Business
Africans investing more in Africa as western interests scale back
Iain Barton, RTT’s chief executive, said health-service companies can grow almost exponentially in Africa, where heart disease and diabetes are becoming almost as common as HIV and tuberculosis as Africans consumption habits change. “It wouldn’t be ambitious to aim for less than tripling our business in the next five years,” Dr. Barton said.
Transcentury, Mr. Kiuna’s Kenya-based infrastructure company, made its first foreign investment in 2005 in Tanzania’s seaside capital of Dar es Salaam, acquiring a majority stake in an electric cable factory from France’s Nexans SA.
“They wanted to exit the market because they saw it as small,” Mr. Kiuna said. “I would argue that was a big mistake.”
A spokeswoman for Nexans said the factory didn’t fit the company’s Africa strategy at the time.
Less than one-tenth of Tanzania’s roads are paved and it can take a month for imports to clear Dar es Salaam’s port. That can make for unreliable supplies of the copper and aluminum Transcentury needs to forge its cables. But Mr. Kiuna said those tribulations were worth enduring to reach an urbanizing population of 44 million and growth above 6 percent. Under Transcentury, the factory has doubled its share of Tanzania’s cable market and turned a profit every year except 2010.
Even with Tanzania’s robust growth, companies with strong positions here are looking to expand elsewhere. Since 2009, Bakhresa Group, East Africa’s biggest flour miller and Tanzania’s dominant purveyor of fruit juices and ice creams, has spent US$45 million building a grain silo and flour mill in northern Mozambique. The mill will help Bakhresa ramp up sales in Mozambique, where growth averages above 7% a year, and make it easier to transport flour overland to neighboring Malawi. There, Bakhresa has nearly 80 percent of the market.
“We saw the market potential, and based on that, we expanded,” said Ramesh Kumar, Bakhresa’s vice president for corporate planning. “We’re catering to markets with promise.”
Published with permission from the Wall Street Journal
