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1.2billionopportunities|TheEconomist

BusinessinAfrica

1.2billionopportunities
Thecommodityboommaybeover,andbarrierstodoingbusinessareeverywhere.ButAfricasmarketof
1.2billionpeoplestillholdshugepromise,saysDanielKnowles

Apr16th2016| Fromtheprintedition

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FORALOOKattheAfricanboom
atits
peak,do
asa
multitude
offoreign
investors
havedone
andfly
into
Abidjan,thecapitalofIvoryCoast.Visitorsarriveinanair
conditionedhallwhereaFrenchstylecafsellsbeers,snacksand
magazines.Thereisadvertisingeverywhere,formobilephone
companies,firstclassairlineticketsandanewBurgerKing.The
taxiintothecitysmoothlycrossesoverasixlanetollbridge.Onthe
waytothePlateau,thecityscommercialcore,cranes,new
buildingsandbillboardsjostleforspaceontheskyline.Inthe
lagoon,redearthpilesupwhereyetanothernewbridgeisunder
construction.
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Justfiveyearsago,IvoryCoastseemedlikealostcause.Having
beendefeatedinanelectionattheendof2010,thethenpresident,
LaurentGbagbo,refusedtoleaveoffice.Thevictoriousopposition
leaderandnowpresident,AlassaneOuattara,mountedamilitary
offensivetoforceMrGbagboout.Frenchtroopsseizedtheairport
toevacuatetheircitizens(thecountryusedtobeaFrenchcolony).
Protestersweregunneddownbytroops,foreignbusinesseswere
lootedandhumanrightsactivistsgavewarningaboutmassgraves
beingdug.
IvoryCoaststillhasproblems,asshownbya
terroristattackinMarchthatkilled22people.But

Specialreport
1.2billionopportunities

itseconomyisthesecondfastestgrowingin
Africa(afterEthiopia,whichismuchpoorer),
expandingbyalmost9%peryear.Foreign
investmentispouringin.AswellastheBurger
King,AbidjannowhasaCarrefoursupermarket,

Amatterofdefinition

anewHeinekenbrewery,aPaulbakeryand
plentyofnewinfrastructure.Sharpsuited,
Frencheducatedministersexplaininperfect
Englishwhattheyaredoingtoopenup,
improvetheeaseofdoingbusinessand

Settledstrangers

Notmakingit
Cominguproses
Obstaclecourse
Isitworthit?

Onthemove
Virtualheadaches
Fortunefavoursthebrave
Sources&acknowledgments
Reprints

sustainablygrowthemiddleclass.Expensive
hotels,suchasthereopened$300anightIvoire,
arebookeduptheirbarsarefullofaffluentpeoplestrikingdeals.
Thecountrysthreeportterminals,thebiggestofwhichisbeing
expandedbyBollor,aFrenchindustrialfirm,areworkingatfull
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1.2billionopportunities|TheEconomist

capacity,importingcarsandelectronicsandexportingcocoa,coffee
andcashewnuts.
Advertisement

0:00

Thisisthe
Africaof
business
magazines
andbank
ads:a
continent
thatis

risingata
prodigious
paceand
creatingprofitablenewmarketsformultinationalfirms.ButAbidjan
alsohasplentyofremindersthatithasbeenherebefore.Forallof
thenewbuildingsspringingup,itsimpressiveskylineisstill
dominatedbycrumbling1960sand1970sconcretemodernism.
Theroadsmaybenew,buttheorangetaxisthatplythemarestill
ancientfumespewingToyotaCorollas,remnantsofanearlier
boom.ForthetwodecadesafterindependencefromFrancein
1960,IvoryCoastenjoyedaneconomicmiracle.Then,quite
suddenly,thepriceofcocoaandcoffeeplungedandtheboom
fadedasquicklyasithadbegun.
Reasonstoworry
ThedeepestfearoftodaysinvestorsinAfricaisthatitmaybe
happeningagain.InIvoryCoastsneighbour,Ghana,thousandsof
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1.2billionopportunities|TheEconomist

