Afribiz: Business & Investment in Africa

As 2010 comes to a close and the new year comes around, it's appropriate to reflect on the challenges we have faced as entrepreneurs this year and what we will do differently next year to move our ventures forward. Taha Jiwaji, Founder of BongoLive in Tanzania, shares his own experiences this past yearwith us, particularly the challenges he ran into and how he worked around them. You will find both inspiration and a fresh perspective to keep down that entrepreneurial route in 2011.

The EU-Africa Summit finished a few weeks ago. Nwakego Eyisi and Lauri Elliott review some of the key issues which impact business in Africa.

Due diligence is often thought as a negative, antagonistic process when investors and entrepreneurs consider working together - a necessary form of evil. But Lauri Elliott's discussion with Joseph Price of Triomphe Consulting sheds a different perspective while providing practical tips for both entrepreneurs and investors. This episode is a special collaboration with VC4Africa.biz.

Any time a discussion centers around the BRICs, particularly China, in Africa it can swing positively or negatively. However, the truth is that Africa is being seen as an emerging market to the emerging BRICs, so they have interests not only in extracting minerals or making money on projects but also developing sustainable businesses that will serve the growing African economies. One area you can see the BRIC strategic involvement is in infrastructure. While their contribution to infrastructure development in Africa seems small to some, it is growing and as trade flows shift to include more South to South interactions we may see a very different picture in the next decade. Simon Freemantle, an economist with Standard Bank, shares with us insights they have been tracking about the BRICs involvement in Africa's infrastructure development. One key insight is that each BRIC has chosen a different strategy aligned with their strengths and objectives. For example, China is focusing on developing five key economic zones in Africa based on their experience with economic zones in China. You don't want to miss this conversation.

In a continuation of Afribiz coverage of major summits impacting trade, business, and investment in Africa and emerging markets, Nwakego Eyisi, and economist and Afribiz expert, and Lauri Elliott discuss the G20 Seoul Summit declarations. This is a conversation from the week of November 15th.

As we begin to wind down 2010, the business scene in Africa is still alive with possibilities. Duncan Clarke, Founder of Global Pacific & Partners joins AfribizTalk to give us a high-level view of business in Sub-Saharan Africa to whet our appetites for more possibilities in the new year.

Cleantech investments are on the rise globally. 2010 figures are exceeding 2009 figures, according to the CleanTech Group. But how does Africa figure in this picture? Kyle Denning of Sustainable Energy Solutions says the Cleantech sector is poised for growth in Africa once a few projects prove viable. Cary Lee Peterson of Ecco2 is convinced that their project in Nigeria is one of those key projects that will open the watershed for cleantech projects on the continent. Both Peterson and Denning join AfribizTalk to share about their niche in the Cleantech sector in Africa. Ecco2 has recently signed agreements with both the Haitian and Nigerian governments to bring their carbon emission reducing devices to market in each of the countries. It would seem strange for Ecco2 to enter economies with high unemployment and poverty, but cost of the technology is affordable compared to other solutions and they have found a way to generate revenue while providing the technology for free. Peterson shares that the carbon credits earned by the installation of the Ecco2 technology are signed over to them to trade on the carbon commodities exchange. Denning says with projects like this focus can be on social and environmental impact while being economically viable. Listen to the entire episode.

Gauteng Province in South Africa is the 4th largest economy on the African continent after the countries of South Africa, Egypt, and Nigeria, according to Mudunwazi Baloyi, General Manager of Investment, Trade, and Project Facilitation at the Gauteng Economic Development Agency. Baloyi joins AfribizTalk to discuss Gauteng as an asset which investors, entrepreneurs and businesses can leverage to do business in Africa. Baloyi shares that Gauteng is a global city region (GCR), a unified region made up of municipalities, with a population of over 11,000,000. Other global city regions (GCR) around the world include New York, Sao Paolo, and Milan. GCRs are attractive because of their high-density consumer markets. Gauteng has strong industries in engineering, automotive parts, and Business Process Outsourcing (BPO). With investment prioritized for renewable energy, manufacturing, etc., businesses have diverse opportunities within the province. One of the key improvements brought by the World Cup was improvement in public transportation and roads. A trip between business centers of Pretoria and Johannesburg, which used to take more than an hour due to traffic, is now clocked at about 30 minutes, according to Baloyi. Using the Gautrain rapid train will reduce the trip to about 15 minutes. Gauteng’s reach goes beyond South Africa. It stretches around the globe through partnerships, multinational corporations, trade agreements, etc. Baloyi notes that Gauteng has the largest concentration of multinational firms in Africa and South Africa has deepened trade agreements with other emerging markets like Russia, China and India. Listen to learn more about how Gauteng can be leveraged as a key gateway between Africa and the globe.

