VENTURES AFRICA – The art of projection is a must for strategic planning. As more and more investments pour into the African continent, it will be necessary to understand what the African sectoral configuration will likely be a couple years down the line. Below, we briefly discuss four high potential sectors and the countries that should be able to compete favourably therein given their present moves.
Financial Services: This space will be dominated by South Africa, Mauritius, Nigeria, Kenya, Ghana and possibly Ivory Coast. South Africa’s financial markets continue to dominate with Standard Banks ranked Africa’s top financial lender. Nigeria’s capital market has seen tremendous growth and stability since its near-collapse in 2008 and has been boosted by an increased flow of FDI. Nigeria’s FDI stock currently stands at $85 billion. Kenya setting the pace for mobile money adoption globally, offering an innovative alternative to payment solutions across the continent.
Oil: Crude and gas discoveries in East African countries has expanded the number of African contributors to global oil suppliers. Kenya has seen explorers such as Tullow kickstart drilling campaigns already, guaranteeing an increased oil revenue inflow for the continent.
Africa’s top two producers, Nigeria and Angola, are experiencing contrasting fortunes. Nigeria has seen illegal activities within its oil producing areas shrink production and exports in the last year. Explorers including Shell have faced disruptions to drilling activities several times. Nigeria reportedly lost $2.5 billion in 2013 to illegal oil activities. Angola on the other hand, continue to see a steady growth in production. The country is set to relief Nigeria as the continent’s largest exporter of crude.
Agriculture: Players here should include Nigeria, Ethiopia, Zambia, Mozambique, and Angola. Africa as a whole, having 60 percent of the world’s total arable land, has the raw potentials to feed the rest of the world once capabilities are built in this sector.
Power: South Africa, Nigeria, Tanzania, Kenya and Ethiopia show the strongest potential for growth here. South Africa is already doing well in terms of power production but there remains some potential for growth. Nigeria shows huge potential following the power sector privatization; once successfully executed, can propel the country’s quest for rapid industrialization. The West African giant recently emerged Africa’s largest economy, displacing South Africa, the continent’s most developed economy.
America’s declaration to support push for stable power, seen in President Obama’s pronouncement of $7 billion Power Africa Initiative, will further strength resolve to move towards ending the power challenges faced on the continent.
Transportation: Finally, this sector will be dominated by Nigeria, South Africa, Kenya, Tanzania and Mozambique. Nigeria shows progress in building good road and rail links while South Africa continues to draw up mega infrastructure spending plans.
Technology: Mobile and broadband adoption is seeing rapid growth. The continent’s mobile penetration stands at 80 percent, and is expected to become the largest consumer of mobile gadgets by 2020. The smartphone market is also experiencing a boom with makers like Blackberry stating that the continent, along with Middle East, is its largest market.