governmentworkershavebeenmarchinginthestreetsinthepast
fewmonthstoprotestagainsttheirrisingcostofliving.Ghanarelies
onoilandgold,bothofwhichhavefalleninprice,aswellascocoa.
That,plusprodigiousgovernmentborrowing,hascausedacrisis.
OneUSdollarnowbuys4cedi,thelocalcurrencyin2012,it
boughtnotquitetwo.Growthhashalvedsince2014,andGhanais
runningabudgetdeficitof9%ofGDPandacurrentaccountdeficit
of13%.
AccordingtotheWorldBank,intheyeartoAprillastyeartheterms
oftradedeterioratedin36outof48subSaharanAfricancountries
asthepriceoftheircommodityexportsfellrelativetothecostof
theirimports,mostlymanufacturedgoods.Those36countries
accountfor80%ofthecontinentspopulationand70%ofitsGDP.
Eightcountries,includingtwogiants,AngolaandNigeria,derive
morethan90%oftheirexportrevenuesfromoil,whichhasrecently
plummetedfarbelowthepriceneededtodrawinnewinvestors.
GrowthacrosssubSaharanAfricadroppedto3.7%in2015,far
belowEastAsias6.4%andnowherenearenoughtocreateenough
jobsforthecontinentwiththeworldsyoungestandfastestgrowing
population.TheWorldBankexpectsittotickupagain,butonlyto
4.8%in2017.
Countriesthathappilyborrowedfrominternationalinvestorsover
thepastfewyearshavenowfoundthemselvesshutoutofthe
markets.Thestockofoutstandingsovereignbondsintheregion
hadrisenfromlessthan$1billionin2009toover$18billionin
2014.Ifgrowthcontinuesatadecentclip,thatshouldbe
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manageable.Butifitstops,interestratesof10%ormoreondollar
denominatedbondswillmakerefinancingdifficult.
Thecontinentstwobiggest
economies,NigeriaandSouthAfrica,
arealreadyindeepdistress.The
reasonsaredifferent,butbothhave
sufferedfromcommoditypricefallsas
wellasfromatrociouseconomic
management.TheIMF,although
loathedinmuchofAfrica,isback,
providinga$1billionloantoGhana
andpreparinganotherforZambia.
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Somefearareturnto2000,whenthisnewspaperdescribedAfrica
asthehopelesscontinent.
Yetdespitethat,NairobisthrivingmallsandAbidjanshumming
portsshowthatthereareplentyofreasonstostayoptimistic.The
economicconditionshavegotworse,butthisisaverydifferent
continentfromtwodecadesago,whentroopsfromeightAfrican
countrieswerefightinginCongoalone.WarsstillrageinSouth
Sudan,Somalia,MaliandnorthernNigeria,andviolencebubblesin
placeslikeeasternCongo,theCentralAfricanRepublicand
Burundi.Butbroadlyspeaking,mostofsubSaharanAfricaisnow
peaceful.Electionsseemincreasinglylesslikelytoresultinstrife,
eveniftheystillgenerallyreturnincumbents,andmoreandmore
oftenforunconstitutionalthirdterms.Thegovernmentsthatcometo
powerarestilloftencorruptandinefficient,butfarlessbrazenlyso
thanthoseofcoldwardespotssuchasMobutuSeseSekoof
CongoorJeanBedelBokassaoftheCentralAfricanRepublic.
Africas1.2billionpeoplealsoholdplentyofpromise.Theyare
young:southoftheSahara,theirmedianageisbelow25
everywhereexceptinSouthAfrica.Theyarebettereducatedthan
everbefore:literacyratesamongtheyoungnowexceed70%
everywhereotherthaninabandofdesertcountriesacrossthe
Sahara.Theyarericher:insubSaharanAfrica,theproportionof
peoplelivingonlessthan$1.90adayfellfrom56%in1990to35%
in2015,accordingtotheWorldBank.Anddiseasesthathave
ravagedlifeexpectancyandproductivityarebeingdefeated
graduallyforHIVandAIDS,butspectacularlyformalaria.Someof
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thegainsmayseemmodest,butgiventhatlivingstandardsacross
Africadeclinedduringthe30yearsafterindependencetheyare
sufficientlyestablishedtoprovelasting.
Andforallthatoilandmetalshavecometodominateeconomies
suchasNigeriasandCongos,theboombroadenedbeyond
naturalresources.Mobiletelephoneshavetransformedcommerce
acrossAfrica,andnowsmartphonesandfeaturephones(whichare
halfwaybetweendumbandsmart)aretakinghold.In2014,the
latestyearforwhichfiguresareavailable,27%ofNigeriansowned
asmartphone.InmanyAfricancountries4Gmobilephone
infrastructureistheonlythingthatworkswell,butitworksatleast
aswellasinmuchrichercountries,andalotcanbebuiltonit.
WhatbeganwithmobilemoneysystemssuchasKenyasMPesa
isnowbranchingintobankaccounts,savingsaccounts,loansand
insurance.Thatinturnishelpingpeopleriseoutofpovertyand
investintheirfuture.
Thisspecialreportwillarguethatdespitesomedeepand
entrenchedproblems,Africanbusinessesofferhopetoo.Itisclearly
riskytomakesweepingjudgmentsaboutanentirecontinentwith54
countriesand2,000languages.Thisreportdrawsonvisitsto
variouscountriesinsubSaharanAfrica,butfourinparticular:South
Africa,Nigeria,KenyaandIvoryCoast,allcoastal,urbanisedand
relativelyrich.TheycertainlydonotrepresentthewholeofAfrica,
butyourcorrespondentpickedthembecausetheyeachillustratea
differentaspectofbusinessacrossAfricaasawhole.The
businessescoveredhavenotyettransformedthecontinent,but
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theyshowthatAfricanfirmsarecapableofextraordinaryinnovation
ifonlytheycanbesetfree.

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