Busi­ness op­por­tu­ni­ties in Africa

Sunday Express - - CAREERS - 20 Ca­reers

AF­TER nearly a decade of gal­lop­ing eco­nomic growth, the con­ti­nent ex­pe­ri­enced a very sharp de­cline last year. The hard­est hit were the ma­jor com­mod­ity ex­porters, es­pe­cially Nige­ria, An­gola and South Africa. Nige­ria, Africa’s largest econ­omy, went through a re­ces­sion and its cur­rency took a se­vere beat­ing, los­ing more than 60 per­cent of its value in less than 12 months.

In South Africa, pull-backs in min­ing op­er­a­tions and volatile com­mod­ity prices (es­pe­cially for gold, plat­inum, and coal) led to in­creased un­em­ploy­ment and slow eco­nomic growth.

You see, for decades, the big­gest busi­ness op­por­tu­ni­ties in Africa were cre­ated through “tra­di­tional” sources, es­pe­cially from the trade and ex­port of raw and non-value-added com­modi­ties such as crude oil, tim­ber, gold, coal, co­coa, tea, cof­fee, leather and sev­eral oth­ers.

To­day, the wealth that is breed­ing a new gen­er­a­tion of mil­lion­aires in Africa is be­ing cre­ated through new and un­con­ven­tional busi­ness op­por­tu­ni­ties.

Th­ese busi­ness op­por­tu­ni­ties are sim­mer­ing be­neath Africa’s end­less stream of un­solved prob­lems, un­der­served needs and ev­ery­day frus­tra­tions. New wealth on the con­ti­nent is emerg­ing from solv­ing prob­lems and cre­at­ing value, and not from “old school” re­source ex­trac­tion.

In this ar­ti­cle, I’ll share with you the top busi­ness op­por­tu­ni­ties on the con­ti­nent that are likely to make more mil­lion­aires in 2018.

Film & Movies Over the last three years, three dif­fer­ent block­buster movies from Nol­ly­wood, Africa’s lead­ing film in­dus­try, have bro­ken lo­cal box of­fice records back to back.

One mil­lion dol­lars in box of­fice pick­ings may be pocket change by Hol­ly­wood stan­dards, but it’s the scale and growth of busi­ness op­por­tu­ni­ties in Africa’s film in­dus­try that’s truly breath­tak­ing.

With a pop­u­la­tion of over 1 bil­lion peo­ple, of which about 60 per­cent are young peo­ple below the age of 25, Africa presents a very fer­tile ground for its lo­cal film in­dus­try.

The four big­gest busi­ness op­por­tu­ni­ties in this in­dus­try are in film fi­nanc­ing, pro­duc­tion, dis­tri­bu­tion and ex­hi­bi­tion.

With less than one cin­ema per mil­lion peo­ple, Africa is the most un­der­served cin­ema mar­ket in the world. That’s why en­trepreneurs like Kene Mk­paru, who worked for many years with Odeon cine­mas in the UK, have re­turned to the con­ti­nent to ex­plore lu­cra­tive op­por­tu­ni­ties in the African cin­ema mar­ket.

Since launch­ing his busi­ness, Film­house has opened Nige­ria’s first IMAX movie the­ater and about10 cine­mas across the coun­try in just a few years.

Sports Bet­ting Of­ten re­garded as a com­pli­cated and con­tro­ver­sial in­dus­try, sports bet­ting is mak­ing a wind­fall in Africa.

Africa’s young and fa­nat­i­cal sports fan base makes it a very promis­ing mar­ket for the global sports bet­ting in­dus­try.

I have no­ticed how a grow­ing num­ber of bet­ting busi­nesses in the US and Europe are ex­pand­ing into Africa as they po­si­tion them­selves to tap into an ex­plo­sive growth op­por­tu­nity for sports bet­ting on the con­ti­nent.

