Three Ways African Businesses Can Step into the World-Class Space

Categories: Featured , IGD Members , Infrastructure , Perspectives

Three Ways African Businesses Can Step into the World-Class Space

By Abdu Mukhtar, Chief Strategist, Dangote Group


Photo via Dangote Group

(Photo via Dangote Group)

Africa’s recent economic boom has given rise to greater economic growth and a stronger African private sector. Despite this, some investors still hold a negative perception of doing business in Africa. Some think African companies do not follow international standards or that corruption is too rampant in the business landscape. We, in Africa’s private sector, know the African business narrative is much more nuanced. Of course, corruption is a real problem for businesses, as it is for other regions around the world. However, it does not define Africa’s business environment. Africa’s homegrown businesses are producing high-quality products, implementing world-class standards, and outpacing our multinational counterparts. Our growth, integration in the supply chains, and local knowledge give us the resources needed to become leaders in both the regional and global economy.

The Dangote Group, which is based in Lagos, Nigeria, started trading essential commodities in 1978. Since that time, we’ve witnessed the transformation of Africa’s business landscape: in the past year, Africa saw a 65 percent increase in capital investment. The region also accounted for 30 percent of the worldwide regulatory reforms, which is paving the way for making it easier to do business on the continent. The ingredients for sustainable growth are there and African businesses are integral to driving this growth.

Here are three ways that African born and bred businesses can harness this growth and emerge in the world class-space.

  1. Be bold, think big, be courageous

The world economy is constantly expanding and evolving. To stand out and be known, you have to think big and be bold and courageous. At Dangote Group, we think large scale, in terms of size of investments and size of our projects. For example, Nigeria imports much of its fertilizer for agricultural purposes. Why are we importing goods when we have the capacity to do it ourselves? We decided to approach this question by thinking big, and building Africa’s largest ammonia and urea plant. Once finished, Nigeria will be able to produce its own fertilizer needs as well as provide goods for the rest of the world. This is part of our $19 billion investment over the next five years in Nigeria to develop our industries.

African companies — from large conglomerates to small and medium sized enterprises (SMEs) — have local knowledge and understand African markets. Living and doing business on the continent gives us unique insights on the products and services that will benefit our business ventures and local communities. The best ideas often stem from our long experience of working on the continent. With hard work, market insight and more, these big, bold ideas will elevate you to a world class-space.

  1. Be strategic

To be bold, you need big action. However it’s often difficult to execute these ideas on your own. This is where strategic partnerships come into play. What is the key to establishing these strong relationships? Internationally-credible partners who are committed to your big idea. Not only can international partnerships attract more financial backing from banks and foreign investors for business expansion, but also creates visibility for your business. It highlights your company’s ability to operate at a global level, challenging the age old stereotype that African businesses do not adhere to global standards.

As we expanded our business operations in Nigeria, Dangote Group began searching for suppliers for power equipment in our plants. We were interested in finding partners committed to African markets as well as those who had international credibility. At the same time, General Electric(GE) was looking to increase their presence in Africa. We exchanged ideas and established our partnership. It was a win-win for all. GE had a local partner which enhanced their understanding of the market. We had an international partner willingly to invest in our ideas and supply us with equipment needed to expand our operations.

Equally important are local partnerships. Dangote Group is keen on local content, and works to source supplies and services from Africa’s born and bred companies wherever possible. With proper guidance around quality and specifications, SMEs have become reliable partners for our business ventures. Not only has it given us cost advantages that boosted our bottom-line , but the partnership has helped SMEs to expand their business operations. The creation of local partnerships will build an ecosystem that fosters growth at all levels — from suppliers and distributors to local marketing of our products.

  1. Be opportunistic

The global economic slowdown and China’s financial woes have caused many to question the sustainability of Africa’s economic growth. Despite these challenges, the continent’s future looks bright. By 2040, Africa will have the world’s largest working age population. The continent’s increasingly young, educated, and urban population is growing in consumer spending power, as well. This, along with increased political stability and better business friendly policies, is creating a climate ripe for business.

Opportunities for African businesses are abundant, but three stand out: infrastructure; agriculture; and consumer goods. Initiatives such as the U.S.’s Power Africa or the African Development Bank’s call for infrastructure development indicate that resources and interests are being developed in this field.

Agriculture is also a growing sector for business. Today, agriculture accounts for 32 percent of Africa’s GDP and employs most of its labor force. As many African governments, such as Nigeria, begin to diversify their markets, they are looking to develop the agribusiness sector to improve the livelihood of smallholder farmers.

Another growing trend is the growing demand for consumer goods — a reflection of Africa’s rising middle class. Last year, half of all household spending in sub-Saharan Africa went to consumer packaged goods. From public-private partnerships to manufacturing, opportunities for private sector engagement are endless.

Africa’s homegrown businesses

To take advantage of the opportunities in African markets, African companies must collaborate with local governments dedicated to creating a strong business environment. Business leaders must also jump on the new trends in your sector, engage young, African talent and support their innovative ideas. Africa is an emerging market. Despite the risks, in virtually every sector, there’s a high return on investment.

At Dangote Group, we strive to provide the jobs, investment, and growth needed to create sustainable development on the continent. With 9 of the 15 fastest growing economies in the world located in Africa, the potential for African companies to flourish is immense. Africa is our home and it’s time to recognize that harnessing the power of the private sector will transform the continent. We can’t wait for foreign investors to take the lead. With these three tips, Africa’s homegrown businesses can step into the world-class space and change the continent’s development narrative.


Abdu Mukhtar is Chief Strategist for the Dangote Group.
Dr. Abdu Mukhtar has over 20 years of extensive professional experience in both private and public sectors, having served in the following capacities: Research Associate, Boston University Medical Centre; Consultant, Harvard Centre for International Development; Associate Consultant, Pittiglio Rabin Todd & McGrath (PRTM) Consulting; Transaction Adviser/Special Assistant to The Director General, Bureau of Public Enterprises in Abuja- FCT, Nigeria, and Senior Special Assistant to the Minister of the FCTA on Economic Matters, FCT Abuja. Dr. Mukhtar holds a Masters Degree in Business Administration from the Harvard Business School. He also has Doctorate degree in Pathology and Laboratory Medicine from the Boston School of Medicine. He is also a Mason Fellow of Harvard Kennedy School of Government.