1. DOING BUSINESS IN AFRICA:
THE EMERGING MARKET.
A PAPER PRESENTED BY AMBASSADOR
GEOFFREY I. TENEILABE, CONSUL GENERAL OF
NIGERIA, ATLANTA, TO THE AFRICAN AMERICA
CHAMBER OF COMMERCE, ATLANTA.
JUNE 7, 2012

2. Africa, a con+nent made up of 54 sovereign countries, consist of one billion
people, which is expected to increase to two billion over the next 40 years, is fast
emerging as the next fron+er for business and investment. Once referred to as the
dark or hopeless con+nent, Africa is gradually becoming aArac+ve for trade and
investment, though challenges s+ll remain.
Remarkably, in the past five years, the Gross Domes+c Growth (GDP) rate of
Africa has averaged over 7%. Six out of the ten fastest economies of the world is
African, among which is Nigeria. Despite the slowdown of the North African
economies (Algeria, Tunisia, Egypt and Libya) as a result of the Arab Spring, the
Interna+onal Monetary Fund (IMF) predicts a growth rate of 5.7% for Sub-­‐Saharan
Africa this year. Several African countries are expected to grow as much as 10%.
Indeed, according to the authorita+ve Economist Magazine, Africa could be on the
brink of economic takeoff, much like China 30 years ago and India 20 years ago-­‐-­‐-­‐
the African Renaissance.
Some economic indicators give further hope for this op+mism. According to
the Standard Bank, 60 million African households have annual incomes greater
than 3, 000 US Dollars. By 2015, that figure is expected to top 100 million. Again,
300 million Africans earn more than 700 dollars a year. Combined, this presents a
formidable middle class that could influence demand push for consumer products
and market.
1

3. In Africa today, produc+vity has been rising at an average of 2.7% a year,
while trade between Africa and the rest of the world has increased by as much as
200% since 2000 AD-­‐over $673.4 billion. Infla+on also dropped from 22% in the
1990s to just 8% average in the current decade. Similarly, foreign debt declined by
one quarter and the budget deficit by two thirds.
It should also be noted that with the end of the Cold War, marking the end
of ideological wars, coupled with the influence of interna+onal financial
ins+tu+ons such as the World Bank and the Interna+onal Monetary Fund (IMF),
African countries have come to accept the principle of market economy, with a
view to transforming their economies into the mainstream of the global economy.
To this end, African economies have undergone structural economic reforms
especially in the 1980s and the 1990s. LiAle wonder then, that African economies
were beAer able to withstand the shock of the global economic crisis in 2008 than
the economies of the United States and Europe.
Currently, Africa represents just 10% of the global economy; 2.7% of its
output and 1% of global trade but poten+als are high. According to the World
Bank’s Annual Ranking of Commercial Prac+ces, 36 out of 46 Africa governments
surveyed made things easier for businesses in the past year. This gives a strong
indica+on of the recogni+on of the private sector by African countries as the
engine of economic drive and growth.
2

4. In this wise, virtually all African countries have undertaken painful
priva+za+on/commercializa+on exercises at various +mes with a view to
transferring state owned businesses to the private sector for ownership, more
efficient management, as well as for higher produc+vity and crea+on of more
employment. In this respect, in Nigeria for instance, over a hundred state-­‐owned
enterprises have so far been sold to private businesses, and reforms in many
segments of the economy such as banking/finance, agriculture, oil and gas,
transporta+on, power/electricity, infrastructure, etc. have either taken place or
s+ll ongoing.
Therefore, with a deregulated and liberalized market, coupled with a
number of incen+ves including private ownership of businesses, repara+on of
profit, guarantee against expropria+on of investment, among others, Africa is
hungry for investors and eager to surpass its FDI receipts standing at $80 billion in
2011.
Africa is equally fast puhng to rest one of the variables that drives away
investors, namely, poli+cal instability and civil strife. Africa is not yet a haven in
poli+cal stability but whereas only seven out of more than 50 countries used to
hold regular elec+ons in the past, today two out of three African countries hold
regular elec+ons. Last year alone, as many as 18 African countries had general
elec+ons. This disposi+on indicates a deepening of democracy, good governance,
3