Last year about this time, Kenya entered the global broadband boom with the landing of the SEACOM international broadband cable. David Owino, co-founder of HumanIPO and intimate with the Kenyan ICT sector, joins AfribizTalk to share about what is going on and where the software development community is heading. Owino says three changes over the last couple of years have positioned the Kenyan ICT market where it is today. First, political and regulatory reforms increased freedoms and competition. For example, Kenya just passed a new constitution in August of this year. Second, undersea cable systems like SEACOM and EASSY increased available international bandwidth. And third, the Kenyan government developed an extensive fibre optic backhaul to reach the far corners of the country, as well as connecting Kenya to other East African countries. Owino indicates that this improved environment creates a foundation for a burgeoning web and mobile application/services development community. Kenyan ICT entrepreneurs like Ushahidi (a non-profit) and Virtual City (winner of $1,000,000 Nokia Growth Economy Venture Challenge) are already making their presence known internationally. He notes that while the development community has a lot of potential it still has several challenges. While young ICT entrepreneurs have the technical talent and are innovative, many do not have the business savvy to bring their ideas to market. Also, finances for startups represent another challenge. This development community represents an opportunity for investors looking to get into successful ventures early. IPO48.org, a bootcamp and competition for tech start-ups, is a good example of investors bringing both the finances and coaching needed by Kenyan ICT entrepreneurs. When asked which Kenyan entrepreneurs would bring the next global rage, Owino said “expect a few to come from IPO48.”

As companies shift to take advantage of global markets, a key question is how to develop a strategy that will allow them to compete globally. One company in South Africa, Bizworks, took advantage of government objectives and programs, multilateral agreements, and partnerships across global regions to lay out a global strategy. Mfanu Mfayela, Chief Executive Officer of Bizworks, joins AfribizTalk to share his experience. Myafela explains that Bizworks is involved in the business processing outsourcing (BPO) industry in South Africa, which is small compared to India. He shares that government organizations in the country see the potential of this industry to create jobs, so they have developed incentives and opportunities for firms like his to grow. Since South Africa is an English-speak country, it is natural for South African firms to expand into other English-speaking markets. Myafela adds that Bizworks goal is to also reach non-English speaking markets as well. This is an arena where partnership plays a key role in enabling Bizworks to enter other markets. But partnership can be a tricky path. That’s why Myafela says multilateral forums like the India, Brazil, South Africa (IBSA) Forum present opportunities to find trusted partnerships. Myafela indicates that Business Unity South Africa (BUSA), Business Process Enabling South Africa (BPESA), NASCCOM in India, and Outsource Brazil are working together in alignment with frameworks set under IBSA. The next event bringing everyone together is the South-South Innovation Summit the last week of October 2010.

Born Global firms, a term coined by McKinsey and Associates, are those that provide products or services globally from birth. According to research by McKinsey, Born Global firms see the world as their marketplace from the beginning, not as an expansion to their domestic markets. These firms will often implement their global strategy within two years from inception. On our show today, Ashifi Gogo, CEO of Sproxil, Inc., shares how Sproxil is a Born Global firm operationalized first in Africa. Gogo indicates that Sproxil’s global strategy was a natural result of the challenge Sproxil was designed to address, counterfeit products. Sproxil’s initial product to eliminate counterfeit drugs has a global value chain. Many legitimate brand and generic pharmaceuticals are manufactured in India and China, then sold in Africa. Gogo says that ICT, mobile phones and broadband, has made a significant difference in managing costs, work, and number of visits to Africa. The Sproxil team is able to stay connected regularly with each other and clients in Africa by VOIP and video calls. Finding trusted local partners who can work well remotely using ICT is actually Gogo’s first tip to other global start-ups. Another tip is to identify backers who understand emerging markets. Backers for firms focusing on developed economies are not the same as for firms focusing on developing markets. And the last tip is just go do it! “There is only so much planning you can do,” says Gogo. This interview with Ashifi Gogo should not be missed.

