africa is now: the opportunity for mid-sized us companies

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 1

Executive summaryAfrica has rapidly gained attention as the next invest-ment hotspot and is being called “the final frontier.” A decade ago, the worldwide boom in investing in emerging markets initially benefited Africa along with other regions, but today many African countries stand out on their own as highly attractive investment op-portunities. The African continent is home to seven of the top 10 fastest-growing economies in the world, and foreign direct investment is rapidly increasing.

European and Chinese companies of all sizes rec-ognized the African opportunity early on and have a head start. Today, American companies are increas-ingly discussing Africa as a business destination, yet many have not taken the leap. According to Josh Becker, cofounder and CEO of Impele Consulting Group, “We are seeing tremendous growth in interest in Africa [from the US], but not the same growth in action. Companies take their notebooks but not their checkbooks.”

As growth slows in more developed markets, geographic diversification is a logical next step for businesses of all sizes. Many African markets offer attractive opportunities for mid-sized companies, and as an early mover, a company stands to secure the most suitable options as well as the best talent, part-nerships, and incentives.

While significant risks remain, we challenge those shying away from investing in Africa to consider the following arguments. First, many of the perceived risks are myths. Second, careful analysis will demonstrate that Africa is not a monolith, and an informed investor can find the right fit. Finally, this is not a journey that a mid-sized company has to take alone. Resources and expertise are increasingly available.

This paper offers a framework that we call the PAL Principles—Be Prepared, Be Adaptive, and Be Local—created from discussions with experts to assist mid-sized US companies in developing and implementing a winning strategy for expanding to Africa.

Mid-sized US companies should not ignore Africa’s transformation into a highly attractive business desti-nation. To capitalize on the burgeoning opportunities, the time to act is now.

AFRICA IS NOW:The Opportunity for Mid-Sized US Companies

By Ikbel Achour, Benjamin Bader, Ross Shelleman, Lisa G. Thomas, Shalini Unnikrishnan and Kuliva Wilburn

June 2015

EMERGING LEADERS PERSPECTIVES

The Chicago Council on Global Affairs is an independent, nonpartisan organization. All statements of fact and expressions of opinion con-tained in this report are the sole responsibility of the author and do not necessarily reflect the views of The Chicago Council on Global Affairs or of the project funders.

All charts and other graphics by Ikbel Achour.

Copyright © 2015 by The Chicago Council on Global Affairs

All rights reserved.

Printed in the United States of America.

This report may not be reproduced in whole or in part, in any form (beyond that copying permitted by sections 107 and 108 of the US Copyright Law and excerpts by reviewers for the public press), without written permission from the publisher. For further information about The Chicago Council or this study, please write to The Chicago Council on Global Affairs, 332 South Michigan Avenue, Suite 1100, Chicago IL, 60604, or visit The Chicago Council’s website at www.thechicagocouncil.org.

Table of Contents

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Introduction: Where Africa stands today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Chapter 1—Where Africa is heading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Chapter 2—The opportunity for mid-sized US companies is now . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Chapter 3—Guiding principles for African expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Appendix: Resources to support expansion and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

The Emerging Leaders Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Author biographies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

4 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES

Introduction—Where Africa stands today

“The Indian Tiger and the Chinese Dragon have had their days, and it’s now the African Lion’s turn.” 1

For decades the only news reported about Africa was bleak, creating a singular and distorted image of the continent. Terrorism, famine, political corruption, and the proliferation of AIDS and other diseases dom-inated US media, driving the perceptions of many Americans. Today, however, brighter and more varied narratives are changing those perceptions.

Africa is the second largest continent in the world, with a total landmass greater than the United States, Europe, India, and China combined. There are 54 sov-ereign countries, each with its own unique identity and varying economic, social, and political structures. Over one billion people now live on the continent of Africa, with Nigeria topping the list as the most populous country with more than 175 million people.2 English, Arabic, French, or Portuguese are official or co-official languages in every country, with numerous indige-nous languages such as Swahili and Hausa still widely spoken. Of the non-native languages, English has the largest number of speakers—approximately 700 mil-lion. While Christianity and Islam are the dominant religions across the region, traditional African religions still play a significant role, with Judaism, Hinduism, and Buddhism maintaining a minor presence. The cli-matic and ecological regions shaping Africa mirror the diversity of the individual countries and their people. Though the continent is home to the largest desert on earth, the Sahara Desert, which stretches across

10 countries in North Africa, it also claims 500 million acres of tropical forest in the Congo Basin and 60 per-cent of the world’s uncultivated arable land.3

While challenges still exist, Africa has become a source of optimism, progress, and economic oppor-tunity. The economies of many African countries are growing at unprecedented rates, following the tra-jectory of other fast-paced emerging markets such as China and India. A flourishing middle class, diversifi-cation of industry, and adoption of leapfrogging tech-nologies are other key factors propelling Africa onto the world stage as the next great opportunity for busi-ness. Companies who want to be a part of and benefit from this massive transformation must act now.

This report is based on research and interviews with experts on doing business in Africa from both the private and public sectors. It presents a comparison of Africa to other global regions and provides select exam-ples from individual countries, regional groupings, and industry segments to highlight the opportunity that exists for US middle-market companies among the 54 diverse countries on the African continent—each with its own distinctive characteristics and prospects.

For purposes of this publication, the terms “mid-dle-market” or “mid-sized” firms refer to companies with annual revenues between $50 million and $1 billion.4 The authors also employ the broadest defi-nition possible when referring to “investment” or “expansion,” including the full range of strategic, oper-ational, and financial options to tap into the various African markets.


Africa’s Diversity

Source: AfDB, 2014; Ernst & Young, 2014; The Infrastructure Consortium for Africa, 2014; UNCTAD, 2015; World Bank, 2015.

Africa is home to :

370 million people in the middle class

52 urban cities ≥ 1 million people

NorthernWesternEasternCentralSouthern

5 diverse regions

A vibrant private sector

75 - 180

20 - 50

10 - 19

1.9 - 8

0.09 - 1.7

Populationsize (mn)

Sub-Saharan

Committed governments

Africa is the 2nd largest continent

Larger than18 countriescombined,including US,China, India, andmost of Europe

60% of the world’s arable land

Economic drivers and enablers

Africa is the2nd mostattractiveinvestmentdestinationworldwide

(30,221,000 km2)

Sahara desert

Grasslands/ScrubSemi-desert

Moutain forest/woodlandTropical rainforest

US

ChinaIndia

2.5 trillionin GDP

57 billion in FDI

400,000 companiesregistered in 2013

29 countries require≤15 days to open a business

51 countries undertaking3+ national and/orintraregional infrastructure projects

45 countries showimproved governance

32 countries had2+ tech hubs in 2014

30 countries usingmobile money services

Savanna

1.1 billion people

English (25), Arabic (12), French (21), Portuguese (6)

Swahili (10), Hausa (8), Yoruba (2), Oromo (3)

*A country may have more than one o�cial language

O�cial languages (# of countries)*

54 countries

Other major languages (# of countries)

EgyptLibyaAlgeria

Morocco

MauritaniaNiger

Chad

Mali

Sudan

SouthSudan

Ethiopia

Somalia

DjiboutiEritrea

KenyaUganda

Tanzania

DemocraticRepublicof Congo

Congo

CameroonCentral African

Republic

Nigeria

Angola

EquatorialGuinea

Benin

BurkinaFaso

Togo

GhanaCôted’Ivoire

Liberia

Sierra Leone

Senegal

GuineaGuinea-Bissau

The Gambia

Zambia

Namibia

Botswana

SouthAfrica

Mozambique

Zimbabwe

Swaziland

Lesotho

Madagascar

Tunisia

Mauritius

Burundi

Sao Tomeand Principe Rwanda

Seychelles

WesternSahara

Gabon

Malawi

Figure 1


Chapter 1—Where Africa is heading

The African continent is an attractive region for investment. Massive population growth and a rising middle class have created millions of new consumers hungry for products and services. A variety of economic, politi-cal, and social transformations in Africa are creating investment opportunities for the next stage of the region’s growth. Many African countries have insti-tuted meaningful reforms in their governance and investment frameworks. New technologies are being developed to solve unique challenges in health care, infrastructure, power, and agriculture. Incentives for investment are emerging every day. And as the gross domestic product of many nations continues to rise, these positive trends are expected to continue.

Many African countries are experiencing high GDP growth. Of the top 10 fastest-growing economies in the world today, seven are in Africa,* with projected growth rates of 7 percent or more.5 In the past decade, African economies have outperformed those in Latin America as well as many developed countries in GDP growth. Such expansion puts these nations on growth trajec-tories similar to India and China. While today Africa’s collective GDP of $2.5 trillion6 is quite modest com-pared with more developed nations, it is the world’s second-fastest growing region, with a projected growth rate of 5 percent for 2015.7

Africa’s exports are growing exponentially, with broader industry diversification. Sales of goods and services to foreign buyers quadru-pled between 2000 and 2012, from $148 billion to $641 billion.8 Although many African countries continue to benefit from traditional exports of oil, gold, diamonds, rubber, and forest products, national governments are diversifying beyond these industries. For example, Côte d’Ivoire, the world’s largest exporter of cocoa beans, has entered the global confectionery market, now manufacturing chocolate instead of simply ex-

*These countries include Angola, Ghana, Ethiopia, Tanzania, Mozambique, Nigeria, and Zambia.

porting cocoa. The move has compelled three multi-national companies—Cargill, Archer Daniels Midland, and Olam—to pay more attention to the region.9, 10 In addition, as African populations continue to grow, goods and services will be needed domestically to keep up with demand. Regional trade has also been growing and reached $147 billion in 2012,11 including nearly 13 percent of African exports.

