Face-to-face with the opportunities of a rising Africa

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1 Face-to-face with the opportunities of a rising Africa Africa s expanding markets present unique opportunities and challenges. The ability to conduct in-person visits makes all the difference to success.

2 Key Takeaway Strong macroeconomic data and demographics have raised Africa s profile in the eyes of global investors. Those who are gaining a foothold in the continent s emerging consumer markets are doing so by identifying consumer demands and obstacles in person aided by the ease of air travel from Dubai. A resource-rich environment, the world s fastest-growing population and two decades of economic growth at 5% a year in a constrained global economy have transformed Africa into one of the most attractive destinations for investors and entrepreneurs. With the number of the continent s inhabitants projected to increase by 2.7% per year more than double the world average of 1.1% Africa can expect a GDP growth dividend of between 11% and 15% through 2030, according to a World Bank estimate. Despite an opportunity to change lives and create value, the continent s assortment of emerging and frontier markets presents a variety of challenges, not least varying political stability and global connectivity. Still, the accelerating spread of telecom-network infrastructure and the increase in commuter flights are helping to create new openings. Against this backdrop of challenges and change, something timeless is proving decisive for the success of international entrepreneurs in Africa: the in-person meeting. 2 Face-to-face with the opportunities of a rising Africa

3 Connecting people Many of these executives are leveraging Dubai as a launching pad, sometimes literally. Emirates Airline, Dubai s global carrier, added Bamako, Mali, to its list of 27 connections to the continent last year, up from 18 in 2009, and the two Johannesburg and Nairobi that it launched with in Meanwhile, the emirate s budget carrier, flydubai, operates to an additional ten destinations in Africa. Together, the two airlines network connects different parts of Africa more efficiently than might otherwise be possible, says Anand Kapoor, a 42-year-old Indian businessman whose $1.5bn Midcom Group manufactures and distributes Samsung white goods in Nigeria and other parts of West Africa. As a banker in Uganda, he realised that he would need ten years of running the rat race to achieve his career goals and quit to bootstrap a foreign exchange business in Kampala. By 2004, he had expanded into distributing mobile handsets in Rwanda, but when he wanted to take the company to West Africa, the distance and poor airline connectivity posed a challenge. In that pre-budget-travel era, businessmen with interests at opposite ends of the continent often needed to make two transit stops in Europe on a journey that might take an entire day. So Mr Kapoor moved his headquarters to Dubai, from where he now directs operations in ten African nations. We shifted primarily so our top management could travel easily across all our markets. I can t take a direct flight from Uganda to Nigeria or Ghana, but from Dubai I can take a direct flight to all the countries with our operations, whether East or West Africa, he says. Other factors such as the emirate s excellent trade infrastructure, the ease of setting up business and the tax advantages sweetened the move, he adds. 3 Face-to-face with the opportunities of a rising Africa

4 Making a difference Mr Kapoor was drawn to the continent in the mid-1990s, when Asia s tiger economies were capturing both investor attention and global capital. Even though I did not have any contacts in Uganda, I was sure Africa was a land of opportunity, with massive consumer potential that was constantly being overlooked by established companies, he continues. He took the leap, to see if I could make a difference. Midcom currently employs 2,000 people across 17 countries in Africa and the Middle East. South African businessman Marco Signorini also wanted to effect change with his solar lighting enterprise, Solarway. The company, a multi-million-dollar subsidiary of the Africa-based telecom provider Econet Group, develops lighting solutions in the UK and sells them across the continent, targeting mainly low-income households. There are more people living in the world today without electricity than when Edison invented the light bulb, he says, adding that he thought social enterprise could help change that. Since its 2012 launch, sales have more than doubled each year, albeit in stops and starts. The business has seen different growth cycles, with sudden bursts and quick expansion, but we have also had some slow growth with new competitors coming in all the time, he says. Revenues are on target to break even next year, but a constant pain point will remain the need for better public understanding of quality solar merchandise. Africa has been dumped with so many poorly manufactured products that convincing people to trust solar again and pay a little more for a quality product was rather challenging, Mr Signorini says. He and his team take to the road to meet distributors and consumers and demonstrate how their products are different. We demonstrate how even after being dropped several times, Solarway lanterns function exactly the way they re designed to ; they also address misapprehensions, such as when many users didn t realise the panels needed direct sunlight. We increased training and changed our packaging to use more illustrations that show how to charge the products, Mr Signorini says. With an investment from the Group and the services of a licensed agent, he established Solarway in the Jebel Ali Free Zone, a Dubai-based provider of industrial and logistics infrastructure solutions that allows 100% foreign ownership, for logistical reasons similar to Mr Kapoor s. Dubai is probably the world s biggest hub for us connecting Africa to the rest of the world. It s so easy to distribute across various regions from Dubai, so that has been a huge advantage to date, Mr Signorini explains. Dubai s strategic location and so many trade shows attract African businessmen to Dubai, giving us an opportunity to meet them and take our distribution forward. 4 Face-to-face with the opportunities of a rising Africa

5 Knowledge leadership The importance of knowledge-sharing in cultivating opportunities isn t limited to technology businesses. Bani Haddad, a Lebanese-French hospitality professional, will take his first steps into Ethiopia as an entrepreneur this year when his thirdparty hotel management firm, Aleph Hospitality, opens the 122-room Best Western Hotel in Addis Ababa. While subcontracted hotel operations are a well-established concept in the US and Europe, Mr Haddad says he s spending a lot of time explaining how it works and the significant benefits that it offers to all parties. We are offering a new concept to the region, so it hasn t always been easy for hotel developers to understand our business model, he notes. Mr Haddad made the entrepreneurial leap last year after eight years running hotels across the Middle East and Africa for the Wyndham Hotel Group. I have been visiting Africa frequently since Over the years, I have seen with my own eyes the changes, growth and economic opportunity many economists have spoken about, says the 40-year-old first-time entrepreneur. The frequent trips often two or three a month opened his eyes to Africa s possibilities. The more you visit Africa, the more you realise how diverse it is, he says. Those opportunities led him to draw up a list of priority-launch countries, ranked by various considerations, including GDP growth, population size, political and economic stability and government vision and planning. Mr Haddad quickly settled on Ethiopia. 5 Face-to-face with the opportunities of a rising Africa

6 It has the continent s second-largest country and double-digit GDP growth, but a lack of branded hotels, he says. He now travels there at least once a month from his Dubai office, from where he also hopes to launch operations in Kenya, Nigeria and Saudi Arabia this year. Mr Haddad chose Dubai for his company headquarters because of its superior connectivity and career appeal for ambitious professionals, calling Dubai a great hub from which to cover and service both the Middle East and Africa. With Emirates plans to add another ten African destinations through 2025, Dubai Chamber s opening of a third office in Mozambique and the announcement of new events such as the Dubai Show which aims at building trade partnerships in South Africa this November, the pathways to connecting on the ground are only poised to expand. - Mr Kapoor 6 Face-to-face with the opportunities of a rising Africa

7 Economist Intelligence Unit The Economist Intelligence Unit (EIU) is the world s leading resource for economic and business research, forecasting, and analysis. It provides accurate and impartial intelligence to companies, government agencies, financial institutions and academic organizations around the globe, inspiring business leaders to act with confidence since While every effort has been taken to verify the accuracy of this information, The Economist Intelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in this report. Copyright 2016 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of the Economist Group. Whilst every effort has been taken to verify the accuracy of information presented in this document, neither The Economist Group nor its affliates can accept any responsibility or liability for reliance by any person on this information. 7 Face-to-face with the opportunities of a rising Africa

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