I am not sure if you have been following the World Economic Forum on Africa, or if you have even been aware of the fact that it took place. But luckily you have me 🙂 – and if you want to be aware of some of the main topics and Africa business trends highlighted by Africa’s policy makers and economic stakeholders it’s worth listening in. As always, I will try to make this post very practical and will provide a few business tips for you.
Let’s dive in!
The World Economic Forum on Africa 2015, took place on June 3-5 in Cape Town, South Africa. This year’s theme was: “Then and Now: Reimagining Africa’s Future”, and overall the debate was very engaging and optimistic.
On Agriculture and Food
Kanayo Nwanze, president of the International Fund for Agricultural Development (IFAD), reminded the audience that Africa holds about 60% of the world’s uncultivated arable land. Yet despite this huge agriculture potential, the continent remains a net importer of food. He stressed that contrary to public opinion, Africa would not need to tap into uncultivated land reserves to feed its people. All it needs to do is increase food production on land currently being farmed.
“Our small producers, whom most people describe as subsistence farmers, are basically engaged in a business that has failed. Why do I say it has failed? Because productivity on the average is about 40% of its potential,” he highlighted. “We have to increase productivity of existing farming systems. We have to become modern… the potential is there.”
Monica Musonda – founder of instant noodles manufacturer, Java Foods – highlighted the need to invest into more food processing on the continent.
Zambia, she noted, is one of the few African countries which has now become a net exporter in crops such as maize, wheat and soybeans. But not enough of this is processed locally. “What we are seeing is the failure to take the opportunity on the downstream end.”
She spoke about the increasing consumer demand for new kinds of processed foods such as instant noodles or fortified breakfast cereals, and pointed out that the challenge was high production cost and the lack of basic packaging, which needed to be largely imported.
The moderator of the panel mentioned that Ivory Coast, Africa’s largest producers of cocoa, opened its very own first only a few days ago.
Business opportunities for you:
– Go into food processing – it’s clearly an upward trend with huge potential across Africa. But get your cost forecasts right. If local production is too expensive you may find it hard to compete with still existing imports of foreign food goods.
– Invest in existing agricultural producers and ventures to increase farm output. Flower production for export, diary for the local and regional markets, cereals, and fruits – have all huge potential.
– Manufacture and provide basic packaging for local food processing businesses
– Establish a chocolate factory in cocoa producing countries. African consumers want to eat chocolate, but are paying up to 3-4 times as much for a chocolate bar than you would pay for in the West, because the cocoa gets exported and imported as a processed food item.
On Education
It was reported that most of Africa’s education systems are irreparably broken. There was also an acceptance that standards will only improve with a massive increase in resources – which is beyond the scope of governments alone.
There was a general consensus that technological transformation in education are becoming more grounded. Technology, through Massive Open Online Courses (MOOCs) and distance learning technologies, are part of the answer to Africa’s education crisis. But deep-seated problems – from teacher training to teacher absenteeism – won’t be solved through that.
Business opportunities for you:
– Create online courses or distance learning technologies – I would suggest they are both compelling and certified courses that people or institutions would pay for.
– Open a training company on a subject matter that you know well. You could provide training packages in schools, for students, interested individuals, or company staff in their own premises. It’s a great way to start a business on a shoestring budget and allows you to remain highly flexible. If you are looking to invest – look for a Ghanaian hospitality training company – Ghana’ s hospitality industry is currently facing such a huge lack of related personnel that it is peaking of a crisis.
On Finance
Financial inclusion is key, we hear again on the Forum. Small-scale farmers and especially women need to have equal access to financial services. It was said that in the agricultural
sector rural women are better managers of their resources and the rate for the pay back of loans stands at about 96% for women, but at only around 60-70% for men.’
Business opportunities for you:
– There are huge and profitable opportunities for micro-finance or community based banks. Focusing on loans for women only may be a good business decision considering the data above.
On energy
In 2014, Africa added more renewable energy that in the entire last 14 years, which is a rate that no other continent can claim! According to a recent survey, the biggest concern among investors was the lacking political will, executive capability, and a sense of urgency among government. Regulatory frameworks proved to be less of a problem.
Gas has big potential, as it is widely available, a cleaner form of energy , and usually cheaper. The panel on energy stated that we now see new countries like Tanzania or Mozambique who never featured among the traditional gas producing countries become the biggest gas providers. So there is huge potential on the continent that remains entirely untapped.
Business opportunities for you:
– Unless you start off with some small solar power equipment or biogas solutions (which can for example be produced using animal waste), going into energy requires a considerable amount of capital. But it is a very lucrative opportunity for existing renewable energy companies or interested investors.
In closing….
Although I was only able to share a few insights into the debate that took place, it can be said that the World Economic Forum on Africa has continued to inform and further advance the debate on Africa’s economic future.
Let me leave you with some thought-provoking comments by Kanayo Nwanze, President of IFAD (who introduced himself as an ‘optimist and critic of African leaders’ – maybe this is why I felt I instantly related to him 🙂 ). Here is what he said:
‘Most African economies do not need development aid to grow. Why? Because we are the richest continent in the world. In 2013, a total of over 394 Billion Dollars were made from the extractive industries in Africa….yet we spend 35 Billion Dollars each year importing food…Africa’s presidents and leaders are spending 35 Billion Dollar a year creating jobs outside the continent while we have youth unemployment of 35%.”
And he finished with these words: “Come on – does this make sense?”
We all know it doesn’t, but this is precisely why Africa has now become such an exciting economic market with a mind-blowing level of opportunity!
If you want to listen to some of the debates yourself – here are the recordings. And if you would love to get my insights and Africa business tip into your inbox, please tick the box below ‘Notify me’.
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Hi Dr, Harnet,
Thank you for posting this article. I’m an employee looking to make my transition into entrepreneurship. These articles, along with your monthly e-book, provide me ideas to start a business.
Thanks For Your Work
Charles