An improving investment environment is increasing capital flow to the region. According to Ernst & Young’s most recent survey of business attractiveness, over the last four years Afri-ca has moved from eighth of 10 global regions to the second-most attractive investment destination in the world. Sixty percent of businesses surveyed reported Africa’s improved investment attractiveness over the past year, and nearly three-quarters believe it will improve further in the next three years.12 Since the end of the global recession, foreign direct investment (FDI) into Africa has increased every year, with more than $57 billion in inflows in 2013.13 The United States and the United Kingdom remain the top two sources of investment in Africa; however, the number of foreign direct investment projects from China, India, and from new players like Turkey and Brazil are growing at an increasing rate. Equally important, in 2013 greenfield projects in services and manufacturing received nearly 90 percent of FDI dollars.**

Demographic shifts, urbanization, and increased purchasing power are driving change in Africa. In the past 30 years, the African population has grown nearly two-and-a-half times to 1.1 billion people, with 70 percent of the population now under 30 years old.14 This growth is due to a decline in overall poverty, bet-ter disease prevention, and increased life expectancy. A large portion of the population has also migrated to urban centers, seeking jobs and a better life. These shifts are creating megacities, a pan-African phenom-enon, and driving a need for massive advances in

**A greenfield project refers to a new project or venture rather than further development of an existing project or venture.


Figure 3

Exports and Investment Gaining Momentum

4X in African Exports 2000–2012 $641 billion in 2012

ChinaUSA

ItalyIndia

FranceSpainUKNetherlandsGermanyJapan, Brazil

93.2

75.344.4

40.438.8

34.228.4

$147billion inIntra-trade # FDI New projects

Services

Manufacturing

Extractives

2013

in FDI for services

57

31

14

2000–2013

201320052000 2002

9

4X in FDI in�ow

$ billion

Africa is the 2nd most attractiveinvestment destination

North America

Asia

Africa

Oceania

1223

Western Europe45 Latin America5

8

2014

20132012

2011

Source: Ernst & Young, 2014; UNCTAD, 2014.

Figure 2

Africa’s Unprecedented Growth

Above 75 - 6.9

Below 3No data

2015 forecast (%)

3 - 4.9

GDP average annual % change (2000–2015)

USAEurope

ChinaIndia

AfricaBRIC*

2000 2010 2013 2015f2008

Over the past 15 years, the economies of Angola, Ethiopia, Tanzania, Mozambique, Nigeria, and Zambia outperformed Latin America and developed countries, allwhile catching up with China and India

10

5

0

EgyptLibyaAlgeria

Morocco

MauritaniaNiger

Chad

Mali

Sudan

SouthSudan

Ethiopia

Somalia

DjiboutiEritrea

KenyaUganda

Tanzania

DemocraticRepublicof Congo

Congo

Cameroon

Central African Republic

Nigeria

Angola

EquatorialGuinea

Benin

BurkinaFaso

Togo

GhanaCôted’Ivoire

Liberia

Sierra Leone

Senegal

GuineaGuinea-Bissau

The Gambia

Zambia

NamibiaBotswana

SouthAfrica

Mozambique

Zimbabwe

Swaziland

Lesotho

Madagascar

Tunisia

Mauritius

BurundiSao Tomeand Principe

Rwanda

Seychelles

WesternSahara

Gabon

Malawi

*Brazil, Russia, India, China Source: UNCTAD, 2015; World Bank, 2015.


technology and innovation. Of the 100 fastest-growing cities in the world, 25 are in Africa, including Lagos, Nigeria, Kinshasa, Democratic Republic of the Congo, and Johannesburg, South Africa. By 2030 more than half of Africa’s population will live in urban areas.15,16 Today, at least 370 million Africans, 34 percent of the total population, are part of the new middle class,*

strengthening the demand for more and better goods and services.17 Currently, middle class populations are concentrated in a few of the 54 countries, but contin-ued economic growth and diversification will create wider distribution in the future.

*Based on the definition from the African Development Bank.

Infrastructure in Africa lags, but with additional public and private investment, positive trends are emerging. Only one in three Africans has access to electricity, compared to nine of 10 people elsewhere in the devel-oping world. Estimates are that the African continent loses two percentage points of GDP growth annually as a result of its infrastructure deficit.18 But massive change is under way. Multiple national and pan-Afri-can projects have been completed or are in the pipe-line such as building and upgrading highways, rail-ways, ports, power plants, and water stations. China and the African Union launched an ambitious plan to develop road, rail, and air transport routes to link capitals across Africa. African Union chief Nkosaza-na Dlamini-Zuma praised the proposal as “the most substantive project the AU has ever signed with a partner.”19 While China has been the champion of in-

Figure 4

Africa Powerhouse

Eritrea

Tanzania

EgyptLibyaAlgeria

Morocco

MauritaniaNiger

ChadMali Sudan

SouthSudan

Ethiopia

SomaliaKenya

Uganda

DemocraticRepublic ofthe CongoCongo

Cameroon

Central African Republic

Nigeria

Angola

Gabon

BeninBurkina Faso

TogoGhana

Côted’Ivoire

Liberia

SierraLeone

Senegal

Guinea

Zambia

NamibiaBotswana

SouthAfrica

Mozambique

Zimbabwe

Lesotho

Malawi

Madagascar

Tunisia

Mauritius

BurundiRwanda

WesternSahara

Casablanca

Addis Ababa

Nairobi

10 mn

20102025

2 mn

0

Cairo

TunisAlgiers

Alexandria

Dakar

Abidjan

Accra

Durban

Cape Town Johannesburg

Bamako

African megacitiespopulation growth~20-35%

By 2030 Africanconsumer spendingwill reach ~$2.2 trillion

By 2030 the Africanmiddle class willreach ~500 million

By 2025 theurban populationwill reach ~750 million

0.5

1.5

Total Population (bn)

2000 20252013 2020

~1.5 billion

USAEurope

ChinaIndiaAfrica

BRIC

Douala

Dar esSalaam

Kinshasa

Luanda

Lagos

Source: AfDB, 2014; UNCTAD, 2015; UN Human Settlements Programme, 2015; World Bank, 2015.


frastructure investment in Africa, other players such as

Brazil, India, Japan, and the United States have begun

to emerge as major partners on the continent. The US

government’s “Power Africa” project has committed to

adding more than 30,000 megawatts of power capacity

in Sub-Saharan Africa.20 In addition, the Infrastructure

Consortium for Africa is investing nearly $20 billion in

energy, transport, water, and sanitation infrastructure,

including $8 billion from private-sector investment.21,22

Internet and mobile phone use are rising at a dizzying pace. While it is still far behind most of the world, African

connectivity has exploded over the past decade. Inter-

national and pan-African telecommunication opera-

tors have invested in information and communication

technology (ICT) infrastructure to improve connectiv-

ity and cut costs for both operators and end users.23,24

The region now boasts nearly 10 percent of the world’s

Internet users, and more than one-fourth of the

continent’s population have Internet access.25 Along

with Internet access, Africa has also seen tremendous

growth in access to mobile technology. The GSM Asso-

ciation reports that Sub-Saharan Africa has 329 million

unique subscribers and will become the fastest-grow-

ing region, with a compound annual growth rate of

7 percent through 2020.26 In the same period, overall

penetration is expected to increase to 79 percent, with

smartphone connections increasing to over 400 mil-

lion by 2018.27 As high-speed Internet becomes more

prominent and the cost of smartphones and tablets

declines, the better ICT infrastructure and access to

technology can further transform the way people and

businesses function across the region.

Many countries in Africa are benefiting from the adoption of leapfrogging technology. With little landline infrastructure, mobile technology

quickly became the first choice for phone commu-

nication in many African countries. The technology

Figure 5

Improving Infrastructure

*Only international airports included. [Entity financing the project; # $ if available.] See page 24 for acronyms. Source: AfDB, 2014; The Infrastructure Consortium for Africa, 2014; Knight Frank, 2015; UNCTAD, 2015.

Power43% coverage 68% improved in 41 countries

Water

Power AfricaEthiopia, Ghana,Kenya, Liberia,Nigeria and Tanzania[USA; $20 bn]

Roads 47% paved

Rail System64Ports

Ethiopia - Kenya1,000 km highway [AfDB]

UEMOA-GhanaRoad programme I[AfDB; $240 mn]

Sudan (Kartoum)Airport [China; $700 mn]

Chad, Congo, CAR, DRC19 river portsModernizationof river ports andPalambo damconstruction[France; $300 mn]

MozambiqueRailway system[AfDB; $450 mn]

Multinational-Lake VictoriaWater and Sanitation [EIB, AfDB; ~$200 mn]

Morocco [AfDB; $107 mn]

Egypt Power plant[IDB; $200 mn]

Current

Examples

Airports ~160*

KenyaKonza[IFC and Kenyan government]

AngolaLuanda[Chinese andAngolangovernments]

West AfricaRail loop connectingcapitals in Nigeriaand Burkina Faso withthe ports of Côted’Ivoire and Benin[AfDB; $240 mn]

Tunisia PROSOL Thermal[STEG, $206 mn]

completed,ongoing, andplannedprojects2010–2018

City with multipleinfrastructureprojects


was then applied to solve other challenges. A Ken-yan-based company, M-Pesa, which provides financial services using a mobile phone platform, processes nearly $1 billion of transactions per month for over 12 million active users.28 The platform has expanded to provide a “pay-as-you-go” service called M-Kopa, which allows millions of people living outside the reach of a reliable electrical grid in Kenya, Tanzania, and Uganda to move from using kerosene directly to solar-powered energy.29 Technology is also being used to create innovation in the health, education, and ag-ricultural sectors. For instance, mPedigree, a technol-ogy company based in Ghana, developed an app and portal to protect consumers from products that may be counterfeit such as medications. Schools in Kenya are increasing literacy through e-readers and tablets

charged by solar panel systems.30 And smallholder farmers are adopting advances in agricultural biotech-nology to increase crop production, including maize, soybeans, and cotton. Currently, crops engineered to be disease resistant, increase yield, or repel insects are grown in South Africa, Burkina Faso, and Sudan, with additional crops being tested in seven other African countries.31 In retail, Nigerian-based Mobile Media Infotech Limited backed by a US mobile payment platform provider, has introduced M-Iflo, which acts as a payment intermediary between mobile wallet providers and online merchants.32 More than 200 inno-vation hubs, technology labs, science and technology parks, incubators, and accelerators in over 30 African countries provide a boost to continued innovation and entrepreneurial activity.33,34

Table 1

Innovation Across Industries

Source: Manyika et. al., 2013; Walker, 2014.

