‘Africa’. ‘Generation Y’. Two phrases that conjure up a host of entirely different images. The first: poverty, famine, dictatorships, corruption, failed states, drought, pirates, poor infrastructure and illiteracy: the favourite ‘problem child’ of mainstream media. The second: the digital age, smartphones, iEverything, virtual workspaces, super-connectivity, entrepreneurialism and the triumph of the young, passionate and smart. Two concepts that apparently have very little to do with each other. How could the perceived thorn in the side of the West, the supposed bottomless pit into which aid is endlessly poured to no avail, be the right destination for the business leaders of the coming decades?
1. Africa isn’t just one country: it’s 55.
The continent is often treated as an indivisible whole, and subject to absurd generalisations.
Africa is one of the most diverse and culturally differentiated regions on the planet. What many choose to ignore is that the same is true economically speaking. At the World Economic Forum in Cape Town, General Electric Africa CEO Jay Ireland highlighted firms’ and investors’ treatment of Africa as a single country – and the automatic generalisation of highly localised political risks – as the largest factor limiting its potential. This is not to deny the existence of unstable areas and regimes, but to recognise that large swathes of the continent exhibit enormous potential for investors and entrepreneurs alike.
2. Connectivity is easy.
The UN’s Economic Commission for Africa (UNECA) is quick to point out that Africa’s GDP is twice that of India, and it boasts a significantly higher cellphone and internet presence.
The infrastructural spending required to expand and improve telecommunication networks to functioning levels is relatively low, particularly considering the enormous benefits of instantaneous communication and data sharing for business efficiency and quality of service.
Real-time communication allows networks to flourish and facilitates collaboration. Many urbanised areas are awash with smartphones, and social media, particularly Facebook, has a strong following among young people. The 21st century Africa is wired up – and most of the rewards are yet to be reaped.
3. Networking doesn’t get better than this.
By the year 2020, Africa’s workforce will be larger than Asia’s – in itself a huge business opportunity. What helps Africa to stand out, however, is the connections it has with the rest of the world. Millions upon millions of people living in the developed world are African emigrants with roots in the continent. African-Americans, Franco-Algerians and Hispano-Moroccans number just a few. First- or second-generation emigrants in particular are uniquely placed to take advantage of their increasingly connected networks at home, fostering a strong business environment and increasing the flow of communication between the developed and developing worlds. If you’re in such a position: great. If not: find someone who is.
4. If we don’t do it, someone else will.
The world is slowly starting to see Africa as an opportunity rather than a problem. Amid shifting perceptions, the big players are homing in on the continent, increasingly willing to support entrepreneurs and investors. In recent years, US exports to Africa have tripled to $21 billion annually, with the US Department of Commerce actively (and belatedly) advancing plans to aid American businesses in establishing themselves in African countries. Chinese state backed investment in African infrastructure and raw materials is extensive, often with ‘no strings attached’, frequently linked to environmental abuses and questionable ethics, and associated with poor regulation in the recipient country.
Existing market leaders across Africa often deliberately reinforce negative perceptions of the countries in which they operate in order to preserve their competitive advantage. At the same time, over half of African governments have passed pro-business regulatory reforms in the past year alone, aiming to distance commerce from the inefficiencies and incompetencies of the state. This is good news – the barriers to entry in African markets may be weaker than they seem, and Generation Y investors or entrepreneurs can increasingly count on institutional support and stronger regulation.
5. It’s The Forgotten Continent.
At least, that’s how musician-turned-investor Bob Geldof describes it. The untapped potential of sub-saharan Africa in particular is enormous. Perceptions that Africa as a whole has less capacity to innovate than the West is almost certainly misplaced. Innovative products can begin as easily in Africa as anywhere else, and too often ‘escape’ to be patented elsewhere. Under such circumstances, people tend to forget where products originate. Yet the underlying principle of innovation is resourcefulness, the catalyst for which is scarcity, not plenty.
The logic is simple: people in need can usually do more with less. In the fast-paced Generation Y markets of today and tomorrow, constant innovation is critical in staying ahead of the game.
This all adds up to one thing: the time to act is now. Doing business with Africa is a no-brainer, but a more focused approach to the continent as a collection of remarkable countries, not a ‘lost continent’, is a prerequisite. Brazil, Russia, India, China – all have their merits, but when treated independently, dozens of African states have even more.