5. Rule of Law and respect for human rights in the con+nent. The situa+on is also
supported and encouraged by the con+nental umbrella organiza+on, the African
Union (AU) in prac+ce and through its founding statute-­‐-­‐-­‐the Cons+tu+ve Act.
Areas of interest for Africa in the quest for Foreign Direct Investment (FDI)
include but not limited to: infrastructure, manufacturing, industrializa+on,
healthcare, tourism, telecommunica+on, real estate, agriculture, energy/power,
transporta+on, the Green economy.
Mining:
Africa is s+ll noted as one of the richest con+nents in mineral resources.
60% of the global natural resources are in Africa. The con+nent has about half of
the world’s gold reserves and a third of its diamonds, not to talk of huge reserves
of copper, coltan, oil and natural gas, just name but a few.
In par+cular, several African countries are noted for their mineral resources.
For example, Angola has oil/natural gas, diamonds. Guinea has more than one
fourth of the world’s bauxite reserves. Namibia has huge deposits of copper,
diamonds, lead, silver, +n, tungsten and zinc. Zambia has large quan++es of
cobalt, copper, lead and zinc; South Africa, the richest African state in terms of
mineral resources has huge quan++es of an+mony, chromium, copper, diamonds,
gold, manganese, nickel, pla+num, +n and uranium. Ghana has gold. Nigeria,
4

6. Angola, Libya, Algeria, Egypt, Equatorial Guinea, Gabon, Cameroon, Chad and
Ghana have huge reserves of oil, natural gas and other solid minerals.
Africa therefore presents a good investment environment for explora+on
and processing of as well as value addi+on to the vast quan++es of mineral
resources available within the con+nent. Also considered appropriate is the
development of Africa’s infant or non-­‐existent petrochemical industries to
increase Africa’s refining capaci+es and petrochemical products in order to break
down the many by-­‐products of petroleum into numerous petrochemical products
for local consump+on and export.
Manufacturing/Industrializa2on:
Africa was a by-­‐word for consump+on of industrial products, manufactured
in the colonial metropoles. Unfortunately, decades aker independence, much of
the situa+on has not changed. African raw materials are s+ll being converted into
industrial products in which Africa expends much of its foreign exchange to
import, some+mes paying four +mes the price were they to be manufactured in
the countries where the raw materials are sourced.
Thus, there is a need for the industrializa+on of Africa and the ci+ng of
these factories close to the sources of the raw materials, in order to make the
product cheaper both for local consump+on and export.
5

7. Another good case for the industrializa+on of Africa is the poten+als for
employment crea+on, import subs+tu+on, foreign exchange earning and
development of technology.
Infrastructure:
There is no gainsaying the importance of infrastructure to the development
of any na+on or con+nent. The different regions of the con+nent; East, West,
North, Central and Southern Africa need to interlink for the promo+on of intra-­‐
African trade, commerce, rela+onship as well as for easier movement of goods,
people and services within the con+nent.
Today, intra-­‐African trade has increased, though standing only at 13% from
6%. Nevertheless, there is s+ll a lot to be done in the development of inter-­‐
regional infrastructure such as highways, bridges, air routes, waterways, railways,
shipping routes, telecommunica+on, among others.
There is also an urgent need for infrastructural development in individual
sovereign states in like manner in order to boost socio-­‐economic development
and enhance interac+on. The interna+onal financial ins+tu+ons such as the
African Development Bank (AfDB), the World Bank, the European Union Fund, the
IMF, etc., have done quite a lot to close the infrastructural gap but interna+onal
investors can s+ll do a lot more to complement these efforts on government/
6

8. private partnership basis. They are likely to have their returns on their
investments through tolling or other means of payment.
Agriculture:
Many African economies prac+ce subsistence agriculture. Agriculture is not
only a major employer of labor but in many countries such as Burundi, Rwanda,
Malawi, Zimbabwe, Ghana, Cote D'Ivoire, etc., is also a major foreign exchange
earner as well as plamorm for food security. Fortunately, Africa s+ll boosts 60% of
the uncul+vated arable land of the world. In other words, large scale planta+on
agriculture is s+ll very much a possibility in Africa, capable of turning round many
mono-­‐economies such as those of Nigeria, Angola, Equatorial Guinea, Gabon, etc,
if agriculture is taken as a business beyond the subsistence level.
Africa is also blessed with huge expanse of water bodies such as lakes and
rivers which can be used for irriga+on. And the combina+on of appropriate
fer+lizers, hybrid-­‐high yielding seedlings and good irriga+on can transform the
agricultural landscape of Africa to a highly profitable enterprise.
Investors are therefore encouraged to take due advantage of the incen+ve
climate within individual sovereign states for a meaningful agricultural produc+on.
Real Estate:
With a fast growing popula+on and rapid urbaniza+on, from 30% a
genera+on ago to 40% currently, the need for the provision of houses for the large
7