Mobilemoney

Solarenergy kit

M-Pedigree or Sproxil (Ghana)Protects consumersfrom counterfeitmedication. 8.5 mn engagedusers in Ghana, Nigeria, Kenyaand India

EducationHealth care Agriculture

ECX (Ethiopia)SMS and onlinebased marketinformation onsupply, demandand pricing. 1 mnrequests per month, 80% fromrural areas

Retail

M-Pesa (Kenya)17 million users.$1 bn intransactions per month. Present in 6 African countries,Eastern Europeand Asia

M-Kopa (Kenya)‘pay-as-you-go’services. Providesreliable alternativepower to 150,000 homes o� the electrical grid inKenya, Uganda and Tanzania

ReKindle(South Africa)Reinforcescontent presented inthe classroom

Jumia (Nigeria)750,000 users and450 employees.Pay on delivery,online or viamobile money.Operates in 12African countries

Intra-trade marketplace

moWoza(Mozambique)Reliable goodsdelivery fromMozambiqueto South Africato enhance supplychain

Figure 6

Rapid Expansion of Technology

Source: AfDB, 2014; Fab Foundation, 2015; Hamilton Research, 2015; Miniwatts Marketing Group, 2014; Singer et. al., 2015; World Bank, May 2015.

The fastest growing and 2nd largest mobile market

80% users760 mn in 20131 bn by 2016

Coverage 26.5% in 2014~50% by 2030

197.6 mnInternet users

Over 210 tech hubs

1-56-1520-3040

# of hubsbycountry Flat6Labs - Egypt

Klab - Rwanda

Examplesof tech hubs

ActivSpaces - Cameroon

Jokkolabs - Senegal

ilabLiberia 2011 - Liberia

2 Tbps in connectivity and bandwidth (2009-2014)20x in submarine �ber cables2x in terrestrial networks

20x 2x WikiStartup - Tunisia

BongoHive - Zambia

CIPMEN - Niger


Although low labor productivity remains a challenge, current wage differentials are attracting industry.Though Africa’s workforce has been steadily increas-

ing, the average labor productivity for the region

remains low at about 5 percent of the US level, varying

significantly by country and region. Most countries

in Sub-Saharan Africa have rates below the 5 percent

mark, while many North African countries report

productivity higher than 15 percent. South Africa is

currently at the top of the list at 28 percent of the US

level, with Tunisia and Algeria each reporting approxi-

mately 23 percent.35 In comparison, India’s productivi-

ty is about 8 percent of the US level, with emerging and

developing nations in Asia-Pacific posting an average

of 10 percent. According to the African Development

Bank, the low overall productivity in Africa is primarily

because of the lower quality of education and lack of

training.36 Access to education has generally improved,

and enrollment in primary and secondary education

is increasing. But to boost the whole region’s produc-

tivity, more needs to be done. Retaining well-educated

and highly talented Africans which would increase

productivity levels in the domestic market has also

been difficult. The International Labor Organization

reports that African countries lose a “substantial

proportion of their skilled labor force through ‘brain

drain.’”37 However, in the last decade, many of these

Africans have been returning to their home countries

to pursue increased economic opportunities.38 Many

are sought by foreign companies for managerial and

executive roles,39 while others choose to become

entrepreneurs. As political stability continues to take hold and economies grow and diversify, more talented workers are likely to seek employment in the domes-tic market.

Though productivity is too low in some African countries, the availability of large numbers of lower skilled workers can be a comparative advantage in labor-intensive industries such as textiles, agriculture, and manufacturing. In these sectors, lower wages account for up to 43 percent of a company’s moti-vation to expand into Africa. According to a former World Bank economist, in the coming years China may export as many as 80 million manufacturing jobs to countries such as Ethiopia, Kenya, Lesotho, and Rwanda, primarily because of the wage disparity. A typical hourly wage for a Chinese worker making shoes is about $4; in Ethiopia, it is less than 50 cents.40 African countries should be considered manufacturing destinations in the near term.

Inflation rates have been stable or declining across Africa in the last five years. Over half of the African countries reporting to the World Bank showed lower inflation between 2009 and 2013, with an even higher proportion—more than 70 percent—recording a decline in 2013. Since relatively lower levels of inflation contribute to a more stable economic environment, this is an important trend. Strikingly, 26 African countries had inflation rates of 5 percent or lower in 2013, and 18 African countries had inflation rates below the world average of 2.6 percent. Inflation in Kenya decreased from 9 percent to 6 percent for the 2013 calendar year, while Rwanda’s

Figure 7

Workforce by the Numbers

Source: The Conference Board, Inc., 2014; Fine, 2012; UNCTAD, 2015.

Labor profileWorkforce

in 2012382 mn workers

People ≥ 15 years old

2000 2013 2015 2020100

900

500

by 2040

55% Agriculture42% Manufacturing, retail,hospitality and services

workers thanChina or India

Productivity levels

Productivity levelrelative to US (2013)

17%8%

5%

(m)1.1 bn more

USAEurope

ChinaIndiaAfrica


inflation rate dropped from 10 percent to 4 percent in

the same period.41 Inflation is difficult to predict, and

rates in an emerging market can be exacerbated by

political instability or lack of economic diversity, but

many African governments appear to be developing

the right policies to manage inflation risk and keep

high inflation at bay.

Political stability is still a concern in some African countries, but gains are being made. Investors cite political instability as one of the biggest

short-term threats to growth in Africa. Many African

countries are in transition to more democratically sta-

ble states. Sustained economic growth, increased gov-

ernance reforms, and better crisis management have

proven that African countries are moving forward and

that political conflict is “not going to be catastrophic”

for the continent as a whole, according to Paul Col-

lier, codirector at the Centre for the Study of African

Economies at Oxford University.42 Thomas Vester, chief

investment officer and fund manager of the nearly $1

billion LGM Frontier Markets Fund, agrees and said

that he is seeing a change on the continent. Previous-

ly, African government leaders hesitated to commit

to longer-term projects—such as infrastructure and

housing construction—whereas many now feel more

comfortable with planning further ahead because

they do not fear being ousted immediately. Vester also

noted a documented correlation between political

stability and long-term economic progress. He pointed

to Kenya, Ghana, Botswana, and Zambia as countries

that will benefit from continued political stability:

“Factors like that will give [these countries] a serious

liftoff, where they can enjoy 20 years of trend growth

of around 6 to 7 percent.”43 After Tunisia’s popular

uprising in 2011 and a steady transition to democracy

in 2014, investors regained confidence and sought to

participate actively in Tunisia’s economy. Rebrand-

ing itself as “a democratic start-up,” the government

continues to support the implementation of reforms

and sustainable economic development.44 Nigeria,

Africa’s largest economy, is the most recent example

of improved stability with a peaceful transfer of power

between civilian governments after the elections in

March 2015.

Most African countries have mechanisms to guarantee the repatriation of profits and capital gains. Being able to transfer business profits to the home

company from abroad is a key factor for investing in

any emerging market. However, under what portion of

the tax code the gain qualifies and the amount a com-

pany or investor will pay in taxes can vary significantly

across the different countries. According to global

professional services company KPMG, some countries

have separate capital gains tax rates prescribed in the

revenue code, such as Kenya with 5 percent,* Nigeria

with 10 percent, and Ghana with 15 percent.** Other

*Effective as of January 1, 2015.

**There are also provisions in the tax code that bring down the capital gains tax from 15 percent for specific exclusions.

A Brief Word about Corruption…

Corruption exists in Africa, as it does everywhere, but the type of corruption and how it affects individuals and businesses varies significantly by market . According to Transparency International, roughly 40 percent of the African countries included in the Corruption Perceptions Index 2014 scored the same or better than China, Mexico, and Indonesia, all considered attractive emerging invest-ment markets . The perception of rampant corruption in Africa usually centers on payoffs to the government . Building a successful business strategy in Africa may in-clude having the right connections in the government, but it does not mean paying bribes to government officials . In his book Success in Africa, Jonathan Berman points out that strong government relationships are important but, “That’s true in the United States and in many other coun-tries as well, where lobbying, political contributions, and trade associations each represent an accepted path busi-nesses use to enhance returns by engaging government .”

Most of the business leaders and other experts we spoke with who have worked in African countries for many years said that despite rumors on the continent, being asked for a bribe related to a business endeavor is very rare . Africans also know that US companies are prohibited from paying bribes under the US Foreign Corrupt Practices Act . Low-level corruption such as paying fees at a check-point to a local policeman exists as in many other emerg-ing markets, and in some countries it is pervasive . But it is not a substantial barrier to doing business . Most African governments recognize that encouraging investment re-quires ensuring that corruption is eradicated at all levels, and they are working to put effective systems in place .

