Capitalism Brings Hope to Sub-Saharan Africa

Author: Nihar Bihani

Published:

A recent Business Week article highlights how South African companies such as SABMiller, Standard Bank, and others are unlocking Sub-Saharan Africa as the biggest investor in the region - $8.5 billion thus far! While South African beer maker SABMiller leads the way in the region, Johannesburg cellular provider MTN is defying conventional wisdom by providing cell phones to people earning less than $2 a day. And neither the combat in Congo nor the drop in commodity prices have ruffled South Africa's mining company Metorex. In fact, the knowhow South Africans have gained on the continent is making their companies attractive to foreigners with ambitions in the region.

Understanding the twin aspects of South Africa's sophisticated economy and emerging market complexities, however, is the key for any company to be successful in the region. Quirks such as unloading goods from the truck by hand because the retailers can't afford forklifts, or lack of consumer access to media/advertising are things about the local market that South Africans have learnt to accept. The globalEDGE module on Doing Business in Africa could be helpful if you wish to learn more about such issues.

So is Africa the next China? Although growth has slowed and inflation increased in the recent past, there is also a growing trend of consumerism and foreign interest in the area. In March, Industrial & Commercial Bank of China bought a 20% stake in Standard Bank. Britain's Vodafone (VOD) in November took control of Vodacom, a pan-African cellular carrier based near Johannesburg. And yet, Mozambique in Sub-Saharan Africa remains one of the poorest countries on the planet!

Also, here is a podcast with first hand experiences about doing business in Africa. Overall, there has been a dramatic increase in political stability and reduction of conflict over the past 10 years in the region. And as things continue to improve, ample opportunities for international business will arise in the region.