Summary:

• We recommend 5 business books with fact-based insights on conducting business in Africa, beyond the repetitive negative headlines.
• Business opportunities should be contextualized to specific African regions.
• Africa is a mammoth landmass made up of 54 countries that are culturally, geographically, and politically diverse.
• 4 factors usually drive long-term growth projections across Africa.
• We highlight 7 of the most promising business sectors in Africa.
• We highlight 4 strategic areas of focus for Blaxiters and continental Africans to collaborate efficiently.

Introduction

In our previous AfriKili blog entry, part 2 of our 3-part series on Blaxit, we pivoted from the push factors in the western world to the pull factors that are making the African continent an attractive destination for Blaxiters and repatriates. We specifically explored 3 attractive factors: the sense of community, the “Year of Return” initiative, and Africa’s business opportunities.

In this entry, the third and final part of our series on Blaxit, we will discuss Africa’s massive business potential and we will focus on how to successfully conduct business on the African continent. Specifically, we will identify some of the most promising business sectors, and we will offer guidance on how Blaxiters, African repatriates, and continental Africans can join forces to unlock Africa’s business opportunities.

Before starting, it is important to clarify the context of this blog entry and set the proper expectations. Given the scope of our blog, it would not be realistic to attempt an extensive analysis of the ways in which Blaxiters and continental Africans can collaborate to unlock Africa’s business potential. The topic is too broad. Consequently, this blog entry will not focus on heavy empirical data. Rather, we will attempt to make it very accessible by sharing general observations that entrepreneurs and business leaders can focus on.

Business books recommendations

For decisions makers at large companies, policymakers, academics, or entrepreneurs, that would like more robust empirical evidence after reading this blog, I would like to recommend 3 books that were written by a mix of African writers on the continent, and others that have thrived professionally outside the continent.

The first book is “Unlocking Africa’s Business Potential,” written in 2020 by Landry Signé, a senior fellow at the Brookings Institute, a think tank based in Washington D.C., and a professor at Stanford University, one of the best universities in the world. In this book, Landy Signé analyzes business opportunities some African sectors that have the highest potential returns on investment, and he relies on case studies to inform decision making.

The second book is “Africa’s Business Revolution,” written in 2018 by Acha Leke, Mutsa Chironga and Georges Desvaux, senior leaders at the African offices of McKinsey and Company, one of the biggest international consulting firms in the world. The book brands itself as a guide on how to succeed in doing business in Africa. It is designed to help executives and entrepreneurs understand and seize opportunities to build sustainable enterprises in Africa. The book features case studies and interviews with some of Africa’s most famous executives.

The third book is “101 ways to make money in Africa,” written in 2014 by John-Paul Iwuoha and Harnet Bokrezion. The book provides business ideas, success stories and business opportunities for entrepreneurs who live in Africa and those who live outside the continent but would like to start a business there.

In addition to the 3 books above, you might be interested in 2 other books written by experts who are not of African descent. 

There is “Success in Africa,” written in 2013 by Jonathan Berman, a senior fellow at Columbia University. The book provides on-the-ground perspective, personal stories, and insights on how to win from ambitious CEOs who have succeeded in Africa.

The other book is “Entreprenante Afrique,” written in 2016 by Jean-Michel Severino and Jeremy Hajdenberg. Jean-Michel Severino is the former CEO of the French Development Agency (AFD) and CEO of Investisseur & Partnenaires, which is an investment fund focused on African Small and Medium Enterprises (SMEs). The book introduces African men and women that are leading successful SMEs in multiple high-growth sectors on the African continent.

These 5 books are a great place to start if you are interested in getting fact-based insight on conducting business in Africa, beyond the repetitive negative headlines that are pushed by mainstream media outlets.

Let’s now explore how Blaxiters and the entire Pan-African diaspora can capitalize on Africa’s business potential. I will divide this subject in two parts:

1. First, I will provide a short list of some of the most promising growth sectors in Africa, while highlighting business opportunities for some of those sectors.
2. Secondly, I will propose concrete ways for Blaxiters and Africans to collaborate towards successfully unlocking Africa’s business potential.

The true size of Africa

When looking at growth sectors on the African continent, it is important to understand the true size and diversity of Africa. The continent is not a monolith environment, but rather, it is a mammoth landmass made up of 54 countries that are culturally, geographically, and politically diverse.

Mapped: The True Size of Africa

This map should help you appreciate the true size of Africa. You can see that the continent is bigger than China, the USA, France, Spain, India, Germany, and the whole of eastern Europe combined!

This is very different from the Mercator map projection that has been ingrained in most of our collective psyches since childhood, depicting Africa on a much smaller scale. It can make it hard for us to grasp this reality.

World maps

Consequently, when Blaxiters and the Pan-African diaspora are assessing growth sectors, it is important to contextualize them to the African region they want to relocate to or explore.

4 factors driving long-term growth projections.

