadly have prompted multinational brands such as Walmart and Carrefour to expand their presence on the continent in recent years. Walmart acquired a 51% stake in South African wholesaler Massmart in 2011, which operates two stores in Nigeria under the Game brand.

Last year, French retail giant Carrefour partnered with the French distributor CFAO, which specialises in African sales and distribution, and plans to open stores in eight countries across the continent by 2015, including in Nigeria.

Challenges to growth

Concerns over domestic security could be an issue for local and foreign retail investors in the short to medium term, especially in the north of the country where interest has stalled due to militant activity. Continued unrest may also slow larger retailers moving into smaller cities, in particular those in or close to potential areas of instability.

Nigeria faces other challenges endemic to most emerging markets on the continent. Expansion in Africa can be slowed by a lack of infrastructure and difficulties in securing property, said Massmart’s CEO, Grant Pattison. Those hurdles, as well as problems with corruption, an unreliable legal system and currency stability in some countries have to be assessed when planning stores, he said, quoted by Bloomberg last year.

Another factor which may impact retailers in Nigeria is related to the fees charged on bank deposits of more than $15,000, a move by the state to promote a cashless economy and also rein in money-laundering. With many customers of retail chains spending less than $5 per transaction – purchases that tend to be made in cash – retailers have a high cash turnover that incurs bank fees. While some chains such as supermarket group Shoprite have seen electronic sales rise steadily, with the retailer reporting debit card purchases representing about 32% of total sales, cash remains king for the time being, though at a cost due to mandated fees.

While supporting the cashless economy programme, Haresh Keswani, managing director of the Artee Group – which operates a number of retail brands in Nigeria – says there are still hurdles to be overcome.

“As the retail sector develops, cashless transactions will grow. Cashless is a great idea, however the Central Bank of Nigeria must restrict cash transactions and create incentives for cashless payments,” Keswani told OBG.

Changing shopping patterns

As in most African markets, at present around 70% of all retail sales are conducted at small shops or informal outlets, however this will likely shift increasingly in favour of larger retailers in the years to come. McKinsey estimates the rate of sales expansion by modern format stores at 28% a year, a rate of growth that will gain pace as urbanisation increases.

Nigeria had attracted more than N205.4bn ($1.26bn) worth of investments into the retail sector in 2012 and 2013, the minister of industry, trade and investment, Olusegun Aganga, said at the end of last year. This is a reflection of growing demand for formal shopping options, with further floor space due to come on-line by the end of 2014, both in the form of stand-alone outlets and shopping malls.

This article is re-published with permission from Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia and Latin America.

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Africa News

Africa Is Our Next Superpower

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Africa the next super power

Not that “Africa” is a country, of course, but it helps to look at broad, continent-wide trends. People are reluctant to the idea of demographics as the great driver of history. In the general case, this might be true. But the 21st century will see an unprecedented situation: one where every continent will face large-scale aging and slowing demographic growth. Every continent, that is, except one: Africa (or, to be more specific, sub-Saharan Africa). Africa is young whereas the rest of the world is graying, and any strategic thinking about the 21st century must take this into account.

Add to this Africa’s steadily improving situation with regard to governance (there are still many problems, but steadily less war, steadily more free elections, and so on), and a technological landscape and future that will allow Africa to leapfrog many aspects of the rich life that the rich world takes for granted. And national resources are just icing on the cake.

As is frequently remarked upon, and as a book review in this week’s Economist touches upon, China has a very deliberate and ambitious strategy of investment in Africa. The old categories of “neocolonialism” miss the point. So does the remark that China is only interested in Africa’s natural resources in order to fuel its own manufacturing-driven growth and put its strategic eggs in more than one basket.

For sure, China’s drive into Africa is mainly motivated by natural resources. But this is merely the catalyst of a broader phenomenon, which is really driven by the frustration of so many Chinese with the unbearably stifling and corrupt Chinese system. From a slow-growth West myopically hypnotized by China’s largely meaningless growth figures (and a bizarre envy of authoritarianism), we don’t actually see China for what it is, which is a very unhealthy society. The limitation on births. The ruthless and ineffective education system, which now no longer provides the jobs it promised. The omnipresent corruption and inflation. The stifling (literally) pollution. No wonder everyone who can is running for the exits.

It is this social phenomenon which is driving China’s scramble for Africa, more than “neo-colonialism” or a mere geopolitical grab for oil and soybean fields. And underlying it is an understanding that the West ignores at its future peril: Africa is where the future is.

Original title: China Understands What The West Doesn’t: Africa Is Our Next Superpower / Source: Forbes

Africa News

S.Africa ranked 13th most attractive FDI destination

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Green Energy

South Africa has climbed two spots to become the 13th most attractive Foreign Direct investment (FDI) destination.

