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It’s time for Africa

August 24, 2011 Leave a comment

When businessmen think about emerging markets, only a few countries usually come up to their minds. China, India or Brazil have been the “chosen ones” throughout last years, mainly due to a fast growth in the public and private consumption. Africa is often related to poverty, corruption and to a lack of safety, but this is not always true. There are some figures that we must take into account. (Source: The HBR Breakthrough Ideas for 2009)

Growth. The International Monetary Fund’s World Economic Outlook projected an economic growth of 6.3% for sub-Saharan Africa in 2009, with Uganda, Tanzania, and Nigeria exceeding 8% growth. Furthermore, the average annual return on capital of 954 companies studied in 2009 was 65% to 70% higher than that of comparable firms in China, India, Indonesia, and Vietnam. The median profit margin was 11%—better than the comparable figures for Asia and South America.

Stability. The periods of catastrophic government action that slowed growth in past decades have become much less frequent. Nigeria, for instance, has paid off its external debts, enacted prudent fiscal rules, and cleaned up its banking system. The entry of european and north-american companies forced governments to look after their laws to assure markets’ competition.

Opportunity. Construction companies, call centers, and IT services are among the region’s most successful businesses. The energy sector is also expected to be developed, in parallel to a regulation that allows new companies to invest, bringing new chances for existing solar and wind industries to expand.

The time is ripe for multinationals to rethink sub-Saharan opportunities and simultaneously to help the region achieving its promise by contributing much-needed capital, business skills, and global connections.

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Categories: Africa, business, opportunity