Winning in Africa: From Trading Posts to Ecosystems

JANUARY 09, 2014by Patrick DupouxTenbite ErmiasStéphane HeuzéStefano Niavas, and Mia von Koschitzky Kimani

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Africa is growing larger on the corporate map. Mostly ignored by multinationals since the 1980s, the continent is now receiving their attention and investment, and for good reason. Growth rates are rising, and many long-running wars and conflicts are giving way to democracy and bureaucratic competence. Infrastructure and connectivity are improving.

As competition for growth in Southeast Asia and Latin America gets fiercer, companies are seeking the next frontier market. They have understandably trained their sights on Africa, whose growth trajectory has been the steepest in the world over the past decade and is likely to remain so into the future, with forecasts projecting 6 percent annual increases over the next decade. Emblems of optimism, progress, and consumerism abound in the form of smartphones, paved roads, bank accounts, and peaceful transitions of power. Over the past two years, dozens of media and analyst reports have increased awareness of Africa’s rise and the opportunity for private investors and multinationals.

Awareness of the Africa opportunity is one thing. Winning in Africa is another. The continent remains a dizzying collection of emerging markets, each with its own unique business environment, risk profile, and potential. Success in places like China or India will not necessarily translate into success in Africa. Many companies have been operating in Africa for decades and have learned the hard lessons that await newcomers. Unilever, Coca-Cola, Nokia, and a few others generate up to 10 percent of their sales in Africa. But companies just starting their Africa journey in earnest do not necessarily know how much to expect, where to start, and how to win.

In 2000, The Economist declared Africa “hopeless”—the conventional view at the time. In 2011, the magazine revised that assessment to “rising” and in March 2013 to “aspiring.” In fact, the seeds of Africa’s resurgence were already planted in 2000 but had not yet borne fruit. Today the fruit is ripening.

 
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