There is another important consideration. Regardless of which business sectors we are researching across Africa, we will usually find 4 factors that drive long-term growth projections. They are:

1. The population, that is young and fast growing, expected to reach 2.5 billion people by 2050.
2. The workforce, that is massive and rapidly growing.
3. The urbanization rate, which is the fastest in the world, and
4. Technological change, which is accelerating.

Most promising business sectors

Let’s now discuss the business sectors that are projected to grow exponentially in the coming years. I have decided to highlight 7 business sectors and the list is certainly not exhaustive.

Business sector 1: Consumer Markets and Distribution

Africa is one of the fastest growing consumer markets in the world. There are roughly 1.3 billion consumers today that are projected to become about 1.7 billion in 2030. Even though Africans have a relatively low purchasing power, household consumption throughout the continent grew by 4 percent between 2010 and 2015, to reach $1.4 trillion dollars. Furthermore, it is projected to reach $2.5 trillion US dollars by 2025 and $8 trillion by 2050.

African consumer markets and distribution are projected to reach $2.5 trillion US dollars by 2025 and $8 trillion by 2050.

“Unlocking Africa’s Business Potential,” Landry Signé

These numbers are just astounding!!! They present tremendous opportunities in African consumer markets that are not saturated by large vendors. They also mean that several markets will explode over the next few years.

Several international advisory firms such as Mackenzie, Bain & Company, and others are very bullish on Africa’s growth prospects. They are advising companies to seriously consider entering the African consumer markets or else miss significant growth opportunities.

I believe that Blaxiters, the Pan-African diaspora and Africans on the continents should also be bullish and do everything in their powers to occupy leading roles in the African business growth narratives.

Business sector 2: Agriculture and food industry

4 facts should grab our attention:

1. 60% of all the arable lands for the entire planet are in Africa.
2. Since the mid-1990s, agriculture and agribusiness have been among the fastest growing sectors in Africa.
3. It is projected that, by the year 2030, agriculture and agriprocessing will remain the largest sector for business-to-business spending in Africa, at $915 billion dollars.
4. According to the World Bank, the sector will be worth $1.9 trillion per year by the year 2050.

No matter how you look at it, this sector offers many great investment opportunities for Blaxiters and the Pan-African diaspora.

Like most sectors, there are several challenges in the agriculture and food industry. However, Africa also offers great advantages to enter this sector. For example, arable land is relatively low-cost, climates are suited for a diversity of crops, labor is readily available and low-cost in rural areas, etc.

Business sector 3: Information and communications technology (ICT)

The ICT sector is often simplified as internet, digital, or mobile services. However, the sector includes a broad range of products and services that enable storage, delivery, or exchange of information.

Africa currently has big ICT infrastructure gaps and addressing them represents a massive opportunity. For example, many African governments and companies are increasingly looking to move their data from paper to digital formats. However, the large majority are still stuck on antiquated paper.

As a result, there are massive opportunities for Blaxiters and entrepreneurs that can design and offer solutions to help African governments and companies dematerialize. In other words, help them move from paper to digital.

Business sector 4: Manufacturing and industrialization

Most African countries continue to have very few factories. However, the sector has tremendous potential when we consider that business-to-business spending is projected to reach almost $700 billion by 2030. This is $200 billion more than what it was in 2015. As a matter of fact, McKinsey & Company considers that Africa is the world’s next great manufacturing center.

Business sector 5: Infrastructure and construction

Some of the biggest opportunities in this sector lie in addressing infrastructure deficit related to unreliable electricity supply, insufficient telecommunications networks, insufficient road networks, building manufacturing facilities, mining, etc.

The rapid urbanization happening across Africa is also creating massive opportunities in building residential housing and commercial facilities.

Business sector 6: Banking

Compared to other regions of the world, Africa has very low bankarization rates, which mean that there are big opportunities for both retail banking and digital banking. The continent has been a leader in adopting mobile money, which is helped by the high penetration of mobile phones.

Also, the continent is only starting to scratch the surface of the financial technology potential, also known as FinTech. For example, in 2021 alone, African startups raised a record-breaking $5 billion dollars. This trend is expected to continue growing.

Business sector 7: Tourism

As a whole, the tourism industry in Africa is still at an early development stage. The growth of the industry has been slowed by factors such as infrastructure, security risks, economic risks, etc.

However, Africa is well positioned to become a leading destination for global tourism given its unique story and beautiful natural endowments. According to the World Travel and Tourism Council, Over the next 10 years, the African tourism industry will grow by about 30% and generate about $36 billion in direct investments from the USA alone.

As previously mentioned, the list of 7 sectors we have just discussed is certainly not exhaustive. Nevertheless, it paints a clear picture of tremendous business growth opportunities that Blaxiters, the Pan-African diaspora, repatriates, and continental Africans can seize.

Ways for Blaxiters and Africans to collaborate

Now, let’s move on to the 2^nd part of our topic, and look at how Blaxiters and Africans can collaborate towards unlocking Africa’s massive business potential.

