If we bring this back to business, we
know that the political period we are in
has the ‘big boys of democracy’ wanting
to support regimes that are thought to
be progressing the ideals of democracy in
the continent. Countries that are seen to
be more democratic are then perceived to
be more stable politically and thus more
attractive for investment – both in terms
of private investors or in terms of foreign
aid flows. I don’t have the numbers, but I
imagine that there is a strong correlation
between FDI and level of perceived
democracy? The hardcore economists
would prove this relationship I am sure.
I am not one.
So, the fact that in Africa, political
stability is varied, the challenge for
businesses is to keep a keen eye on
political developments and the history
of the markets they operate in – political
changes, violent or peaceful, do come
with business implications. In Tanzania
for
example, the
anti-corruption
measures by the current president has
affected ‘spending power’ in the market as
a common Tanzanian on the street once
told me ‘hamna hela’ – and when there
In the end, we may look at Africa as ONE – and
yes, there may be a number of reasons to carry
this notion – from the similarity in some cultural
dimensions to the unbeaten spirit of resilience
we see across the continent but in business
terms, it would be worthwhile to remain sensi-
tive to the small yet critical differences that have
implications on commercial success in what one
would by now, refer to as ‘Many Africas’?
is reduced money at hand, consume rs do
make changes to their purchase decisions.
In Ivory Coast, the regime’s decision
to ban some packaging materials for
environmental reasons forced some
businesses to cut down or shut streams
of their businesses altogether. Most
recent example in Kenya is where one
political side in the last election asked
its supporters to boycott products and
services of companies they perceived to
have supported the government. Whether
the boycott call affected the selected
businesses or not is a separate discussion
– the point is that business and politics
are very connected and in Africa with its
volatility, it is never the same! It is not one!
Now to economic dynamics – most
enthusiasts of investing in Africa argue
that it is the next frontier – that Africa has
countries that are growing faster than the
global average, a huge combined GDP of
almost 3 trillion dollars, a growing middle
class that is exposed to premium goods
and services and is ready to spend, huge
infrastructural projects that are opening
up the continent for regional trade and the
list goes on and on.
In fact, the very latest effort is what
majority of African Union member
countries signed off this March in Kigali
– the AfcFTA – aiming to take the
economic agenda of the AU to the next
level by largely removing key trade barriers
to Africa trading with itself, which as at
2014, was estimated at a paltry 18%.
I am sure nothing much has changed, and
all are waiting to see what this FTA will
bring forth but from the onset, there are
a few countries that are already jittery
about the deal, including the giant Nigeria
which was not represented at the deal
signing conference in Kigali.
Over the years, we have seen how the
African economies are volatile – and
especially the commodity dependent ones
which coincidentally are also the biggest –
Nigeria, Angola and South Africa are only
starting to recover from recent economic
slowdown.
In Nigeria as an example, the slowdown
affected business in general starting from
basic foreign exchange challenges due to
the depreciation of the Naira to changes
to consumer spending which directly and
naturally impacted both absolute volume
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