Source: Transparency International, 2014.


countries like Senegal and Uganda tax capital gains at the corporate tax rate, 30 percent in both coun-tries. Uganda and others also make an exemption for profits of a local subsidiary being returned to the parent company abroad. In Uganda these are taxed at a lower rate than the corporate tax rate. South Africa’s approach to capital gains appears to be unique on the continent—66.6 percent of capital gains are taxed at the corporate rate of 28 percent. Taxation on dividends among the countries profiled by KPMG is much lower and seems to operate within a tighter band of rates. Ghana, Kenya, Nigeria, Senegal, and Uganda claim between 8 to 15 percent as a tax, with some exceptions for double tax treaties with certain countries.45

Average corporate tax rates are higher than in other emerging markets but may come with better exemptions and other incentives. According to KPMG’s most recent data for 2014, the maximum corporate tax rates for the 21 reporting Afri-can countries ranged from 19 to 35 percent, remaining the same or declining from the previous year.46 Across the countries surveyed, the average corporate tax rate

is about 27.9 percent, above the 23.6 percent global av-erage but below the maximum 35 percent US corporate tax rate. However, despite the comparatively higher rates, many African countries offer tax incentives for particular industries or to achieve development goals such as promoting investment in rural areas or pro-viding training to local people (see Figure 8 above). South Africa has 12 separate tax and other incentive programs to promote trade, export, and investment in the country. One such program, the 12I Tax Allowance Incentive, provides the equivalent of approximately $30 to $75 million in tax allowances for projects in the man-ufacturing sector. After the program was announced in 2010, about 50 projects worth approximately $3.8 bil-lion were approved in eight sectors with the chemical, cement and ceramics, and agro-processing industries leading the way.*, 47 Nigeria has 69 designated “pio-neer” industries ranging from integrated dairy produc-tion and tourism to consumer product manufacturing

*The success of this program in terms of valued added investment in South Africa, the number of jobs created, and the value chain linkages to small and medium enterprises have prompted the South African government to extend the program another two years through December 31, 2017.

Figure 8

Business Regulatory Reforms 2014

Source: AfDB, 2014; KPMG, 2015; Mulligan, 2015; World Bank Group, June 2014 .

Nigeria20% tax credit for sourcing raw materials. 5–7 yeartax holiday for manufacturing telecom equipment

Tunisia11 days to set up a business Ranked 54 out of 189 countries in resolving insolvency10-year tax holiday for priority projects and regions

Rwanda

Bostwana

Senegal

39 reforms to reduce complexity and costof regulatory process such as eliminatinga capital requirement or creating a one-stop shop. 29 countries require lessthan 15 days to open a business.

5 Sub-Saharan African economiesamong the 10 top most improvedglobally in ease of doing businessin 2014: Benin, Democractic Republicof Congo, Côte D’Ivoire, Senegal, and Togo.

36 reforms to strengthenlegal institutions, obtaincredit and protectminority investors.

Morocco15 days to request and obtain a building permitRanked 31 out of 189 countries in ease of trading across borders

37 ease of doing business reforms since 20042–7% corporate tax discount for hiring RwandansTraining and research costs are tax deductible14 days to import goods, same

as Poland vs. 27 days in 2005

MauritiusMost favorable business climate inSub-Saharan Africa: 6 days to set up a businessand 2 weeks to complete a transfer of property

6 days to set up a business, sameas Norway vs. 59 days in 2005

10% reduction in tax rate for manufacturing Deduction of 200% of training expense for local employees

Tanzania25% tax rate for newly listed companies for 3 yearsAllowances for plant/machinery: 110% for agriculture and 50% for manufacturing


and real estate development, which receive seven-year tax holidays. Additional tax allowances and other incentives are offered to established companies that invest in economically disadvantaged areas, promote exports, or create in-house training facilities.48

Continued development of the overall financial system will assist companies in seeking capital and provide exit opportunities for investments. US and European banks such as Standard Chartered, Barclays, and Citibank have operated in Africa for decades. In addition, there are 15 domestic pan-Afri-can banks with total assets of more than $15 billion. Standard Bank, based in South Africa, is the biggest by asset size in this group, posting over $160 billion, with operations in 19 African countries and 11 others globally. Ecobank, headquartered in Togo, has the most expansive footprint in Africa, with branch operations in 35 countries.49 Currently, 26 stock exchanges operate

on the African continent, including a regional exchange for eight West African countries, the Bourse Régionale des Valeurs Mobilières (BRVM), and a new exchange expected to be opened in 2015 in Somalia. The Johan-nesburg Stock Exchange is ranked in the top 20 largest exchanges in the world and dwarfs the other exchanges in Africa with capitalization of over $1 trillion.50 The African Development Bank’s African Financial Markets Initiative is focusing on strengthening and diversifying the financial systems across Africa, including the de-velopment of bond, commodity, and foreign exchange markets, and reinforcing commercial banks and clear-ing houses.51 This will give companies in smaller coun-tries access to public markets and help tackle the issues of low capitalization and illiquidity of current exchang-es. Regionally integrated markets are also an important vehicle for supporting the growth of financial markets across the continent, and work is being done to ensure consistency in legal and accounting practices.

Chapter 2—The opportunity for mid-sized US companies is now

Multinational corporations are often the frontrunners in emerging markets. They have extensive experience and often higher risk appetites, substantial teams, and seemingly endless resources. Beyond the oil and gas sector, several large US corporations have been in Africa for decades. It is no surprise that Coca-Cola, the world’s largest soft drink brand, has been operating in Africa since the 1930s and, in more recent years, com-panies like Microsoft and Walmart have been growing their presence across the continent. But in today’s globalized economy, expansion into emerging markets is not the sole domain of the largest global players. Rapid growth is occurring in many African countries across a range of sectors, generating opportunities for mid-sized companies as well. The time to access this large and growing market is now, while there is signifi-cant latent demand, limited competition, and support mechanisms both in the United States and abroad.

Expanding abroad provides opportunities for growth and diversification for US middle-market firms.Though the United States has a large overall market with good opportunities for growth and investment, strategically minded firms must always consider how the business environment is evolving and where future growth will come from. In spite of the risks, tapping into international markets can provide new revenue streams

that support long-term growth and geographic diversifi-cation, which can mitigate the impact of adverse events in one market. Many mid-sized companies already recognize the opportunity abroad and are making plans to expand into foreign markets. According to a

Tapping into international markets can provide new revenue streams that support long-term growth and

have the potential benefit of geographic diversification, which can mitigate the impact of events in one market.


survey done by the Economist Intelligence Unit and the National Center for the Middle Market in 2012, nearly 60 percent of middle-market companies that responded have operations or sales efforts beyond North America or intend to expand abroad. And overwhelmingly, the main reason cited for increasing activity in foreign mar-kets is to support long-term growth goals.52

The market in Africa is growing, diversifying, and can support a broad range of market participants. As highlighted in the previous chapter, African coun-tries offer opportunities to access a group of markets in burgeoning economies with expanding middle classes. The populations in these countries have diverse and increasing needs. Most countries are developing industries beyond the extractive sectors, ranging from basic consumer goods, manufacturing, and transportation to financial services, telecommu-nications, and biotechnology. Former Ambassador Herman Cohen of Cohen and Woods International, an advisory firm specializing in Africa, remarked, “There is a growing middle class in Africa which is importing everything, as the manufacture of consumer goods lo-cally is still small.” This transformation is an intriguing prospect, not only for companies with large, estab-lished markets in the United States seeking additional customers, but also for companies with products or services that have only a small, niche market. For example, Peppermint Energy, a modular solar panel manufacturer based in South Dakota with a limit-ed customer base in the United States, has targeted markets in Africa where more than 650 million people do not have access to a reliable electrical grid.53 Other US middle-market companies in both innovative and more traditional businesses are also finding fertile markets for investment and expansion in Africa.

An early mover in emerging African economies gains greater access to opportunities and resources. As African markets continue to diversify and increased capital comes in from multiple channels, a broader range of industries will present new options for invest-ment and expansion. Middle-market US companies can leverage their significant expertise and experi-ence in their industry segments to become preferred providers, partners, or investors. In some markets or

sectors, a US company may be the only business mak-ing an investment or supplying a particular product or service. In others, US companies may have advantages in quality and innovation over other foreign compet-itors or local firms. Josh Becker of Impele Consulting Group said that in his experience, “The business envi-ronment is more Western than other emerging mar-kets, so it is a shame more US companies aren’t operat-ing there, especially as US companies are held in high regard. People in Africa want and respect the American and European brands. As soon as they can afford it, they will buy it.” Getting into a market early also gives a company a significant advantage in tapping the best partners and negotiating exclusive contracts.

Incentive programs to assist companies expanding to Africa won’t last forever. Another advantage of moving early into these markets is that individual African countries are vying with each other for investment and trade. As mentioned in the previous chapter, tailored incentives like lower taxes for export-oriented manufacturing or other strategic sec-tors; deductions from taxable income for investment in training, research, or product development; and free repatriation of capital and profits are attracting signif-icant foreign interest. Through various agencies, the US government also has a range of programs to assist companies looking to expand abroad and has recently begun programs to promote investment and trade with African countries, including risk-sharing programs.

Attracting Private Sector Investment

In April 2014 ministers from Chad, Mozambique, Uganda, and Djibouti called for an increase in private investment and encouraged legislation to facilitate private sector development . The ministers appealed to domestic and in-ternational private investors to partner with their govern-ments and highlighted initiatives for economic diversifica-tion and regional integration . Ahmed Osman Ali, governor of the Central Bank of Djibouti, described the country’s strategy to attract investment, “We try to facilitate FDI, working on legislation, on guarantees, and on transparen-cy, and this work that we have been doing for several years is bearing fruit because we are having investments in tele-communication, transportation, construction of harbors, and in the management of our ports .”

Source: World Bank, April 2014.


Some of the incentives may last for an extended period, but promotional programs are usually offered for a limited time, restrict the amount of funds provided, or cap the number of participants. To reap the benefits of these programs, companies need to act quickly.

