VENTURES AFRICA – Experts have offered their opinion on how Africa can make its investment opportunities more sustainable.
According to the Head of strategy at KPMG Africa, Tim Bashall, Natural resources, the growing African consumer, and infrastructure are currently three mega trends driving investment decisions on the continent.
He says the first mega trend, which are natural resources – mining, oil and gas as well as agricultural opportunities have been a source of big investment. The second path is the billion of people who are very young and are rapidly urbanising, and responding to the growth opportunity created by the natural resources environment. Thus, creating a massive middle class who with money to spend, making consumer demand massive. These demands affect telecoms, banks, insurance companies, food and distribution companies. The third mega trend in Africa is the massive requirement for infrastructure.
“There is a great need for big investments into power, into transport – whether it be road, rail, ports, airports – to respond to the needs of the natural resources demand and consumer demand,” Bashall explained.
However, other experts lamented that Africa’s Telecommunications market has not been saturated. Africa’s telecommunications industry has been one of the continent’s fastest growing sectors over the past decade but its full potential are yet to be fully harnessed despite the enormous opportunities.
According to Henry Obi, the Chief /Operating Officer of Private Equity Firm, Helios Investment Partners, although Africa’s coastal areas and cities are well covered in terms of telecommunications infrastructure, the rural area still offer major opportunities.
Obi’s firm has invested in Helios Towers Africa, a company that builds mobile communication towers and then leases space on the towers to network operators.
“We have seen the opportunity within the telecom space where telecom providers don’t have to roll out their own infrastructure, they can give that to someone else to do, and spend the money on content and providing a better service to the customer.”
Another expert Dapo Okubadejo, a partner at KPMG’s Nigeria office, added that although mobile voice services might not offer much growth potential, there are still opportunities in providing data services as well as under-sea fibre optic cables. He said that Africa’s consumer boom is driven by the “aspiration of an average African to gravitate towards the middle class.”
For investors looking at a way to target the African consumer; Raman Dhawan, MD of Tata Africa, said that when it comes to manufacturing, many of the markets in Africa are still too small to justify establishing factories. He said that the big problem Africa has is that it does not have a combined market to make it a big manufacturing-based continent.
He noted that Southern Africa and West Africa are the most lucrative markets from a consumer goods point of view. Obi, however, said that companies should target east Africa from a regional perspective, rather than the individual countries. “There is a lot more integration in East Africa, than in West Africa.” He said.