9. popula+on cannot be overemphasized. From Nigeria to Angola; Egypt to
Equatorial Guinea; Algeria to South Africa, etc., the need for the provision of
modern houses with the appropriate facili+es can hardly be underscored. The
margin of profit in the housing sector is highly aArac+ve. Rather than keep their
money in the banks-­‐-­‐-­‐not knowing exactly what to do with such funds in the face
of the challenging real estate sector in the United States, investors can be wise to
look at the African real estate market.
Healthcare:
A healthy na+on makes a wealthy na+on and a sick popula+on would
reflect on the produc+vity of the country. The World Bank es+mates that Africa
loses as much as $12 billion to the malaria scourge on the con+nent. HIV/AIDS,
polio, tuberculosis, stroke and other ailments are also prevalent in the con+nent.
Amidst this scenario, infant and maternal mortali+es are high, while life
expectancy is low.
There is a crying need for the provision of quality health care from the
primary but par+cularly at the ter+ary level in several parts of Africa through the
provision of state-­‐of-­‐the-­‐art facili+es such as hospitals, equipment, skilled
personnel, original good quality pharmaceu+cal products, among others.
Investors who therefore direct their aAen+on to this end of the African con+nent
would likely reap huge profits from such decisions.
8

10. Transporta2on:
Transporta+on appears to have been par+cularly treated under general
infrastructure provision but the need for the availability of waterways, railways
and airways -­‐ linking the various parts of Africa cannot be over emphasized.
Power/Energy:
Currently, African development is blighted by inadequate power/electricity
supply-­‐ telling nega+vely on GDP growth rate, industrializa+on and other areas of
growth. Fortunately, Africa has enormous poten+als for the development of
electricity from the majes+c rivers such as the Congo, Limpopo, Zambezi, the Nile,
Niger, Senegal, and falls such as Victoria Falls and numerous other water resources
could be tapped for hydro-­‐electricity.
Africa also has a lot of oil and natural gas for use as raw materials for
thermal plants, not to talk of coal that can also be used for electricity genera+on.
From countries harboring the Sahara and Kalahari deserts too, a lot of solar
energy could be tapped; so also could be wind energy from the liAoral countries
bordering the seas and oceans.
Doubtless, the solu+on to Africa’s power problem will contribute to the
accelerated growth of the con+nent as it will form a new plamorm for socio-­‐
economic development of the con+nent.
Tourism:
9

11. One of the best known industries in Africa is tourism. From South Africa to
Tanzania to Kenya, Egypt, The Gambia, tourism plays a major part in the
economies of these countries and earns for Africa $44 billion in 2010 alone.
From the flora and fauna, safari and animal and bird watching to sailing, the
features of tourism are abundant on the African con+nent. Africa, being the cradle
of man, also boasts some of the oldest relics of ancient civiliza+on including
ancient ci+es like Timbuktu, pyramids, carvings, ar+facts, ancient poAery, among
others. Also of tourism value are stretches of silvery sand beaches, the sun and
the sea, unspoiled and pris+ne forests as well as slave relics depic+ng some of the
darkest periods in human history and of man’s inhumanity to man.
Most of these tourism sites s+ll remain much underdeveloped and cries for
modern day infrastructure so as to create access to them and to provide
hospitality to visitors and tourists alike.
Also to be considered are majes+c waterfalls, which can be explored by
developing appropriate spots around them with a view to making them tourist
aArac+ons.
Investors can therefore conduct their market surveys to iden+fy areas they
can invest in. In Nigeria, for example, aArac+ve incen+ves include ease in the
provision of land by state governments, tax holidays, rebates, sok loans with long
grace periods, tax exemp+on on tourism equipment, provision of security.
10

12. It has been es+mated that tourism is one of the industries capable of
crea+ng very quick employment in huge numbers from the tour guard to the
driver of the safari, to the tour operator, to sellers of souvenirs, the hotel
proprietors and workers, entertainers-­‐-­‐-­‐among the many mul+-­‐faceted mul+plier
jobs tourism is capable of crea+ng.
Telecommunica2on:
Perhaps, one of the fastest growth industries in Africa is
telecommunica+ons, par+cularly mobile telephone and internet services. Mobile
phone is revolu+onizing communica+on and produc+vity on the con+nent-­‐-­‐-­‐from
urban centers to rural hinterlands.
Currently, more than 600 million Africans have mobile hand sets and about
10% has access to the internet. In Nigeria, the number of telephone owners
jumped from a mere 400,000 (mainly landlines) in 2000 to 84 million people
today. Importantly, mobile telephone is used not only for communica+on but also
for other produc+ve purposes such as business tool, crop pricing, alert on bank
accounts, etc. It is equally used for fer+lizer distribu+on to farmers through the
Input Voucher and Electronic Wallet Fer+lizer Programme in Nigeria
There are s+ll vast opportuni+es for investors in this field especially in the
provision of cheap but quality internet services as well as the provision of
11

13. hardwares such as mobile phone accessories-­‐-­‐-­‐recharge cards, and mobile
networks.
On this note, I wish the mee+ng a successful outcome and thank you for
your kind aAen+on.
Consulate-­‐General of
Nigeria, Atlanta,
June 7, 2012
12