By Mutsa Chironga, Acha Leke, Susan Lund, and Arend van Wamelen Harvard Business Review, June 2011

Presented by Praveenkumar A. P

Workers at a cocoa cooperative in the Ivory Coast That African nation is the worlds biggest producer of cocoa

Highlights in brief

In Africa the infrastructure is still poor; talent is scarce; and poverty, famine, and disease afflict many nations Most Western executives, unsure of the size of Africas consumer markets, prefer to invest in Asias dragon and tiger economies rather than in Africas economic lions In 2008, Africans spent $860 billion on goods and services - 35% more than Indians spent

Highlights in brief

Over the past decade, Africas real GDP grew by 4.7% a year, on averagetwice the pace of its growth in the 1980s and 1990s By 2009, Africas collective GDP of $1.6 trillion was roughly equal to Brazils or Russias As Africas economies progress, opportunities are opening in sectors such as retailing, telecommunications, banking, infrastructure-related industries, resource-related businesses, and all along the agricultural value chain
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Highlights in brief

The continent is among the fastest-expanding economic regions today Telecom companies in Africa have added 316 million subscribersmore than the entire U.S. population since 2000 Africa offers a higher return on investment than any other emerging market Reasons: Competition is less intense and few foreign companies have a presence there, and consumer demand is strong
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The Growth Ahead

Several African countries, such as Angola and Mozambique, halted deadly hostilities, creating the political stability necessary for growth Economies became healthier as governments shrank budget deficits, trimmed foreign debt, and brought down inflation Since 2000, African countries have cut their combined foreign debt from 82% of GDP to 59% and reduced budget deficits from 4.6% of GDP to 1.8%, which sent inflation rates tumbling from 22% to 8%
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The Growth Ahead

Several governments adopted market-friendly policies Privatized state-owned enterprises, reduced trade barriers, cut corporate taxes, and strengthened regulatory and legal systems Nigeria, for example, privatized more than 116 enterprises between 1999 and 2006 Morocco Egypt struck free-trade agreements with their main export partners Rwanda established courts to settle business disputes

The Growth Ahead

Africa will continue to profit from the rising global demand for oil, natural gas, minerals, food, and other natural resources The continent has an abundance of riches,
including 10% of the worlds oil reserves, 40% of its gold ore, and 80% to 90% of its deposits of chromium and platinum group metals

The population is young, growing, and migrating to the metropolitan centers

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Trend in GDP Growth

Categorizing the Opportunities

Group countries by income level or geography Or by their economic diversification and level of exports Exports are the means by which emerging economies earn hard currency to pay for imports of capital goods In most African countries, capital goods imports account for roughly half of investment, making exports a critical enabler of growth

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Keys to Success

Bring midlevel expatriates

Educate the worker, build skills Setup extensive training programs Fill the skill gap Build partnerships

Put the stakeholders on the board

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