This is according to global A.T. Kearney’s 2014 Foreign Direct Investment Confidence Index.

According to the index, South Africa, which was ranked at number 15 in 2013, closed two major deals with international companies BP and Google, signalling a positive FDI trend for the country.

British oil major BP, for instance, announced a 550 million US dollar investment over five years while global search engine Google made its first renewable energy deal with South Africa’s Northern Cape Province for 12 million US dollars.

The South African government stated that they are humbled by the ranking as it shows that the country’s strategic partnership with foreign investors is gaining momentum. Continue reading

Africa EABDC News

Opportunities that Africa Presents – A discussion

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NewAfrica2014

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?
  2. Sub-Saharan Africa faces a number of socio-economic challenges – what is the role of business in tackling these?
  3. What role can others – in government, society, academia and business networks – play to maximise the contribution of business?

Can we hear your opinion on this.

© Africa Hub (Source)

Africa News

World Bank to support Kenya in 5-year plan

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Diariétou Gaye

The World Bank has endorsed a five-year strategy to help Kenya achieve its national development blue-print.

A loan facility of 348 billion Kenyan shillings has been approved.

The development strategy is set to aid Kenya flourish in its efforts to boost economic growth sustainably, create more jobs for the youth, improve infrastructure, and devolution in order to fight poverty and manage social diversity.

“While Kenya has grown on average at 4.6 per cent annually over the last decade, poverty and inequality have fallen less dramatically which has prevented many Kenyans from sharing in the benefits of the country’s strong economic performance,” the World Bank said in a statement. Continue reading

Africa News

The amazing spirit amongst Africa’s tech entrepreneurs

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Jason Njoku

You think you have seen them all until you see more of them. Solutions that you thought had been long employed. Innovations that you thought had long been exploited. The DEMO Africa Innovation Tour across the continent was an eye opener. Last week we were in Ghana. Be sure to apply before coming Sunday, June 15th.

The startups came in numbers and ready to impress the judging panel, which comprised decision makers from top companies in Ghana and other global players including Google. From Citizen Eye, a social enterprise that aims at tracking oil money with an aim to empower citizens to hold the government accountable, to Kitiwa a startup bringing Bitcoin to Africa. Continue reading

Africa News

East African Energy-Boom Investments Take Focus in Budgets

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Petroleum Exploration

Kenya, Uganda and Tanzania plan to allocate money in their annual budgets to spur investment in infrastructure to exploit oil and natural gas from deposits that companies including Tullow Oil Plc (TLW) are developing.

Ugandan and Kenyan oil discoveries, made in 2006 and 2012 respectively, and new gas finds off the coast of Tanzania that have boosted reserves to as much as 46 trillion cubic feet have seen East Africa become a frontier for petroleum exploration.
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Africa News

Zimbabwe’s Emerging Tobacco Queens

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Tobacco-farmer

Harare — Madeline Murambwi sits behind the wheel of her brand new Toyota Land Cruiser, threading her way through the traffic in Zimbabwe’s capital, Harare. She’s on her way back from the tobacco auction floors where she just pocketed thousands of dollars.

“Tobacco farming is a brisk business here. Before joining it, I didn’t realise men were making lots of money out of this leaf. I have made great economic strides in my life,” Murambwi tells IPS, adding that she now also invests in property.

“So far I have made 42,000 dollars through tobacco sales, with more sales to come,” says Murambwi, 47, who has a 32-hectare tobacco farm in Zimbabwe’s Mashonaland East Province.

In 2012, Murambwi ventured into tobacco farming and her business continues to grow each season. Continue reading

Africa News

Africa’s women entrepreneurs take the lead

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Janet Nkubana

KAMPALA, Uganda (AP) — Madinah Nalukenge recalls the day she set out to sell food on the filthy edges of a bus terminal in the Ugandan capital in 2004. She had just $10 left over from a failed attempt to sell bed sheets.

Now she runs a catering business that makes a monthly profit of up to $3,000, a source of pride for the 34-year-old single mother who spends her days offering plates of mashed plantain and greasy meats to transport operators in downtown Kampala. Continue reading

Africa News

Ventures Africa chats with Serial Entrepreneur Ashish Thakkar, Keynote Speaker at MIT’s Africa Innovate Conference

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Ashish J. Thakkar

VENTURES AFRICA – Ashish J. Thakkar is widely known across Africa as one of the continent’s most innovative and inspiring entrepreneurs. The founder and Managing Director of the multinational conglomerate the Mara group which has operations in 19 African countries and 21 countries world wide, Thakkar has been in business since dropping out of high school in 1996 at age 15 to found his first business selling computers. Thakkar chats with Ventures Africa about business, entrepreneurship, and the future of Africa: Continue reading