Funding is one of the critical factors in the development of entrepreneurial and SME enterprises in Africa. J. Skyler Fernandes, Chief Operating Officer of the South African Chamber of Commerce in America (SACCA), joins AfribizTalk to discuss what is happening with a particular segment of SME finance in Africa – that between microfinance and venture capital. This segment of finance happens to lack a cohesive industry, so it’s known as the “Missing Middle.” The “Missing Middle” includes finance between $20,000 and $3,000,000. Fernandes says that this segment of SME finance is the next wave of innovation after microfinance. In fact, he shares that while a young industry, SME funds have grown 80% in the last few years. This also has practical applications for both entrepreneurs and investors involved in Africa. As more funds appear on the horizon, access to funding will become more widely available. But what SME funds typically look for are “polished” entrepreneurs, according to Fernandes. “Polished” entrepreneurs are those who have delivered a proof of concept, implemented operations, and/or proved there is a demand for their products or services. So, we discuss a few tips to help entrepreneurs better position themselves to tap into funding. This is a discussion you don’t want to miss.

Would you be surprised to know that Africa has 17 countries that on average had GDP rates of over 5% over the last 15 years? These countries have helped Africa position itself as an emerging global trade and business region. And according to Steve Radelet, author of “Emerging Africa: How 17 Countries are Leading the Way," indicators portend more positive movement on the continent moving forward. Radelet joins this AfribizTalk episode to share the insights he gained over twenty years in the international development field and expressed in “Emerging Africa.” Radelet served as advisor to Liberian President Ellen Johnson Sirleaf and now serves as an advisor to U.S. Secretary of State Hillary Clinton. Radelet shares that this new, emerging Africa started when many African nations became bankrupt, the Soviet Union crumbled, and apartheid ended in South Africa. Since then, the transformation of these nations came from economic and political reforms, as well as other drivers like technology. Some of the 17 emerging African economies include Tanzania, Ghana, Cape Verde, South Africa, and Mali. Other nations like Liberia and Sierra Leone are considered transitional economies, who are currently making the right moves to become emerging economies. Investors and entrepreneurs will find this discussion enlightening as it sets out to highlight countries in which the business context has been improving significantly within the last 10 to 15 years and collectively represent a population of 300 million people. You will definitely want to listen to this episode.

This segment of AfribizTalk covers insights into the specialty food market in Africa and the opportunity to develop more African specialty food brands for global markets. Jim Thaller, Managing Director of Talier Trading Group, joins us. With the food shocks of the past several years, nations and firms are scrabbling to Africa to acquire land so they can secure food supply and make money. It’s as if the world finally realized one of Africa’s great potential strengths, if cultivated. But other savvy investors and business people have known this for a while and have been quite successful at tapping the potential of African agricultural value chains. African brands like Rooibos teas, Nando’s restaurants, and Amarula drinks have developed international markets well. Ethiopian, Moroccan, and Sengalese cuisine are becoming more popular and recognized. According to Thaller African specialty foods have done well amidst the slow global economic recovery. Thaller says that the specialty food market in the U.S. is about 90 billion annually, making it the world’s largest and an attractive market for African food entrepreneurs and investors to consider. The specialty food sector includes food products of high value compared to food commodities, which fluctuate in price often making it more difficult on sustainability and profit margins. Listen in on this insightful episode.

McKinsey recently reported that the annual consumption of a group of emerging economies would double the U.S. annual consumption within ten years. This group of emerging economies includes the African countries of Egypt, South Africa, and Nigeria. McKinsey's advice is for firms to move early to catch the coming tide. The question is how? Exporting is one means for African and global firms to diversify revenue streams. Unfortunately, entrepreneurs and SMEs can find this process daunting, but there are strategies to succeed in this space. As more firms look at opportunities in Africa, we bring the discussion to the show with a U.S. SME export firm, Joint International Business Group (JIBG). Alex Ayalew, JIBG's founder, will share how they have made exporting to Africa and beyond a successful business strategy for them.