What is mid-sized in the US may seem larger in Africa.There are large and growing companies based in key markets in Africa, but the competitive landscape still has plenty of room for new entrants. According to The Africa Report, in 2013 nearly 150 African companies earned revenues of $1 billion or greater, and more than 500 African companies had over $200 million in rev-enue.*, 54 These domestically grown businesses, many similar in size to US middle-market companies, under-stand the market dynamics and know how to navigate the operating environment far better than foreign

*By contrast there are nearly 200,000 middle market firms in the United States, as companies with annual revenue between $10 mil-lion to $1 billion.

players. But the overall pool is still quite small,55 allow-ing US middle-market companies to have the advan-tage of relative scale in many African markets. This is especially so outside of the big urban centers, such as Cairo in Egypt, Johannesburg in South Africa, Nairo-bi in Kenya, and Lagos in Nigeria. But even in these markets a mid-sized US company can take on larger projects and have a better negotiating position than smaller local companies. If a company is perceived as being larger in the African context, it is also a more attractive prospect for local partners and employees, particularly qualified managers. Since many African markets have a shortage of capable management per-sonnel due to inadequate education and the emigra-tion of educated professionals, competition for scarce management talent will increase as markets attract additional investment. While more highly educated Af-rican professionals with work experience in the United States and Europe are returning, they are still a minori-ty of the resource pool. Securing this talent early on will provide a solid foundation from which to build.

Chapter 3—Guiding principles for African expansion

Doing business in African countries is different from the United States in innumerable ways, and there is no rule book to execute the perfect strategy. We spoke with 36 experts in both the private and public sectors to gain a better understanding of the most effective approaches for investing and operating in these diverse markets. We have synthesized insights from

interviews with those doing business in Africa to create the PAL Principles, which will help a mid-sized compa-ny to develop and implement its best strategy for African markets. This framework can be applied to any business, from the moment management decides to explore an African market as a potential option to after initial investments have been made.

Gather initial information and draft a plan

Get on the ground and conduct due diligence

Be Prepared

01

Figure 9

Data Collection

* Business network, public policy, agribusiness, construction, manufacturing

Experts by business sector Interview topics

Financial Applying alternative business strategies

Identifying and mitigating risks and challenges

Distinguishing factors for success

Managing the operating environment

Building relationships

Establishing local partnerships

Understanding the legal framework

Accessing resources

Others*

Consulting

Renewable

Medical devicesPublic sector

energy

services

ConsumergoodsLegal


interviews with those doing business in Africa to create the PAL Principles, which will help a mid-sized compa-ny to develop and implement its best strategy for African markets. This framework can be applied to any business, from the moment management decides to explore an African market as a potential option to after initial investments have been made.



Be Prepared

01

Gather initial market information and draft a plan.

With any expansion, a lot of work needs to be complet-ed up front. The unique opportunities and challenges of each African country make determining where to enter a new market and what strategy to use especially important. A company’s options will vary depending on the industry segment, the sophistication of the business environment, relative levels of risk, the polit-ical climate, the cost required, and the amount of con-trol that company management would like to main-tain. The company should gather as much information as possible from a wide variety of sources and develop a clear plan for expanding to Africa. A lack of resources to collect information and the prevalence of informal economies in Africa mean that detailed market data is often unavailable or unreliable. So, identifying alter-native sources of information is vital. To build a basic picture of the operating environment, it is helpful to speak directly with US and African business contacts,

tap into the African diaspora in the United States, and

connect with US government representatives focused

on African projects as well as other experts like lawyers

and consultants operating in relevant African coun-

tries. Burt Lang, senior managing director, Africa, for

Varian Medical Devices, said of the resources the com-

pany leveraged when expanding its cancer diagnostic

devices to Algeria, “We received a lot of organizational

support from US embassies in Africa, African embas-

sies in the United States, the US Commerce Depart-

ment, and trade organizations such as the Corporate

Council on Africa.” (For further information on organi-

zations providing resources to facilitate investment in

Africa, see the Appendix).

Figure 10

The PAL Principles

Be Prepared

01Be Adaptive

02Be Local

03



(Re)learn to be scrappy

Be prepared to change plans

Get a local partner

Develop two-way relationships

Build local capacity

Africa is a diverse market of 54countries. The starting point forsuccess is selecting the marketthat best aligns with the company’sgoals, and then doing the properdue diligence to understand theopportunities and challengeson the ground.

With any emerging market, beingable to adapt is often the mostcritical skill. No amount ofpreparation can alleviate theneed to modify plans as themarket environment changes.

Ultimately, sustainable successwill require being local. This can be achieved by identifying strong,local partners and buildingrelationships, as well as by hiringand building the capacity of thelocal talent.

What Resources Do We Already Have?

An assessment of internal capabilities will also be critical to the execution strategy that a company selects . This analysis will define how much of the current infrastructure the business can leverage for its expansion strategy and how much must be acquired . The acquisition of resources may mean establishing relationships to access distribution networks for exporting goods, hiring local talent with rel-evant market knowledge, or developing a partnership or joint venture with a local company .


Get on the ground and conduct due diligence.

Many of the key principles for developing a market entry or expansion strategy, including defining the market, identifying the competition, and assessing the operating environment, cannot be finalized without being in the country, meeting directly with people, and studying the local business culture. Ken Ihenacho with Latham & Watkins, a highly respected international law firm, said that he spends a lot of time with clients who recognize the opportunity of the African macro environment, the growing middle class, and the in-

creasing urbanization, but do not know how to access the market. His first piece of advice is often simply, “Get on the ground.” The numerous onsite confer-ences and trade missions being organized are easy ways to dip a toe in the water and gain insight into the business environment. Without seeing the mar-ket firsthand, a company can misjudge the risks and the potential rewards, especially in emerging markets where available research and data is insufficient to tell a complete story. In addition, every African market is different, and the opportunities and constraints for en-try into Ghana may be completely different from those for Mozambique or South Africa. A company will need to spend time in the local market it intends to target to understand the business environment and estab-lish contacts for implementing its strategy. Onsite due diligence is also essential for identifying and vetting local partners. Finally, and perhaps most important, the business culture in much of Africa emphasizes de-veloping close relationships. This cannot be done over the phone or by email. Face-to-face communication is of primary importance, and a company should build in time on the ground over multiple visits to ensure it

develops robust relationships with the right partners.

(Re)learn to be scrappy.

A company needs to be able to adapt to the environ-ment rather than trying to mold it to suit the orga-nization. Resources are not always available when needed. Infrastructure like roads and consistent access to electricity is often less than ideal, and regulations sometimes change with the election of new political leaders. But business is still thriving on the continent, and savvy managers figure out a way around these obstacles. Nathalie Gabala, director of investments for Africa for Equator Capital Partners, explains, “Toler-ance of uncertainty and high market volatility is im-portant. What may be perceived as catastrophic in the US context is not always of the same importance in the African context. Keep changes in the market environ-ment in perspective.” American companies are known for their entrepreneurial drive and ability to innovate

around problems, skills well-suited to the consider-ably different African operating environment. The determination and ingenuity that entrepreneurs in middle-market US companies have needed to succeed in the extremely competitive US market will be put to the test in many of the African markets. But these traits can give a company a significant advantage over larger firms and other foreign and local competitors.

Be prepared to change plans.

Many companies have found that once they have first-hand experience in a new market and have begun to understand the operating environment, they need to adjust their original strategy to be successful. Differ-ent customer preferences, unwritten requirements of doing business, and the lack of extensive distri-

Keep market changes in perspective. “Tolerance of uncertainty and high market

volatility is important. What may be perceived as catastrophic in the US context is not always of

the same importance in the African context.”

Getting on the ground is essential. A company can misjudge the risks and potential

rewards by not taking time to gather local intelligence and gain an understanding of how

business works in a particular country.

(Re)learn to be scrappy

Be preparedto change plans

Be Adaptive

02


bution channels are typical factors that may prompt modifications to a company’s expansion plan. Chid Liberty, the CEO of Liberty & Justice, a clothing man-ufacturer with a factory in Liberia, explained that they consider the business plan to be “a living document” that evolves as the market changes. Challenges exist because of weak infrastructure, inconsistent regulatory frameworks, and a lack of access to skilled workers. At the same time, as noted above, new technologies are adopted more rapidly and are fundamentally altering some industries such as mobile money in the financial services segment. Companies need to be nimble and modify their strategies for gaps or changes in the mar-ket environment. Having a longer-term vision from the outset will ensure the company focuses its planning

and resources for success.

Figure 11

Building a Value Chain Model in Kenya—Focus on International Green Structures

Building a Value Chain Model in Kenya Focus on International Green Structures

Company ProfileInternational Green Structures (IGS) manufactures innovative and sustainable Compressed Agricultural Fiber (CAF) panelsfrom biomass, which are used to construct a�ordable housing, schools, and healthcare facilities the company calls IGStructures.Founded in 2005 to provide disaster relief housing in the US, the company realized there was limited demand in the domestic market and recognized the signi�cant opportunity for a�ordable housing solutions in developing countries. The companypairs its CAF technology with a pre-engineered framing system to create strong, easy-to-assemble designs that allow forquicker build times, no-waste construction, and cost savings. Since its entrance into the African market in 2012, the companyhas now created a replicable value chain model utilizing local partners.

Kenya

Rice and wheat products aresourced from local farmers. Thestraw, which would ordinarilybe agricultural waste, is also collected.

Agriculture products are transported toa facility owned by a local partner. Thegrains are processed for sale, and the leftoverstraw is manufactured into CAF panels.

Panels are then shipped tolocal construction �rms thatare trained and certi�ed by IGSin the proper building techniques.

Local Processing Facility

LocalFarmer

~ 12,000 housingstructures annuallyper factory can bebuilt in about 20%of the time astraditional cinderblock construction.

LocalConstruction Firms

~ 2,000 local jobsper factory. Impactsthe local economy byabout $30 mn.

The local partnerbene�ted fromIGS’s technologyand expertise toexpand its productline to include highermargin paneling.