Lax laws on bet­ting, a wide­spread use of mo­bile phones and in­creas­ing ac­cess to the in­ter­net have re­duced the bar­ri­ers to en­ter a 350-mil­lion strong African mar­ket, where nearly 50 per­cent of male adults in Nige­ria, South Africa and sev­eral other coun­tries are in­volved in ac­tive sports bet­ting.

In July 2016, SportPesa, the big­gest sports bet­ting busi­ness in East Africa, be­came the first or­gan­i­sa­tion in Kenya to spon­sor an English Pre­mier League foot­ball club af­ter it signed a three-year deal with Hull City FC.

Why would a sports bet­ting com­pany in Kenya spend over a mil­lion British Pounds on a spon­sor­ship deal in the most-watched foot­ball league in Africa? Your guess is as good as mine: “ex­pected high re­turns on in­vest­ment.”

Across the con­ti­nent, in Ghana, Nige­ria, South Africa and sev­eral other coun­tries, hun­dreds of sports bet­ting busi­nesses are jostling for a greater share of this lu­cra­tive mar­ket as they spend hand­somely on mar­ket­ing, pro­mo­tion and cus­tomer ac­qui­si­tion.

Re­new­able En­ergy With a grow­ing global bias for cli­mate-friendly en­ergy so­lu­tions, Africa has be­come an in­ter­na­tional test bed for in­no­va­tive re­new­able en­ergy so­lu­tions.

Ac­cord­ing to a re­cent World Bank study, only one in three peo­ple in Sub-Sa­ha­ran Africa has ac­cess to elec­tric­ity. And up to 80 per­cent of house­holds on the con­ti­nent use fire­wood and char­coal as a pri­mary en­ergy source for cook­ing, en­dan­ger­ing the con­ti­nent’s fast-de­plet­ing for­est re­sources.

Across the con­ti­nent, the so­lar en­ergy rev­o­lu­tion is in full swing. In East Africa, busi­nesses such as M-Kopa So­lar, Off Grid Elec­tric, StemaCo and sev­eral oth­ers are light­ing up Africa by us­ing the power of the sun to pro­vide low-cost elec­tric­ity to un­con­nected house­holds.

In West Africa, where sewage col­lected from house­holds is of­ten dumped into rivers and the ocean, this busi­ness in Ac­cra, Ghana, con­verts smelly hu­man waste into an odour­less and en­ergy-ef­fi­cient fuel which looks ex­actly like char­coal and can be used for cook­ing.

This year, the $5 bil­lion Grand Ethiopian Re­nais­sance Dam will open in East Africa. This 6,000-megawatt power plant will be the largest dam and hy­dropower plant in Africa. Though a govern­ment-owned as­set, this dam will be a ma­jor mile­stone in Africa’s progress to­ward a re­new­able en­ergy-de­pen­dent fu­ture.

Africa’s sig­nif­i­cantly un­der­served en­ergy needs presents a lu­cra­tive mar­ket for re­new­able en­ergy so­lu­tions and I ex­pect more play­ers will be drawn to this promis­ing in­dus­try in 2018. Ur­ban Trans­porta­tion The ef­fects of ru­ral-ur­ban mi­gra­tion and nat­u­ral pop­u­la­tion growth have over­whelmed trans­port sys­tems and in­fra­struc­ture in ma­jor cities and towns across Africa.

Ac­cord­ing to the AfDB, Africa has ex­pe­ri­enced the high­est ur­ban growth in the de­vel­op­ing world. Dur­ing the last two decades, Africa’s ur­ban pop­u­la­tion grew by 3.5 per­cent per year and this rate of growth is ex­pected to hold into 2050, with some African cities ac­count­ing for up to 85 per­cent of the na­tional pop­u­la­tion.

While govern­ment au­thor­i­ties and ur­ban dwellers are frus­trated by the con­ges­tion, in­ef­fi­ciency and dis­or­ga­nized na­ture of ur­ban trans­port sys­tems on the con­ti­nent, a grow­ing num­ber of busi­nesses are ex­plor­ing the busi­ness op­por­tu­ni­ties be­hind this un­der­served mar­ket.

