Post from the Coordinator’s Desk: “Africa’s Rise”

Categories: IGD Members

By Josephine Luu

Josephine Luu worked as Corporate Outreach Coordinator for IGD from January 2012 to February 2013. This post shares some of what she learned in her work with IGD. In March, Josie moved to Senegal, where she is serving as a Peace Corps volunteer.

Is Africa really rising? It’s an important question for all of us at the Initiative for Global Development (IGD), and one that I paid particular attention to since my daily research uncovered information that dovetailed with many of the relevant arguments.

As Corporate Outreach Coordinator, my primary responsibility was researching the companies that we identified as potential recruitment targets for our network. IGD looks for highly-respected multinational executives and corporations from Africa, Europe, and the United States, who have the capacity and commitment to make large-scale investments that will make a difference for the continent. We are especially focused on the infrastructure, agriculture, information and communications technologies (ICT), and financial service sectors for their potential to spur broad-based growth, create jobs, and improve the lives of the poor.

Over the past year I led a large research project examining over 150 corporations to better understand the landscape of their investments, operational goals, and development orientation (if any) on the continent. We used a combination of publicly available information and knowledge gained from IGD events and meetings.

The trends we are seeing are not at all ambiguous. As I describe below, global companies are investing capital and resources into expanding offices and manufacturing sites on the continent, implementing workforce education and training programs, developing new initiatives, and rolling out innovative products. The following examples showcase just a few of the many companies that are investing in Africa’s agriculture, ICT, infrastructure, and financial services sectors:

  • Food and nutrition company Nestle plans to spend $1.4 billion by 2015 to expand production capacity in Africa. The company recently opened a plant in Nigeria and a facility in the Democratic Republic of the Congo, and plans to also build in Mozambique and Angola.
  • Beverage conglomerate Diageo spent $285 million acquiring breweries in Tanzania and Ethiopia. They are looking to scale up and source a diverse range of local raw materials for production in the region.
  • Agricultural machinery company AGCO signed a deal with Algeria Tractors Co. to build a local plant to produce one of the largest brands of farming tractors, Massey Ferguson. AGCO’s Africa strategy also includes providing technical education using demonstration models and techniques.
  • IGD Frontier Leader Microsoft recently rolled out Microsoft 4Afrika, an initiative that will provide African youth with tens of millions of smart devices, bring up to one million SME’s online, train 100,000 members of Africa’s existing workforce, and help an additional 100,000 recent graduates develop skills to enhance their employability, 75 percent of whom Microsoft will help place in jobs.
  • HP has recently opened several new offices in Africa; its strategy is to hire a small team in each new country while investing in partnerships. HP is also hiring and training university graduates and aiming to empower governments, businesses and consumers by increasing access to HP’s technology products and services.
  • The world’s second largest PC manufacturer, Lenovo, currently has African offices in Kenya, Nigeria, Morocco, and South Africa. Last year they earned $21 billion, with $120 million coming from Africa—a figure the company wants to double in the short- to medium-term.
  • Global logistics and express company DHL announced an aggressive expansion into Sub-Saharan Africa in February, 2013. Charles Brewer, Managing Director for DHL Express Sub-Saharan Africa stated that there is a “major opportunity to improve connectivity across the continent, and access to logistics services and international markets are both key to this improvement.” In six months, DHL has tripled its network from 300 to more than 1,000 DHL Service Points, an effort that it believes will help connect African SMEs to the rest of the world.
  • IGD Frontier Leader Main One Cable Company has installed more than 7,000 kilometers of fiber-optic cable linking the West African coastline to Europe. This has helped to improve the availability of internet services and, according to the Nigeria-based company’s CEO Funke Opeke, decreased wholesale broadband prices by up to 80 percent.
  • In November 2012, AMECO, a mobile equipment and tool company, acquired ServiTrade, a Mozambique-based construction equipment rental and project services company. AMECO President Gary Bernardez says that this acquisition will help the company establish a sustainable presence in Africa by giving them an early position in the high-growth region.
Financial Services
  • Leading pan-African bank and IGD Frontier Leader Ecobank provides approximately 40 hours of training and coaching per year for all staff members. This ensures that the bank will have local employees with the technical, financial, and management skillsets needed to fill high-level positions as the company grows.
  • IGD Frontier Leader Attijariwafa Bank is a leading African bank and the first to specialize in alternative financial products in Morocco. The bank has a network of nearly 1,000 branches across the country, which provides access to banking services for low-income groups.
  • IGD Frontier Leader Visa recently launched mobile banking product mVisa in Rwanda. The launch is part of a larger partnership established in 2011 with the Rwandan government to create an electronic payments network, and fund and promote financial literacy training programs.

As more companies focus on Africa, an important shift is happening behind the scenes. Increased business interest and investment—both from outside and within Africa—is strengthening local business climates. Companies are requiring higher standards, shorter time frames, broader financial tools, and greater transparency, creating a more conducive environment for business growth and generating increasing opportunities for investment.

Investments in Africa will take time to develop and bear fruit, and it will be a while before we understand their full impact. What is clear from my point of view, however, is that conversations about Africa are happening in boardrooms and conference calls all over the world. Working in Africa, with Africans, is on everyone’s mind and we are just beginning to see what that means for the continent, let alone the world.