South African firms need to tap into opportunities in rest of continent, says Martyn Davies
21 August 2013
“I think South Africa is a relatively slow growing economy in our own region… so I think it’s imperative, increasingly, that South African businesses need to internationalise to grow,” said Dr Martyn Davies, CEO of Frontier Advisory. “And naturally this growth is coming from our own region… where better to internationalise than in our own backyard?”
This is one of the reasons why Wits Business School in Johannesburg, South Africa, is collaborating with Frontier Advisory to present the Africa Now executive course. The aim is to give managers and investors an on-the-ground understanding of the opportunities and challenges for business success in the African market.
The course, taking place towards the end of next month, combines foundation classroom sessions in Johannesburg with a practical learning tour to Kenya’s capital Nairobi and Kigali, the capital of Rwanda.
“Everyone knows that Africa is now emerging and open for business, and new forms of government and changing policies around logistics and investment is freeing it up as a business continent,” said Adam Gordon, director of executive education at Wits Business School. “It will take us a while for sure, but we are fundamentally in a new game and the opportunities are there to build immense enterprises from the ground up. So that is an enormous opportunity for South African businesses.
“At the same time, doing business on this continent, particularly during this transitional phase, is quite different to doing business in South Africa, and is quite different to doing business in the US or Europe,” he added.
According to the African Development Bank, Africa’s GDP growth rate is projected to be 6.6% this year, and sub-Saharan Africa contains six of the top 10 rapid growth markets in the world. Davies said that while the African market is still developing, each region and country offers unique challenges and opportunities.
“It’s imperative for South African businesses to understand this,” said Davies. “We are arguably losing ground to many other competitors in the region. I think South African companies have been somewhat conservative towards the region. It’s picking up speed now, but if we look at the past 10 or 15 years perhaps we have been somewhat conservative in instances.”
He added that the Africa Now programme seeks to give South African multinationals and global companies using South Africa as a gateway or springboard, increased confidence to fully engage in the region commercially.
Why East Africa?
Both Gordon and Davies emphasised that future courses will not be limited to the East Africa region. However, they decided to focus this course on East Africa generally, and Kenya and Rwanda specifically, for a number of reasons.
“The most progressive region, when it comes to regional integration on the continent, is undoubtedly the East African region, the East African Community (EAC),” said Davies. “The EAC has a population of 140 million people, and of course this provides a significant business opportunity.”
He added that East Africa is a dynamic region that is not oil driven like Nigeria, and economies like Rwanda and Kenya offer a diverse set of opportunities for South African business.
“Rwanda, firstly, is probably the best case of a public sector leadership turnaround in Africa in the last decade or so,” continued Davies. “Under [President] Paul Kagame we have seen very progressive leadership around the economic management of the country. And Rwanda is doing incredibly well. It doesn’t quite take the limelight of some of the other [countries in Africa] because it’s relatively small. It doesn’t have the population of many other big emerging markets in Africa, but Rwanda, I would argue, is a phenomenal success.”
The IFC’s and World Bank’s 2013 global Doing Business report highlighted Rwanda as having made the greatest strides to improve its business environment, passing 26 business regulation reforms since 2005.
The course also includes a visit to Nairobi. “I think Kenya is certainly the most exciting market in East Africa… And of course we all talk about the ICT opportunity in Kenya as well which has been extremely progressive,” Davies added.
According to Gordon, companies and business leaders need to visit the African countries in which they want to do business, in order to gain that on-the-ground understanding.