Uber, a highly suc­cess­ful multi­na­tional ride hail­ing busi­ness, is one of the big play­ers har­vest­ing the op­por­tu­ni­ties in Africa’s ur­ban trans­port mar­ket.

Now present in 12 cities across the con­ti­nent, in­clud­ing Jo­han­nes­burg, La­gos, Kam­pala, Nairobi, Ra­bat and Cairo, Uber has cre­ated a pow­er­ful plat­form for en­trepreneurs and in­vestors to reap the lu­cra­tive re­wards of serv­ing ur­ban trans­port needs in Africa.

Hun­dreds of en­trepreneurs now earn re­cur­ring monthly rev­enues by putting cars on the Uber net­work, whose value propo­si­tion of con­ve­nience, af­ford­abil­ity and com­fort has cre­ated a loyal and fast-grow­ing cus­tomer base of ur­ban com­muters.

Magic Bus is another busi­ness that presents an in­ter­est­ing so­lu­tion to ur­ban trans­port needs in Nairobi, Kenya. It uses an SMS-based sys­tem that al­lows ur­ban com­muters, es­pe­cially in slum ar­eas, to pre-book their bus tick­ets us­ing ba­sic mo­bile phones.

The startup, which at­tracted $1 mil­lion from the Hult Foun­da­tion, has the po­ten­tial to in­crease bus avail­abil­ity, and re­duce the frus­tra­tions caused by ad­hoc bus sys­tems in ur­ban ar­eas.

In 2018, more en­trepreneurs and in­vestors will be ad­vanc­ing in­no­va­tive so­lu­tions to the ur­ban trans­port prob­lems in Africa. It’ll surely be an in­ter­est­ing in­dus­try to watch.

Pay TV There are over 100 mil­lion TV house­holds in Sub-Sa­ha­ran Africa.

How­ever, at the mo­ment, just about 15 mil­lion of th­ese house­holds are pay-TV sub­scribers, and this num­ber is ex­pected to reach 30 mil­lion by 2021.

Ac­cord­ing to a study by Dataxis, the five big­gest pay-TV mar­kets ac­count for 65.4 per­cent of to­tal African pay-TV sub­scrip­tions. Th­ese are: South Africa (35.8 per­cent), Nige­ria (14.5 per­cent), An­gola (6.5 per­cent), Tan­za­nia (4.4 per­cent), and Kenya (4.2 per­cent).

Cur­rently, the big­gest play­ers in th­ese mar­kets are South Africa’s Mul­tiChoice, China’s StarTimes, East Africa’s Aza­mTV, Sa­fari­com and Zuku TV. In Fran­co­phone Africa, Canal Plus Over­seas re­mains the dom­i­nant op­er­a­tor.

Africa’s large pop­u­la­tion and its youthful de­mo­graphic makes the con­ti­nent a very at­trac­tive mar­ket for the pay-TV in­dus­try. With an­nual rev­enues es­ti­mated at over $4 bil­lion, there is still a lot of room for new play­ers in this mar­ket.

Just a few weeks ago, Econet Me­dia, owned by Strive Masiyiwa — one of Africa’s most suc­cess­ful en­trepreneurs — en­tered the payTV mar­ket with the launch of Kwesé TV. The ser­vice has gone live in Ghana, Rwanda and Zam­bia, and plans to roll out to more coun­tries by April 2018.

Africa’s grow­ing in­ter­net pen­e­tra­tion, ris­ing smart­phone adop­tion, and dig­i­tal mi­gra­tion will be the key growth driv­ers of the pay-TV mar­ket in Africa as niche of­fer­ings such as video-on-de­mand (VOD) and In­ter­net Pro­to­col TV (IPTV) evolve.

In 2017, more house­holds on the con­ti­nent will be­come pay TV sub­scribers, gen­er­at­ing more rev­enue for new and ex­ist­ing play­ers in Africa’s fast-emerg­ing pay TV mar­ket.

