Local Businesses Should Capitalize on Africa’s Growth

Local businesses should be encouraged to capitalize on the continent’s increasing economic growth.  This is according to Sumesh Rahavendra, head of marketing for DHL Express Sub-Saharan Africa (SSA).  He further explained that Africa is home to seven of the 10 fastest growing economies in the world, with many global businesses looking to get in on the action.

And while a growing interest from international parties is much needed for foreign direct investment (FDI), local businesses need to start taking advantage of Africa’s rising opportunities.  Rahavendra said, “The rise of Africa has been well documented over the past decade and has now become one of the biggest frontiers for trade and investment.”

According to the Ernst & Young 2014 Africa Attractiveness survey released last week, Africa is the second most attractive investment destination in the world and in 2013, the continent’s share of global FDI projects reached 5.7 percent, its highest level in a decade.

South Africa remained the largest destination for FDI projects with countries such as Ghana, Nigeria, Kenya, Mozambique and Tanzania becoming more prominent on investor’s radars.  Rahavendra explained that FDI projects in Mozambique, for example, grew at a compound annual growth rate in excess of 30 percent since 2007 due to the country’s coal deposits, offshore gas fields and infrastructure projects.

Also, in the latest International Monetary Fund’s (IMF) regional economic outlook report for April 2014, SSA’s gross domestic product (GDP) growth is forecasted at 5.4 percent this year.  Many African countries have already surpassed that figure such as Rwanda and Sierra Leone, which are projected to grow by 7.5 percent and 13.9 percent respectively.

The problem with foreign investment, he added, is that it overlooks the real potential of Africa’s people and businesses.  “Many local entrepreneurs and small and medium enterprises (SMEs) have so much to offer to their respective countries, both in terms of services and sustained economic growth,” he said.

He then went on to say, “As household expenditure has increased over the years, resulting in rising consumer demand, there is a definite opportunity for SMEs to fill the gaps which are not being serviced by large global companies. We have over 25,000 SMEs who work with us across Africa and every day we work on understanding their needs better and help them to go global.”

Rahavendra stated that currently, the retail and telecommunications industries are among the fastest growing in Africa and local entrepreneurs should be tapping into these growing markets the same way that international businesses are.  He added, “Other sectors where we have seen growth include fast moving consumer goods, health care products, retail, food, telecommunications and other consumer related necessities.”

Source: CNBC Africa