TECH TITANS UNFAZED BY AFRICA ' S COMMODITY SLUMP
Kenya leading
Investors have adapted by focusing more on the continent’ s young population and rising middle class as harbingers of opportunity. Countries less exposed to commodities are reaping the benefits. The number of foreign direct investment projects carried out by private-sector companies in Kenya rose to 95 in 2015 from 62 the previous year, the biggest increase among African nations, according to EY.“ Kenya is really benefiting in terms of longterm investment,” said Martina Bozadzhieva, an analyst at London-based Frontier Strategy Group, which advises firms looking at emerging markets.“ A lot of companies see it as a much more reliable, less vulnerable destination than, say, Nigeria or Angola.”
Investment in West Africa’ s Ivory Coast, which the International Monetary Fund said will grow 8.5 percent this year, more than anywhere else on the continent, is also booming. Heineken NV announced a new brewery last year, French retailer Carrefour SA opened its first store in December and Burger King launched its first sub-Saharan restaurant outside of South Africa there the same month. To be sure, the gap between promise and reality has bruised earlier generations of foreign investors in Africa. Heineken Chief Executive Officer Jean-Francois van Boxmeer said he was“ praying” for higher oil prices to boost beer sales, while retailer Truworths International pulled out of Nigeria in February, citing red tape and capital controls.
Still, Facebook CEO Mark Zuckerberg just travelled to Kenya and Nigeria on his first visit to sub-Saharan Africa. In Nigeria, where his personal fund in June invested $ 24 million in Andela, a Lagos-based start-up software developer, he said he was“ blown away by talent and entrepreneurs in this country.” In Kenya, he said he wanted to learn how businesses were using mobile money.
Oracle said this month that Africa was a“ priority market” in which“ cloud technology will undoubtedly drive the next phase of growth for businesses.” Since launching in South Africa in 2013, Uber has entered Nigeria, Ghana, Uganda, Tanzania, Kenya, Morocco and Egypt. Last year CEO Travis Kalanick named the continent as one of his priorities, along with China and India.
‘ Middle-class option’
Though only 15 percent of African adults own a smartphone, compared with around two-thirds of Americans, there are still plenty of opportunities. That’ s true even in markets suffering economic slumps, according to Alon Lits, who heads Uber in sub-Saharan Africa.“ At this stage, it’ s probably more of a middle-class option,” Lits said from Johannesburg.“ But we’ ve seen
Mark Zuckerberg, Facebook, CEO. invested $ 24 million in Andela, a Lagos-based start-up software developer
a huge increase in smartphone adoption across the continent. We’ re seeing consistent growth across all markets. In a tough environment, if anything, people may look to get rid of one vehicle in the household and look at alternatives, removing the burden of a fixed cost.” While minerals, oil and gas will continue to attract substantial money from abroad, internet-based industries will become more prominent over the next few years, according to Adeniyi Adedokun, an economics teacher at McPherson University in southern Nigeria.“ Investors need to diversify,” he said.“ It’ ll take time, but they are changing their strategies. They’ re focusing on manufacturing and construction. And telecommunications is
IN KENYA ROSE TO 95 IN 2015 FROM 62 THE PREVIOUS YEAR, THE BIGGEST INCREASE AMONG AFRICAN NATIONS
attractive due to the growth of broadband and smartphone penetration.” – Bloomberg
66 Business Times Africa | 2016