IGS capitalizedon the market knowledgeand positioning of a localpartner to secure afoothold. The machinesused by the local partnersare manufacturedby IGS in the United States.

JobsIGS

A Value Chain Model

Mutual Benefit Outcomes

Over 100% increasein IGS’s revenues by expanding to Africa.

Adapting for Success

Power generation is a significant challenge in Africa, which has created an immense opportunity for off-grid technologies . Founded in 2011, Peppermint Energy is a portable solar power generator manufacturer based in South Dakota that targets emerging and frontier markets . A key challenge for the company is product distribution, since there are currently no large sales channels on the continent . To overcome this challenge, the company built its own network of small distributors . Peppermint is working with about 35 African-based entities in 15 coun-tries in Sub-Saharan Africa with plans to expand to North Africa in 2016 .


Get a localpartner

Buildlocal capacity

Be Local

03

Develop two-wayrelationships

Get a local partner.

Successful businesses know that their ability to com-pete in any market depends on the people they employ and do business with. If the opportunity exists, some companies may want to acquire a local firm or enter into a joint venture to gain access to the market. How-ever, even if a company does not require a local foot-print, it will need to work with reliable, local partners that can assist in navigating the market to properly execute the company’s strategy. These “navigators” can provide significant advantages such as in-depth market knowledge; access to networks for financing, human capital, and other resources; and the ability to maneu-ver within local regulations and the unique operating environment. International Green Structures (IGS), an innovative, fiber panel manufacturer operating in the United States and emerging markets, expanded to Africa three years ago. The CEO of IGS, Richard China, explained the importance of local partners to the com-pany’s strategy: “The key risk for us is not being able to identify all of the risks that exist—it is the unknown. The mitigation for this is having good local partners who already know the nuances of the market.”

Many firms providing support for entry into African markets advise that local partners can be critical to success, depending on the country and the type of business. And having a partner whose interests align with the company’s goals is essential. Bobby J. Pittman, who heads up Kupanda Capital, commented, “More often than not, the partner should be local and on the ground, but finding the right partner can be a challenge. You also need the right amount of incentive and alignment.” Local partners can be difficult for for-eign companies to identify because foreign managers do not always understand the local market dynamics, and publicly available information is in short supply. Many local companies rely on more informal business

practices that US firms find difficult to assess such as verbal agreements rather than written contracts or the reliance on family members in the business. Inquiries through local legal counsel or other trusted local advi-sors may help a company explore the suitability of potential partners.

Develop two-way relationships.

In most markets, the business community tends to be relatively small and a company can quickly get to know the key players. Building a reputation at the outset as a company that wants to work with local businesses helps to establish relationships that pro-mote acceptance and support. Burt Lang of Varian Medical Systems explained the importance of these relationships: “Previously, Varian operated through long-standing distributor partnerships. Now, there is a major initiative to increase our long-term presence. In some cases, this will mean strengthening our part-nerships with distributors, and in other cases, creat-ing legal entities and joint ventures. For example, we just announced a joint venture in Algeria that we are implementing right now.” The need to build contacts within the government depends on the industry. It is usually helpful if the relevant government ministry understands the company’s plans and how they will affect the local community. More extensive relation-ships may be needed to gain insight into how to access certain incentives or get permits approved. Compa-nies might also build relationships with local village leaders, country directors, and staff of international organizations operating in the area, local business associations, and trade organizations.

Build local capacity.

Businesses with any presence on the continent are faced with a choice for their staff—bringing in expa-triates or hiring local talent. In the long run, building local capacity is much more likely to yield sustain-able success. Hiring expats from the United States or Europe may limit a company’s execution strategy because of the potentially higher expense to transfer an entire team or to compensate for an undesirable location. If expats are willing to go to more rural parts of Africa with fewer available resources, they may want higher compensation. In addition, foreign staff have a learning curve, and some argue that expats will never fully understand the nuances of the local culture. How-ever, the benefit of bringing them in is that they are


highly qualified, are often from the home company, and therefore understand the context of the business.

There are several options for hiring local talent while still achieving business objectives. One alterna-tive is to hire US-educated Africans and transfer them back to their home country, which does not always save money, but supplies staff who can bridge the cul-tural gap between the US company and the local oper-ating environment and implement US standards in the local context. An additional alternative is to hire local talent, which is generally cheaper and comes with built-in knowledge of the market, including how and when to interact with government officials. Currently, a large pool of qualified and highly trained profes-sionals are not typically available in most African markets. But this is changing as education and training advance. In a conversation with Josh Becker at Impele Consulting Group, he said, “The quality of education is improving in many of the countries, so we are starting

to see a larger talent pool of mid-level management. At some stage, perhaps not too long from now, there will be a tipping point, which will lead to all recruiting being done on the continent rather than sourcing from abroad.” In fact, one survey found that 70 percent of African MBA students studying in the United States and Europe plan to return to their home countries. Many companies use a combination of strategies, but eventually hire and train local people who can take over the management of the operation. Investing in training for local partners and on-the-ground staff cre-ates a sustainable model for the company to grow and generates goodwill in the local community.

Identifying Local Partners

Even with extensive onsite work, executing a successful market entry strategy often requires a permanent local presence or a partnership with a local entity . For companies selling goods, access to distribution networks and salespeople is imperative, since building an onsite presence from scratch is expensive and time consuming . Most experts we spoke with said that a company should find a local partner with market expertise and a network of contacts .

Though often a key element of success, finding reliable local partners is one of the main risks of operating in Africa . Part of this is a shortage of deep expertise in specific industries . Very skilled Africans are running successful local businesses, but they may not have the experience in the industry that the company is targeting . However, these local business people know how the business environment operates, have a track record of overcoming challenges in the market, and possess the relationships to enable successful strategy execution . Sometimes the company will need to make tradeoffs to find the “right” partner . For ex-ample, a partner with a network of relationships may be more important than one with industry knowledge .

Identifying partners in any market is always a challenge, but in a new market with different regulations and norms, a com-pany may feel that it does not have enough knowledge to make a qualified assessment . The companies we spoke with said they identified partners through a variety of sources . Just as in the US market, management should start with people it trusts and respects . Before arriving in the designated African market, it is helpful to talk to US and European companies already doing business there and speak to members of the African diaspora in the company’s local or regional community . Many Africans liv-ing abroad maintain strong relationships with people in their home countries and often have business interests of their own .

The company should then speak to sources on the ground . Consulting and law firms in the United States and Europe can of-ten help to put companies in touch with trusted contacts and potential partners . Local legal counsel can also assist with back-ground checks on specific individuals and companies . In addition, a number of local advisory firms employing both foreign and African experts specialize in assisting companies with market entry and with introductions to reliable local partners . US embas-sies typically maintain lists of local experts and reliable service providers . If a company has a contract with a US government program, local partners will be vetted as part of the selection process .

Finally, a growing pool of highly educated Africans with work experience in the United States or Europe are returning to their home countries to start businesses or provide advisory services . These individuals can create enormous value by bridging the gap between the different business cultures in the United States and their home countries . But, even with this advantage, companies need to conduct the same onsite due diligence as with any other local partner to be certain that the person has the skills and contacts that the company needs . If the person has been living abroad for many years and just returned, knowledge of changes in the operating environment may be out of date .


Conclusion

Africa has reached an inflection point for investment with enormous potential for a wide range of business-es. Immense challenges of infrastructure, electrifica-tion, and political stability still exist but are balanced by expansive growth, rapid adoption of technologies, and the diversification of economic sectors. US middle market firms have much to gain by looking now for opportunities in Africa. The 54 markets in the region are diverse and offer companies an array of options in the political, economic, and investment climate they seek and the sector they choose to operate in.

Given the variances between countries, no overall report on Africa can be a specific guide, but there are some core principles for expansion. This report offers three guiding principles for a successful strategy—Be Prepared, Be Adaptive, and Be Local. In addition, a growing set of resources—local, national, and inter-national—can be accessed to navigate the complex landscape. From investment promotion programs of individual African countries and US government trade missions to industry groups focused on Africa and net-working with members of local African diaspora, mar-ket intelligence is becoming richer every day.

Expanding into Africa requires a long-term view of success. Being willing to modify initial plans, maneu-vering through unforeseen challenges, and having the right local partners are critical elements for thriving in African markets. This is especially true for mid-sized companies, where more time and talent will be put forth to establish and maintain the right strategy. Companies will need to effectively deploy resources to grow and adapt with the market over time.

International expansion is not the right answer for all middle-market businesses, but the increas-ingly global economy has changed the playing field. Ultimately, we hope to stimulate companies to con-sider a move they may have otherwise thought to be beyond their scope. Investing in Africa can mean a dramatic growth opportunity for US middle-mar-ket firms and for the development of the region as a whole. Exploring the opportunity is the first and most important step in the process. The prospective return on a correctly executed approach in Africa is signifi-cant and has the potential of outpacing other markets for decades to come.

Appendix: Resources to support expansion and investment

A range of domestic and international, public, and pri-vate resources is available to US companies looking to enter the African market. Many US government agen-cies now have a mandate to promote Africa-related projects and investments. Multilateral agencies such as the World Bank, the International Finance Corpora-tion (IFC), and the African Development Bank (AfDB), are also known for their support of business in Africa. More recently, commercially focused private sector resources have also become available. Industry asso-ciations and chambers of commerce have recognized the growing opportunity in Africa and are developing information databases for their members and partic-

ipating in trade missions. In addition, a limited but growing number of specialized advisory firms have an Africa focus and can provide targeted services for US companies that were not previously available.

The table on page 23 provides examples of organi-zations in various categories and the types of resources they offer that will help US companies in gathering information, establishing contacts, and accessing funding to expand to African markets. This is by no means a complete list of all available resources, but it provides a sample of the breadth and depth of what exists to assist companies with building a strategy for investing in Africa.


