Over the past seven years, Qalaa Holdings has invested billions of dollars in East Africa, focusing on energy, transportation and logistics. “We are now speaking a common language,” said Hisham el Khazindar, the firm’s co-founder and managing director and one of five panelists who spoke at a Jan. 22 AmCham luncheon titled “Business in Africa: The Untapped Potential.” The event coincided with a delegation of African business leaders chosen by the Institut Choiseul, a French think tank. The lunch, held at the Four Seasons Cairo at Nile Plaza, was also hosted in cooperation with the Federation of Egyptian Industries.
“I have a lot of déjà vu whenever I visit one of these countries,” said Qalaa Holdings Managing Director Karim Sadek. “The positive déjà vu, albeit 15 to 20 years behind Egypt, is the impressive growth in a young, consumer-oriented middle class that is well educated, wellversed with the latest in technology and consumer trends.” Noting that many sub-Saharan governments are strapped for cash, Sadek is selectively optimistic: “I continue to bet on consumerism and the private sector on the continent and shy away from projects tied to treasury and government.”
Carole Kariuki, CEO of Kenya Private Sector Alliance, an industry body similar to the FEI, said that African states have to build trade and investment in one another to stimulate growth. Currently, intra-Africa trade accounts for just 10-12 percent of the continent’s total trade volume, while trade with the European Union is between 40 and 60 percent. “America and the UK are turning inward. This is the time for Africa to also look inwards, not as countries, but as a continent,” said Kariuk. “Do we allow foreigners to continue to exploit us, or do we exploit our own resources for our benefit?”
Infrastructure and energy are among the biggest growth sectors in Sub-Saharan Africa, noted Wael Hamdy, vice president-power at Elsewedy Electric, who recalled how his firm had established factories in Ethiopia, Ghana, Zambia and Nigeria, among others. “To our surprise, they started suffering from low sales because, as it turned out, you can’t sell to neighboring countries,” said Hamdy. “This is the business mentality.” For infrastructure and energy investments, the biggest challenge is financing, he added. “Short-term financing is there, but it’s really expensive. However, medium- and long-term financing is almost non-existent.”
IBM Egypt General Manager Amr Talaat spoke about the potential the ICT sector offers for cooperation with sub-Saharan African countries. “ICT has been a major driver in economies across Africa,” he said. “A lot of African countries haven’t invested a lot in legacy technology and so are open to nascent technologies,” such as
mobile money transactions, which have taken off at a much faster rate in parts of Sub-Saharan Africa than they have in Egypt. The biggest IT challenge for the continent, Talaat added, inadequate internet access. Only 28 percent of Africans have online access, compared to a global average of 56 percent. Continent-wide, mobile penetration stands at 73 percent versus the global average of 85 percent.
Packaged and frozen food is another untapped opportunity. “Gambia is an excellent example of achieving food security by cooperating with another African country,” said Tarek Tawfik, head of the FEI’s Food Industries Chamber. He noted that The Gambia has some 1,000 acres dedicated almost entirely to potato and onion cultivation. Until 10 years ago, he said, it was importing these crops. “We convinced political powers over there to break the local monopoly and allow us to automate the cultivation and storage processes,” said Tawfik. “We did it, and now they have 100-percent self-sufficiency in both crops.”