Food Pro­cess­ing It’s widely be­lieved that Africa does not pro­duce enough food to meet its own needs. The con­ti­nent ac­tu­ally pro­duces far less food per hectare than the world av­er­age.

How­ever, while food pro­duc­tion re­mains a big chal­lenge for the con­ti­nent, post-har­vest losses and waste are the big­gest threats to food se­cu­rity in Africa.

Due to in­ad­e­quate pro­cess­ing op­tions, a sig­nif­i­cant pro­por­tion of har­vests from farms in Africa never make it to the fi­nal con­sumer.

Right now, Africa’s big­gest food prob­lem isn’t pro­duc­tion; it’s pro­cess­ing, and then, mar­ket­ing.

If Africa could process more of the food it pro­duces, food waste will re­duce, food sup­plies would be more stable and less sea­sonal, and food prices would be less prone to wild swings.

Real Es­tate This is hardly sur­pris­ing given the cur­rent and fu­ture size of Africa’s pop­u­la­tion. Ac­cord­ing to the United Na­tions, more than half of global pop­u­la­tion growth be­tween now and 2050 is ex­pected to oc­cur in Africa. Of the 2.4 bil­lion peo­ple who are ex­pected to join the world over the next 30 years, 1.3 bil­lion of them will be Africans.

Where will all th­ese peo­ple live, work, shop and play?

Cur­rently, coun­tries across the con­ti­nent suf­fer a sig­nif­i­cant real es­tate deficit. In Nige­ria, for ex­am­ple, the World Bank es­ti­mates the af­ford­able hous­ing deficit at over 17 mil­lion homes. In La­gos, one of Africa’s largest cities with a pop­u­la­tion of over 15 mil­lion peo­ple, there are less than 7 ma­jor shop­ping cen­tres.

It’s the sever­ity of the real es­tate deficit across Africa that makes it such an amaz­ing multi-bil­lion dol­lar busi­ness op­por­tu­nity.

Across the ma­jor seg­ments of the mar­ket — res­i­den­tial, of­fice spa­ces, re­tail, in­dus­trial and hos­pi­tal­ity — in­vestors and de­vel­op­ers are po­si­tion­ing them­selves to ben­e­fit from un­der­served needs.

The Land­mark Group is one ex­am­ple among sev­eral oth­ers that have been pursuing real es­tate op­por­tu­ni­ties in Africa, and main­tains a multi-mil­lion dol­lar port­fo­lio of prop­er­ties on the con­ti­nent.

African Fash­ion Africa is in the heat of a fash­ion rev­o­lu­tion.

The ex­plo­sive com­bi­na­tion of cre­ative ge­nius and en­tre­pre­neur­ial tal­ent is in­creas­ing the vis­i­bil­ity of African fash­ion on the world stage, as a new breed of de­sign­ers are lever­ag­ing the con­ti­nent’s rich cul­tures, his­tory, and fab­rics to make bold fash­ion state­ments.

Young African de­sign­ers such as Maki Oh and Aisha Obuobi have fea­tured fash­ion pieces worn by in­ter­na­tional celebri­ties, in­clud­ing Bey­oncé and Michelle Obama.

De­spite its cur­rent chal­lenges, Africa’s fash­ion in­dus­try has the po­ten­tial to cre­ate mil­lions of jobs and sig­nif­i­cantly boost eco­nomic growth on the con­ti­nent. This is al­ready hap­pen­ing in coun­tries like Mau­ri­tius, Ethiopia and Le­sotho where ap­parel ex­ports are a ma­jor for­eign ex­change earner.

As more African fash­ion de­sign­ers, en­trepreneurs and stylists un­leash their cre­ativ­ity and imag­i­na­tion in 2018, the world is in for a big sur­prise.

— Small­starter.com

Newspapers in English

Newspapers from Lesotho

© PressReader. All rights reserved.