We have been closely watching the growth of the African market and believe there is a great opportunity for the NZ mid-market in the medium to long-term. Now, the NZ business opportunity in Africa is real.
Mid-Market Watchlist – Turn Your Gaze To Africa
If you are wanting to grow your business you will be looking at where you want to be in 5-10 years’ time and what you need to support growth. By that time the African emerging market will be booming and should be considered. We have a number of clients who are including Africa in their medium-term plans for growth (5 years from now). If you haven’t done so already, now is the time to put Africa on your watchlist.
The NZ business opportunity in Africa has evolved with the market at an exponential rate. To help you understand the market better, here are a few facts that may surprise you.
Size and Opportunity*
- Africa has a population of around 1.2 billion that is projected to double over the next 30 years.
- By 2030, Africa will have 17 cities with more than 5 million people, including five with 10 million or more.
- Income per capita is more than double the continental average.
- Africa has 400 companies earning revenues of US $1 billion or more and nearly 700 companies with revenue greater than US $500 million.
Consumer and Talent Markets*
- Africa’s consumer class spending already exceeds India’s.
- Soon Africa will have double the number of smartphone connections than North America.
- Africa’s talent market includes:
- a motivated group of entrepreneurs who are working hard to develop their own enterprises and the African economy.
- a group of well-educated leaders, who have gone to the best universities internationally and have come back to drive African enterprise and growth.
- people at the front line who are extremely ambitious, interested in learning and want to develop. These people don’t always have the right skills, but the attitude to learn is there.
Relevance for NZ
In their book Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market, McKinsey senior partners Acha Leke, Mutsa Chironga, and Georges Desvaux, state that small and midsize companies will be crucial to speeding up economic development, serving unmet needs, and creating jobs in Africa. They predict that these companies will become the large companies of the future.
They believe there is space for businesses to build scale, whether in manufacturing, retail, or a myriad of other sectors. The competitive landscape is still quite weak and by turning challenges into innovation, and unmet market demand as room for growth, NZ business leaders can find opportunities in the African market.
NZ Business Opportunity in Africa
Business strategist and founder of Smallstarter Africa John-Paul Iwuoha, identified the top business opportunities in Africa for 2018 as:
- Agriculture / Crowdfarming
- Drone technology
- Affordable Housing
- Transportation and Automobiles
- Local products for export
- Start-up funding
- Fintech – Financial Services
- Urban Logistics
Add to this the future opportunities of retail and renewable energy and there are numerous NZ business opportunities in Africa.
Political Risk and Volatility
Of course, there are risks associated with the African market. Political risk and volatility are factors. Poverty remains widespread and there are great infrastructure gaps and regulatory complexity.
It is important to know the market and the differences between countries and cities within the African continent. There are countries that are quite stable and growing fast such as the East African and the francophone African countries, for example, Rwanda, Ethiopia, Cote d’Ivoire, and Morocco.
So, as Georges Desvaux points out, it is important that a venture into Africa is well planned and that you build resilience into your business to manage the risks and the inevitable storms.
All the signs are right that Africa is going to be the next centre of global growth. If you are serious about growing your business then now might be the time to start working on how and what needs to be done to be trading in Africa by 2023. A long-term view is needed and Africa may just become an essential part of your long-term sustainable growth strategy.