Você fala Português?

February 5, 2014 rachel_eaton

Sarah Caddy

If you can’t, chances are you’re missing out, was the message from OMFIF’s conference on the ‘Role of Portugal and the UK in Lusophone Economies’ (February 4^th 2014, London).

Addressing a roundtable of business owners and potential investors looking to expand into Angola and Mozambique, João Alves, Partner at EY, listed the benefits enjoyed by Portugal as a result of its 500 years of common history with the rest of the Lusophone world. Reporting on the findings of his firm’s Attractiveness Survey 2014, which tracks 200+ investor perceptions, Mr. Alves detailed that:

58% of interviewees believe Portugal will improve over the next three years (marking one of the strongest scores for a European country)
95% of investors in Portugal today believe that they will still be doing so in five years’ time

And the reason that investors gave for these bullish views? That Portugal has such strong cultural and linguistic affinities with emerging markets.

With Angola and Mozambique both clocking in over 7% GDP growth, this interest is unsurprising. And despite the oil sector continuing to dominate – it currently accounts for 96% of Angolan exports, for example – the panellists and government representatives were unanimous in providing evidence of rapid sector diversification. Agriculture and telecommunications were two of the most regularly cited, with government agencies like ANIP (@ANIP_US) providing incentives for many non-oil sector businesses.

The swathe of positivity did come with a dose of realism from international law firm Miranda – in Angola, the only real way for a foreign company to build a business is via a local partner. At least the attendees of the conference now have the contacts to do so.

Insight

More good news for Africa: Consumer spending and private investment is up

April 26, 2013 rachel_eaton

Sarah Caddy

Consumer spending, which accounts for more than 60 % of Africa’s GDP, remained strong last year according to a World Bank report.

The trend was driven by declining inflation across the continent and improved access to credit in Angola, Ghana, Mozambique, South Africa, Nigeria and Zambia. In addition, interest rates were much lower in 2012 than in 2011 and we witnessed a spectacular rebound in agricultural income thanks to stable weather conditions. Especially Guinea, Mauritania and Niger experienced good rains compared to 2011, but less crops failed in general across the continent compared to the previous years.

We also have to add the steady remittance inflows to the good news coming from Africa, currently estimated at $31 billion.

Not to be sneezed at are the increased investments that are supporting the region’s growth performance. In 2012, for example, net private capital flows into the region increased by 3.3 % to a record $54.5 billion; and foreign direct investment inflows to the region increased by 5.5 % in 2012 to $37.7 billion.

The World Bank report also mentioned that exports are increasingly helping the continent’s growth and that the traditional destination of these goods over the last decade is also changing. Since 2000, the overall growth of sub-Saharan exports to emerging markets and other African countries has surpassed that to developed markets. Africans are increasingly selling to and buying from other Africans, which is the best news of all.

Insight

The “Where and Why” of investing in Africa

March 11, 2013 rachel_eaton

Isabelle Alenus-Crosby

Gong recently hosted a breakfast meeting chaired by The Economist’s Business Editor, Robert Guest.

One of the topics discussed was that too much “ignorant” money is going into Africa simply because there are not enough listed companies outside of Nigeria. The big question is therefore “where to invest?” Where are the various opportunities that tomorrow’s Africa presents, and what makes one country more attractive than another?

With 54 diverse markets offering unique prospects and challenges, most delegates had different opinions. What they didn’t have however, was conflicting opinions. Most agreed that there are still only a handful of good entry point to expand into Africa today.

Here are the top 5.

1. With a population of 170 million people, a growing middle class, and a reputable stock exchange, Nigeria is a notable market for those looking to target a large consumer base in Africa. With reformed petroleum regulations, Nigeria has also become an appealing market for multinational companies.

2. Ghana is doing incredibly well and has proven to be politically stable. The fact that Ghana and Nigeria have space programmes is a measure of how much these two countries are ahead of the game. The difference between Ghana and other countries is that everything (power, institutions, infrastructure) works. With the discovery of offshore oil, the country now really has everything to soon be claiming the number 1 spot.

3. Kenya is more business friendly compared to other regions on the continent. In addition, there is access to good human capital, excellent IT infrastructure, and IT skills.

4. Tanzania has always been politically stable and is therefore emerging as the most effective gateway for trade into Eastern, Southern and Central Africa. It has lucrative investment opportunities in infrastructure, privatization and value-adding facilities, and oil has recently been discovered off-shore.

5. Mozambique is developing at a rapid pace, has much oil and is also politically stable.

I should add that Ethiopia received an honourable mention at the Gong breakfast meeting; It has become Africa’s fastest-growing non-energy economy and Diageo and Heineken recently paid nearly $400m combined to acquire state breweries in the country. Ethiopia is not for the faint-hearted, however. Its population of 85 million people still ranks among the world’s poorest.

The conclusion was to watch what the diaspora is doing – and they are returning first and foremost to our top 3.

Insight

Developments in the insurance/reinsurance market – An African perspective.

January 14, 2013 rachel_eaton

Isabelle Alenus-Crosby

Demand for insurance and reinsurance continues to grow globally, but nowhere as quickly as in Africa.

Rating agencies are awarding stronger ratings to African Reinsurance providers despite the continuing economic crisis in the West.

The Economist states that seven African countries, including Nigeria, Ethiopia and Mozambique, are forecast to be among the 10 fastest–growing economies over next 5 years. Nigeria has by far the largest population in Sub-Saharan Africa, which, combined with being the second largest economy (after South Africa), gives it the highest potential for life insurance.

The middle class in each of these countries is fueling a growing demand for goods & services. Demand for insurance products, new or otherwise, should therefore follow. According to Continental Reinsurance “this urban consumer class, that is expanding faster that the middle class base anywhere else in the world, is the insurance industry’s biggest opportunity. However, with the exception of South Africa, little headway has been made in unlocking it”.

Africa has not escaped the general increase in the worldwide incidence of natural catastrophes that, according to an AON report, saw 900 occurrences globally in 2012, compared to 820 in 2011. The African continent experienced widespread flooding in Mozambique, Kenya, Tanzania, South Africa, and Nigeria, and severe drought in parts of the horn of Africa. The lack of insurance in these areas shows that the market is still very much in its infancy, and, with the exception of South Africa, should translate into immense potential.

“Unlocking” is certainly the key word.

Archives

Você fala Português?

More good news for Africa: Consumer spending and private investment is up

The “Where and Why” of investing in Africa

Developments in the insurance/reinsurance market – An African perspective.

Part of The Wilful Group