Appendix: Resources

Name of Organization*Trade

Missions/ Conferences

Export Assistance

Business Counseling

Funding/Incentives Network Data/

Statistics Reports Current News

US Government Agencies

US Dept of Commerce International Trade Administration

US State Department Bureau of African Affairs

US Trade and Development Agency

USAID

Overseas Private Investment Corporation (OPIC)

NGOs and Private Organizations

Corporate Council on Africa

Continental Africa Chamber of CommerceAfrica-USA International Chamber of Commerce and IndustryAfrican Development Foundation

US Chamber of Commerce – Africa

Investment Promotion Agencies

Nigerian Investment Promotion Commission

Tanzania Investment Centre

Foreign Investment Promotion Agency of Tunisia

Eastern Cape Development Corporation

Southern African Development CommunityUS Embassies, Consulates, and Diplomatic Missions (in 50 African countries)Africa

Near East

African Union

Networks/Diaspora Communities

African Diaspora Network Tunisian American Young Professionals (TAYP)

African Diaspora Marketplace

World Africa Diaspora Union (WADU)

International Diaspora Engagement Alliance

Africans in the Diaspora

Bilateral and Multilateral Agencies

African Development Bank

International Finance Corporation

International Monetary Fund

African Export-Import Bank

Portals/Statistical Databases

World Development Indicators

International Monetary Fund data African Development Bank dataUnited Nations Conference on Trade and Development (UNCTAD) statisticsfDi Markets

Other Resources

African Business Magazine

Ventures Africa (News)

allAfrica (News)

Africa – All Things Business (Discussion Group)US Business School Conferences on Africa (Harvard, University of Chicago, Wharton, etc .)

*Hyperlinks are embedded in the organization name .

www.trade.gov/dbia/contacts.asp

www.state.gov/p/af

www.ustda.gov

www.usaid.gov

www.opic.gov

www.africacncl.org

www.continentalacc.org

http://www.africa-usa.org

http://www.africa-usa.org

www.adf.gov

www.uschamber.com/africa

www.nipc.gov.ng

www.tic.co.tz

www.investintunisia.tn

www.ecdc.co.za/ecdc

www.sadc.int

www.usembassy.gov/africa.html

www.usembassy.gov/mena.html

www.usau.usmission.gov

www.africandiasporanetwork.org

www.tayp.org

www.diasporamarketplace.org

www.wadupam.org

www.diasporaalliance.org

www.africansinthediaspora.org

www.afdb.org

www.ifc.org

http://www.imf.org/external/

www.afreximbank.com/

http://data.worldbank.org/data-catalog/world-development-indicators

http://www.imf.org/external/

www.afdb.org/en/knowledge/statistics/data-portal/

www.unctad.org/en/Pages/Statistics.aspx

www.unctad.org/en/Pages/Statistics.aspx

www.fdimarkets.com/explore/

www.africanbusinessmagazine.com

http://www.ventures-africa.com

www.allafrica.com

https://www.linkedin.com/groups/Africa-All-Things-Business-56849/about


Acronyms

AfDB – African Development Bank

AU – African Union

BRIC – Collectively, Brazil, Russia, India, and China

BRVM – West African Regional Stock Exchange (French acronym)

CAF – Compressed Agricultural Fiber

CAR – Central African Republic

COMESA – Common Market for Eastern and Southern Africa

DRC – Democratic Republic of the Congo

EIB – European Investment Bank

FDI – Foreign Direct Investment

GDP – Gross Domestic Product

GSMA – GSM Association

ICA – Infrastructure Consortium for Africa

ICT – Information and Communication Technology

IDB – Islamic Development Bank

IFC – International Finance Corporation

IMF – International Monetary Fund

IPA – Investment Promotion Agency

NGO – Nongovernmental Organization

OPIC – Overseas Private Investment Corporation

SMS – Short Message Service

SSA – Sub-Saharan Africa

STEG – Tunisian Company of Electricity and Gas (French acronym)

TBPS – Terabytes

UEMOA – West African Economic and Monetary Union (French acronym)

UNCTAD – United Nations Conference on Trade and Development

UN-Habitat – United Nations Human Settlement Programme

USAID – United States Agency for International Development


The Emerging Leaders Program

The Chicago Council on Global Affairs’ Emerging Leaders Program is a two-year program that draws the best and the brightest emerging leaders from across business, civic, government, and academic sectors in the Chicagoland area. The program provides the Emerging Leaders (ELs) with a deeper understanding of global issues and Chicago’s place in a globalized world. ELs also develop a strong network of contacts with current civic and business leaders and, perhaps more importantly, with their Chicagoland peers, who are also grappling with global challenges. In short, they emerge better prepared to assume key leadership positions in this new era.

Acknowledgments

The members of this team all contributed over the course of two years to the discussion and debate in the development of this topic and report. Throughout the second year they were briefed by experts in Wash-ington, DC, and Chicago, who provided invaluable insights for their research. The Chicago Council would like to express our gratitude to the following individu-als for taking time out of their busy schedules to brief this group and share their experiences and views: Tahar Achour, president, National Chamber of Renew-able Energy (Tunisia); Leila Aridi Afas, director, Export Promotion, USDTA; Edwin Barber, advisor, GoodWorks International LLC; Josh Becker, cofounder and chief executive officer, Impele Consulting Group; Matt Bell, chief operating officer, Medimmune; Euler Bropleh, founder and chief executive officer, VestedWorld Man-agement of Fortis Microfinance Bank, Abuja, Nigeria; Richard China, chief executive officer, International Green Structures, LLC; Lee Clegg, president, Africa Business Portal; Ambassador (ret.) Herman J. Cohen, president and chief executive officer, Cohen and Woods International, former ambassador to Gambia and Senegal, former Africa director for the US National Security Council, former US assistant secretary of state for African affairs; Senator Dick Durbin, US senator for Illinois and assistant majority leader; Theodore E. Deutch, US representative for Florida, House Judicia-ry Committee, House Ethics Committee, and House Foreign Affairs Committee; William Finn, senior vice

president, Fifth Third Bank; Clement Fondufe, head of Africa practice, Latham & Watkins; Nathalie Gabala, di-rector of investments, Africa, Equator Capital Partners; Ambassador (ret.) William Garvelink, senior advisor, International Medical Corps; Hatem Goucha, member, Tunisian American Young Professionals; Brian Gramm, chief executive officer, Peppermint Energy; Adam Hartmann, head of operations and investor relations, Frontier Investments Group, ACCION International; Kem Ihenacho, partner, Latham & Watkins; Rachid Izzar, vice president commercial–international, Astra-Zeneca; Bahija Jallal, executive vice president, Astra-Zeneca, head of MedImmune; Pete Jenkner, president, Isovac products LLC; Katrin Kuhlmann, senior advisor to the president, Corporate Council on Africa; Burt Lang, senior managing director Africa, Varian Medical Systems; Chid Liberty, chief executive officer, Liberty and Justice; David Makovsky, director, Project on the Middle East Peace Process, The Washington Institute; Mohamed Malouche, chairman of the board, Tuni-sian American Young Professionals; Anis Mnif, project manager, Tunisian Handicraft Export Program, Tuni-sian American Young Professionals; Michael Murai, senior investment officer, Frontier Investments Group, ACCION International; Don Niss, deputy coordinator, Power Africa Initiative, USAID; Kara M. Palamountain, research assistant professor and executive director, Global Health Initiative, Kellogg School of Manage-ment, Northwestern University; Bobby J. Pittman, managing director, Kupanda Capital; Robert Sham-bora, chief executive officer, AGES-Athena Global Energy Solutions; Jacob Sitati, managing principle, Maurice+Fischer LLC, lecturer, International Studies at Valparaiso University; Karina Wong, independent emerging markets consultant.

Council staff Molly O’Donnell worked with the group throughout the two-year process and Council intern Emma Swanson assisted in editing. Ellen Hunt of Hunt Communications edited drafts of the report. Ikbel Achour created all graphics. None of this great work would have been possible without the vision, leadership, and support of John F. Manley and Shirley Welsh Ryan, both vice chairs of The Chicago Council’s Board of Directors. They, along with the other mem-bers of the Emerging Leaders Selection Committee,


invested significant time in selecting the members of this class.

Their efforts have resulted in another great group that The Chicago Council is proud to have as Emerging Leaders. Our sincere appreciation goes to the Robert R. McCormick Foundation and the Patrick G. and Shirley W. Ryan Foundation for their support of the Emerging Leaders Class of 2015.

Ivo Daalder President, The Chicago Council on Global Affairs June 2015

Author biographiesIkbel Achour Director of Precision Health, University of Arizona Vice President Development, Tunisian American Young Professionals Organization

Ikbel Achour works to translate cutting-edge science into patient care. As director of precision health at the University of Arizona, she leads and manages the research and development team in translational re-search and computational biology at Lussier’s Group. She focuses on developing precision medicine-based technologies, integrating genomic data with patient medical records to predict and improve clinical out-comes as well as repositioning and rescuing drugs. As funding chair of Women In Bio (WIB), Achour works with both the academic and business communities of Illinois and beyond to promote career development and entrepreneurship. In addition, as vice president of development for the Tunisian American Young Profes-sionals Organization and a part of the Tunisian dias-pora in the United States, she is deploying initiatives to promote economic opportunities for investment and partnership with US companies in North Africa, particularly Tunisia. In the last four years, she has also actively participated in “Tunisia, a Democratic Start-up” initiatives to empower individuals and businesses. Achour earned her PhD in immunology (immunoge-netics) from the Institute Pasteur-University Paris VII and her BE in biotechnology and bioindustry from the National Institute of Applied Science and Technology in Tunisia.

