Africa: A billion customers

Africa has a history of colonialism and marginalization, and although it has experienced a slow start towards growth, it is rapidly merging into the Global Village. Africa’s natural resources are in high demand from countries like China and India, and with a lack of infrastructure on the continent, its resources are a much needed tool. More importantly, along with its strong human capital, “Africa is now able to trade equally, across the globe. Africa is able to move beyond the dream, because all its dreams have become an attainable reality”, says Lynette Chen, CEO of the NEPAD Business Foundation (NBF).

The continent’s contributions and exports to the world include agricultural products; minerals and other material goods; as well as knowledge and cultural expressions. This trade has allowed African societies to benefit from imports from the outside world which are, most recently, information and other technologies.

However, since global growth is anticipated to be in the 0.0 – 0.5% ranges during 2009, compared with 2.7% in 2008, the immediate future prospects for growth in Africa is uncertain and the commitment of Africa’s global partners are yet to be tested. Now, perhaps more than ever, partners and investors need the nearly one billion African consumers, and policies should be engineered to cater for the future economy. Many multinational companies have already recognised that Africa offers fertile opportunities for smart investment and business possibilities.

Population forms a great part of achieving a country’s goals. In fact, China and India’s growing population motivated them to grow into key players in the world. According to Stanley Subramoney, Deputy CEO of PricewaterhouseCoopers South Africa and NBF Director, a growing world population will cause a "perfect storm" of food, energy and water shortages by 2030. He says, “by 2030, the demand for resources on a global scale will escalate to unprecedented levels as the world population tops 8.3 billion. Climate change will exacerbate matters in unpredictable ways.” These issues offer business opportunities because where there is a need, there is an opportunity.

In the rest of the world, including developing nations like Asia and South America, modest population growth will be experienced and some countries, particularly in Eastern Europe, will see their numbers decline. By 2050, however, some of the poorest nations in the world are projected to triple in size. Nigeria, for example, is projected to become the world's fourth most populous country while the Democratic Republic of Congo (DRC) and Ethiopia will be amongst the top 10 for the first time. Hence, nearly a quarter of the world's population will come from Africa. Subramoney points out that “mature markets are not the markets of the future – developing economies are. Africa is a market of the future”.

He continues, saying, “A billion is such a large number, that it is difficult to stretch the imagination and grasp the significance - it comes as a surprise to many when they realise that Africa's population is nearly a billion people. As multinational companies were a driving force in Eastern Europe's post communist transition; bringing new skills; technology; training; and better working conditions, the same phenomena is emerging in Africa. Sensible partnership with these companies, where macro and micro economic partnerships may be joined for mutual benefits will result in a win-win situation and mould the market to benefit the multinationals and Africa in the short term”.

Africa’s geophysical environment can accommodate the growing population, whilst the aggregate of Africa’s Gross Domestic Product (GDP) reveals that Africa is the fifth largest economy globally, exceeded only by China, Germany, India, Japan, and the U.S. Thus, Africa offers the opportunity to tap into a market of universal importance and cannot be ignored in global terms. Even in the current global crisis we should not forget that the modern era of globalisation remains a powerful force for change and to lift masses of people out of poverty.

Critics may argue that Africans are isolated in poverty and corrupt uncertain governments. However, the NBF has witnessed that the foundation needed for Africa’s success is already in place. Leaders need to unite, and move towards a sustainable environment – only then, can Africa’s people feel secure. Subramoney concludes that in the short-term, governments will have to manage the lower revenues from commodities and trade but must build on good governance, open markets and strong institutions which will enhance their long-term sustainability.