Home' Trinidad and Tobago Guardian : February 18th 2016 Contents BG24 INTERNATIONAL
BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 18 • 2016
Africa s biggest economies have been ham-
mered by the collapse in commodity prices
over the past 18 months but there are still
investment bright spots to be found.
In cities such as Lagos, Nairobi, Accra, Kin-
shasa and Johannesburg, growth remains robust
and investors are prospering in the retail, finan-
cial services, technology and construction sec-
tors. This means investors can now re-adjust
their strategy for Africa. Instead of taking a
view on the continent as a whole, or choosing
one country over another, they can seize oppor-
tunities city by city.
Sub-Saharan Africa is urbanising faster than
anywhere else in the world and city dwellers
have more money to spend.
"In the current economic environment,
investors want areas where success is proven,
growth is strong and will remain strong. Big
African cities give you that," said Jacob Kholi,
a partner at Abraaj, a private equity firm with
US$9 billion under management.
"It has become even more important to focus
on these key cities than before," Kholi added.
Nairobi is the most attractive destination
for foreign investment, according to a 2015
report by PricewaterhouseCoopers, followed
by Accra, with Lagos and Johannesburg equal
Consumption per capita in Accra is 1.6 times
greater than the average in Ghana, 2.3 times
bigger in Lagos than the average in Nigeria,
and 2.7 times larger in Nairobi than nationally
in Kenya, Abraaj estimates.
Lagos, one of the world s fastest growing
cities and with a population of 20 million,
expects economic growth of 7.0 per cent this
year, twice the pace of the country as a whole.
Even South Africa, which is grappling with
youth unemployment of over 40 per cent and
could slip into recession this year, has areas
where industry is booming.
"Looking around here, you wouldn t know
things were so bad," construction worker Sifiso
Zwane told Reuters in Johannesburg s wealthy
Sandton business district.
"Rich people will always find a way to make
more money," said Zwane, with cranes filling
the skyline behind him and billboards adver-
tising new retailers like Krispy Kreme doughnuts
and Hennes & Mauritz.
There are similar stories elsewhere.
This year, Kenya is set to unveil the Two
River malls in Nairobi, the continent s largest
shopping centre outside South Africa, with
brands like Porsche, Hugo Boss and France s
Carrefour already booking space.
"The economy still has opportunities," said
Gabriel Modest, a jeweller who says demand
for the gold necklaces and bracelets he sells
"Sometimes you have to treat yourself," he
added, ordering a bowl of muesli and yoghurt
at an upmarket Nairobi coffee shop.
In Lagos, plans are in place to develop the
vast multi-billion-dollar Eko Atlantic city, a
Dubai-style gated community that will boast
chrome skyscrapers, business parks, palm trees
and a marina.
By 2025, Mckinsey estimates that more than
80 cities in sub-Saharan Africa will have pop-
ulations of more than one million, accounting
for 58 per cent of the region s growth.
This rapid urbanisation means Africa s big
cities will need more roads, hospital and power
stations, while growing numbers of new inhab-
itants will be buying consumer goods like
instant noodles, washing powder and mobile
Though some big companies like Massmart,
Barclays and Nestle have slowed expansion
plans in Africa in the last two years they are
still making healthy profits in the big urban
centres, according to banking sources.
"Our investment is focused on cities where
we see the best opportunities even if the invest-
ment environment in the rest of the country
isn t as robust," said Louis Deppe, partner at
Actis, an emerging market-focused investment
"The mega-city trend is still very much
on the cards."
The share of Africans living in urban areas
is expected to grow from 36 per cent in 2010
to 50 per cent by 2030, with cities expected
to be home to 85 per cent of the national pop-
ulation in some countries, according to the
The rapid urbanisation of mostly the young
and unemployed is placing a huge strain on
infrastructure and will put pressure on politi-
cians to direct more resources towards cities.
Inequality in African cities is already among
the highest in the world.
African governments with stretched public
finances will need to improve housing and
social safety nets in cities and diversify their
economies to support rural areas in order to
avoid an increase in inequality that could stir
"In a more risk-averse world, urban bias ---
where there are proven returns---is likely to be
reinforced. Investors will look at urban areas,"
said Razia Khan, head of Africa research at
"This trend runs the risk of the rural elec-
torate being marginalised; in especially unequal
regions, it may raise political risks, and the
potential for unrest."
Back in Lagos, business is still expanding
for cab-owner Cyril Ugochukwu, whose earn-
ings are running well above the target he set
for his business, which has contracts with
online firm Easy Taxi.
"Individuals must make trips whether times
are good or bad," he told Reuters. Reuters
Africa's big cities offer
investors hope in hard times
Construction is seen below the skyline of
Johannesburg's upmarket Sandton suburb.
Links Archive February 17th 2016 February 19th 2016 Navigation Previous Page