We see opportunities in every conceivable sector in Africa: Mitchell Prather, Managing Director, Djembe Communications

Mitchell Prather, Managing Director, Djembe Communications

Where are the growth sectors in Africa?

We are seeing inquiries from a number of public and private sector entities representing a wide variety of sectors, including financials, agriculture, infrastructure and hospitality, to name a few. This reflects not only the growing need for world class communications across the continent, but also the increasing levels of interest that international companies have in entering African markets.

In recent months, we have received interest for partnership with a major high-end luxury lifestyle and residential project in two countries, a major global pharmaceutical company and a fast-growing international consultancy that specializes in engineering projects. Furthermore, a number of global communications agencies are looking to partner with agencies like Djembe, who have established capabilities in key African markets.

This increasing interest in the region is in addition to the existing African interest coming from governments, government-related entities and African corporations, who are increasingly recognizing the value of the reputation management services that Djembe provides.

Do you have any views on which sectors present the most opportunities for Gulf investors?

In short, every conceivable sector outside of oil and commodities. The size of the investment opportunities naturally vary greatly from country to country – but there are definitely existing opportunities to invest in growing industries such as timber; hospitality; agriculture/agribusiness; ICT; national infrastructure and construction projects; and SMEs of all shapes and sizes. Innovation is perhaps one of the most important topics right now in Africa because it is central to the objective of building a diverse, and therefore more sustainable, economic model. Gulf investors would do well to look at SMEs that are growing and profitable but might not have the capital they need to expand.

How is globalization and digitalization affecting opportunities?

Globalization is inevitably a factor in the economic development of any region or country. China has become a major investor across the region but, of course, as China’s growth slows, we will likely see the pace of Chinese investment slow down.

With increasing saturation in mature markets for Chinese-manufactured consumer goods, Chinese companies are looking to new export markets in Africa. It is well established that Africa has a rapidly-growing middle class, with an increasing appetite for high-end consumer goods.

Africa is obviously not immune to global headwinds but investors and manufacturers are certainly seeing opportunities on the continent that do not exist elsewhere.

On the topic of digitalization, many countries, such as Angola, have invested in high-speed broadband, both fixed line and mobile. Such investments are transforming how companies engage with their customers. Furthermore, increased digitalization is supporting the growth of the e-commerce sector and boosting retail sales, even in rural communities.

Africa is very young, one of the youngest populations on the planet. Smartphone penetration is growing and the continent has an incredibly high degree of penetration of feature mobile phones, which enables millions of people to make mobile payments in stores, in taxis and other retail environments. Mobile technology also provides access to basic financial services that were previously out of the reach for people without a bank account.

Twenty six African countries signed off on the Tripartite Free Trade Area (TFTA) in June. The agreement creates a free trade zone from Cairo to Cape Town, encompassing 600 million people and covering more than half of the continent’s GDP. What are the potential benefits of and challenges in this agreement?

This agreement will create an economic bloc that will be larger than the European Union. I hope that the individuals spearheading this trade bloc learn from the challenges of the European experience, from a fiscal, regulatory and structural perspective.

One of the TFTA’s objectives is to align industrial development plans so that countries in the region can trade more freely. Such agreement would facilitate freer movement of people, smoother transport logistics and easier cross-border transactions. This new trade bloc has the potential to integrate Africa’s disparate economies much more tightly. The challenge, of course, is how to achieve such integration while balancing the need to minimize bureaucracy and maintain the sovereignty of countries.

This agreement establishes the foundation for TFTA countries to essentially become one common market, providing easier access for international investors to some of the most exciting and high potential markets in the world.

This article has been edited for clarity.