I would like to stress the importance of humility when Blaxiters and the Pan-African diaspora decide to seize business opportunities on the continent. Coming from the “developed” world does not mean that you are automatically equipped with the necessary best practices and resources to conquer Africa’s business environment.

Many who entered the world’s next growth market thinking that they could just copy and paste models that have worked in other continents, quickly became disillusioned and were sent back packing, with their tails between their legs.

As a matter of fact, in our last blog entry, BLAXIT part 2, we discussed the importance of preventing resentments by developing a genuine desire to build relationships and learn from each other when entering Africa. The same applies to building successful businesses in Africa.

Beyond the intangibles, it is also important to have a clear strategy before entering the African business space. As Sun Tzu stated in the popular book “The Art of War”, tactics without strategy is the noise of boots before defeat.

“Tactics without strategy is the noise of boots before defeat.”

“The Art of War,” Sun Tzu

To give you guidance, I will summarize 4 strategic areas that are discussed in detail in the book “Africa’s Business Revolution.”

Strategy focus 1: Prioritize your markets

Whether you are an individual Blaxiter, entrepreneur or a company looking to enter the African market, remember that Africa is made of 54 countries that are culturally, geographically, and politically diverse. These countries can be very informal and hard to navigate for newcomers. Therefore, you should map your strategy and contextualize the business opportunity to the country you are targeting.

From the start, you should focus on getting local knowledge or associating with local partners that can provide you with local know-how. Also, understand that a strong ecosystem and a strong network are necessary for you to win in the long term. You will need to connect with a network that will guide you with necessities such as getting reliable power and water, but also local insight on acquiring reliable suppliers or navigating the regulatory environment.

If you are in a country without a business hub or an ecosystem for your industry, consider starting one. Ultimately, your network will determine your net worth.

Strategy focus 2: fulfill real unmet needs

Blaxiters and repatriates should avoid the temptation of packaging products and services from the West and delivering them as-such to African markets. That is a recipe for failure. Instead, it is important to associate with local partners that can help clearly identify your customers’ unmet needs.

You should put yourself in the shoes of your African customers and tailor products and services according to how they would engage with you. You will most likely have to innovate your business model to keep your operations lean and keep prices low.

Keep in mind that mobile and digital technologies are rapidly adopted across Africa and you can leverage them to grow your customer base while controlling operational costs. Given that cheap Chinese products are flooding African markets, it is particularly important to drive innovation while keeping your prices low.

Strategy focus 3: Build long-term resilience

You will hear many tales of overnight business success in Africa. You might hear how people are able to acquire lucrative government contracts and, almost immediately, go from rags to riches. There are certainly elements of truth to these stories, and I will not discount them as baseless.

However, it would be foolish for Blaxiters, African repatriates and the Pan-African diaspora to base their entire African business strategy on the hopes of negotiating lucrative government contracts. The responsible approach is to understand the local context and focusing on winning in the long-term.

Additionally, inconsistent government policies represent serious short-term volatility risks in most African countries. Consequently, I would highly recommend building healthy relationships with governments when deciding to conduct business in Africa.

Finally, building long-term resilience requires having access to working capital. Blaxiters and African repatriates should not rely on raising early venture capital on the continent. It is important to enter the African market with enough runway capital to sustain the launch and early business stages.

Strategy focus 4: Unleash Africa’s entrepreneurial talent

Blaxiters and African repatriates can generate profits by partnering with entrepreneurs on the African continent. Africa has a young and entrepreneurial population. They often have innovative concepts but lack the financial means to prove them or grow them.

Considering that capital acquired outside the continent can potentially generate much higher returns in Africa compared to the West, business oriented Blaxiters and African repatriates should seriously consider investing in cash-strapped entrepreneurs with a high potential upside. With this approach, Blaxiters can quickly gain prospective business partners on the continent, and quickly gain hands-on experience on how to navigate Africa’s business environment.

Ultimately, setting up structures to facilitate strategic investments in Africa’s entrepreneurs and creating formal joint ventures, could allow investors across the Pan-African diaspora to profit from businesses in Africa, without having to physically relocate on the continent.

Conclusion

As we have discussed through this blog, Africa is truly the world’s next business growth continent. We have highlighted 7 industries that are projected to grow exponentially, and we have highlighted business opportunities within those industries.

We noted how Blaxiters and members of the Pan-African diaspora that are assessing business growth sectors, should remember that Africa is made up of 54 countries that are culturally, geographically, and politically diverse. Consequently, they should contextualize the growth sector to the specific African region they want to relocate to or explore.

Finally, we also discussed 4 strategic areas of focus to help Blaxiters, the Pan-African diaspora and continental Africans collaborate efficiently towards successfully unlocking Africa’s business potential.

For more detailed and empirical information, remember to check out the 5 books I recommended.

Thank you for your reading this blog and, as always, peace be with you.

Let’s get to work.

AfriKili, African Intelligence to Build a New Africa!