Benjamin Bader Managing Director Jones Lang LaSalle

Benjamin Bader leads the transaction advisory ser-vices group for Jones Lang LaSalle. In his 17-year tenure at the firm, he has had extensive experience managing global relationships and has executed transactions on five continents. He has twice been recognized with the firm’s LaSalle Club Award, won the 2008 JLL Collaboration Award, and has twice earned CoStar’s “Power Broker” Award. Prior to join-ing JLL, he worked at China Enterprises, Inc., an import-export company trading Chinese goods with US and European customers, which included three years living and working in Qingdao, China. He was a summer associate at Andersen Consulting’s China Strategy Group. Bader serves on the board of directors of the British-American Business Council of Chicago, is a licensed broker in Illinois, and holds a Six Sigma Green Belt certification. He earned a BA in interna-tional studies from Vassar College and an International MBA from the University of Chicago’s Booth School of Business.

Ross Shelleman President and Chief Executive Officer Target Data

Ross Shelleman serves as president and CEO of Target Data, a marketing analytics and services company. Prior to founding Target Data, Shelleman held various senior business development positions across a mul-titude of industries, including technology, health care, and managed services. He also cofounded Australian Portable Storage, a holding company that owns and operates moving and storage franchises throughout Australia. In addition, he serves as chairman of Arco Capital Partners, an investment holding company that makes angel investments and leads small private equi-ty transactions. He also serves on the advisory board of Flow Equity, a holding company that operates a series of poultry farms in Ethiopia. Shelleman is a member of the Economic Club of Chicago. He earned a BA in English from Franklin and Marshall College.


Lisa G. Thomas Director of Investments – Asia Equator Capital Partners LLC

Lisa G. Thomas is the director of investments-Asia for Equator Capital Partners LLC (ECP), a fund manage-ment company that manages private equity funds that invest in economies throughout Africa and Asia to pro-mote sustainable economic, social, and environmental development through private sector investments. She is responsible for sourcing and managing attractive investment opportunities that fit the company’s social mission. Prior to joining Equator Capital, Thomas was vice president of capacity building and operations for CapitalPlus Exchange, ECP’s capacity-building partner. In this role, she was responsible for developing the infrastructure of socially oriented financial institutions in Asia and Africa to meet profitability and impact goals. She has also worked in investment banking, research, and consulting in New York and Chicago. Thomas serves on the board of Khushhali Bank Limit-ed, the largest microfinance bank in Pakistan, as well as on the advisory board of VestedWorld, a US-based online investment platform connecting investors to opportunities in emerging markets. She is also an advi-sor for start-up companies in Impact Engine’s 16-week accelerator program based at 1871, Chicago’s entre-preneurial hub for digital startups. Thomas earned an MBA from the University of Chicago Booth School of Business in 2006 and a BS in business administration (finance concentration) with honors from the Univer-sity of Oregon in 2000.

Shalini Unnikrishnan Principal Boston Consulting Group

Shalini Unnikrishnan is a core member of Boston Con-sulting Group’s (BCG) health care and social impact practices. In health care, she advises clients in the biopharmaceutical, medical technology, and payer ar-eas on a broad range of strategic issues. Unnikrishnan serves as BCG Chicago’s office node and works globally across public education, global health, and economic development teams. Unnikrishnan has also worked for former UK Prime Minister Tony Blair’s nonprofit Africa Governance Initiative, first as a private sector develop-ment adviser to Rwanda’s largest government agency, Rwanda Development Board, in 2009 and 2010. Then in 2012 she was a special adviser to President Joyce Banda in Malawi and the head of Blair’s Malawi team.

In these roles Unnikrishnan was based within the government and worked alongside the core members of the president’s team. Unnikrishnan earned a BA in economics and sociology from Davidson College in North Carolina, an MBA from the Wharton School at the University of Pennsylvania, and an MA in interna-tional relations from the School of Advanced Interna-tional Studies, Johns Hopkins University.

Kuliva Wilburn Senior Consultant Health Management Associates

Kuliva Wilburn is a strategic planner with extensive experience in the philanthropic sector, building cross-sector partnerships and analyzing health policy. Prior to joining Health Management Associates, Wil-burn served as the senior program officer for health at the Chicago Community Trust. She provided oversight for the foundation’s health grant-making portfolio of more than $11 million, representing health-care pol-icy, advocacy, and system integration in the arenas of improved access, reform implementation, and obesity prevention. Previously, Wilburn oversaw planning and development for a federally qualified health-care network. She managed an $8 million portfolio of community health grants from private and public institutions, led community assessment processes, and facilitated strategic planning, fundraising, and program development. Wilburn’s previous work and academic background in biotechnology have afforded her opportunities to work with NASA as well as several large pharmaceutical companies. She also has many years of experience consulting on and researching community health initiatives. Ms. Wilburn received a BS degree in biochemistry from Drexel University and an MPH degree from the University of Illinois at Chicago. She is currently a student in the doctoral program in the University of Illinois at Chicago School of Public Health.


Endnotes

1. Alex Court and Holly Brown, “Africa is doing amazing– it’s our turn to shine,” CNN Online April 16, 2015.

2. The World Bank, “World Development Indicators,” 2015.

3. Acha Leke, Susan Lund, Charles Roxburgh, and Arend van Wamelen, “What’s Driving Africa’s Growth,” McKinsey Global Institute, June 2010.

4. National Center for the Middle Market, “4Q 2014 Middle Market Indicator,” 2015.

5. World Economic Forum, “The Global Competitiveness Report 2014-2015,” 2015.

6. The African Development Bank, “Tracking Africa’s Progress in Figures,” 2014.

7. International Monetary Fund, “World Economic Outlook,” April, 2015, http://www.imf.org/external/datamapper/index.php.


9. Ibid.

10. Peter Guest, “Bittersweet Success for Cocoa Farmers,” African Business Magazine, April 1, 2015.


12. Ernst & Young, “Africa Attractiveness Survey 2014,” 2014.

13. United Nations Conference on Trade and Development, “UNCTAD World Investment Report 2014,” 2014, http://unctad.org/en/PublicationsLibrary/wir2014_en.pdf.

14. Susan Njanji, “One-Third of Africans Have Entered the Middle Class,” Yahoo! News, Yahoo! October 27, 2014.

15. United Nations, Department of Economic and Social Affairs, Population Division, “World Urbanization Prospects: The 2014 Revision, Highlights (ST/ESA/SER.A/352),” 2014.

16. The United Nations Conference on Trade and Development, “Total Population, Annual, 1950-2050,” 2015, http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx.

17. Susan Njanji, “African Development Bank data,” October 27, 2014.

18. The Economist Intelligence Unit, “Investing in African Infrastructure,” September 16, 2014.

19. “AU, China agree big infrastructure deal,” News24, January 27, 2015, http://www.news24.com/Africa/News/African-Union-China-agree-big-infrastructure-deal-20150127.

20. USAID.

21. African Development Bank, “Tracking Africa’s Progress in Figures,” 2014.

22. The Infrastructure Consortium for Africa, “2013 Annual Report.”

23. Ibid.

24. Safaricom, “Safaricom Limited FY 14 Presentation,” May 12, 2014, http://www.safaricom.co.ke/images/Downloads/Resources_Downloads/FY_2014_Results_Presentation.pdf.

25. Internet World Stats, “Internet Usage Statistics for Africa 2014,” http://www.internetworldstats.com/stats.htm.

26. GSM Association, “The Mobile Economy 2014: Sub-Saharan Africa,” 2014.

27. Informa Telecoms and Media, “Africa Telecom Outlook 2014.”

28. Safaricom Limited FY 14 Presentation, May 12, 2014.

29. M-Kopa Solar website, http://solar.m-kopa.com/about/company-overview/.

30. Katie Linendoll, “E-readers Bring Hope to Africa’s Schools,” CNN, August 22, 2014, http://www.cnn.com/2014/08/20/tech/mobile/worldreader- readers-kenya/. August 22, 2014.

31. Young Africa Leaders Initiative, “Advances in Crop Technology Benefit Africa’s Smallholder Farmers,” January 28, 2015.

32. Richard Walker, “Africa: Innovation Hubs Galore,” African Business Magazine, July 21, 2014.

33. The World Bank, “Tech Hubs Across Africa (as of February 2014),” Information and Communications Development (IC4D) blog, accessed May 25, 2015, http://blogs.worldbank.org/ic4d/files/Kelly_Techhubs_0.pdf.

34. Fab Foundation, “Public List of African Innovation Spaces,” 2015, https://www.google.com/fusiontables/DataSource?docid=1zcE1JNl5IqaIrEleIvfl1kE--WAKPsber4x4jhAP#rows:id=1. Accessed May 25, 2015.

35. The Conference Board, Inc., “Global Productivity Slowdown Moderated in 2013–2014 May See Better Performance,” 2014.

36. African Development Bank, “Africa’s Competitiveness,” April 10, 2012.

37. International Labor Organization, “Labor Migration at the Heart of Africa’s Integration and Development Agenda,” February 18, 2015.

http://www.imf.org/external/datamapper/index.php


http://unctad.org/en/PublicationsLibrary/wir2014_en.pdf

http://unctad.org/en/PublicationsLibrary/wir2014_en.pdf

http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx

http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx

http://www.news24.com/Africa/News/African-Union-China-agree-big-infrastructure-deal-20150127



http://www.safaricom.co.ke/images/Downloads/Resources_Downloads/FY_2014_Results_Presentation.pdf



http://www.internetworldstats.com/stats.htm

http://solar.m-kopa.com/about/company-overview/


http://www.cnn.com/2014/08/20/tech/mobile/worldreader- readers-kenya/. August 22, 2014



http://blogs.worldbank.org/ic4d/files/Kelly_Techhubs_0.pdf


https://www.google.com/fusiontables/DataSource?docid=1zcE1JNl5IqaIrEleIvfl1kE--WAKPsber4x4jhAP#rows:id=1




38. Homecoming Revolution, “African Diaspora Statistic,” October 10, 2013.

39. David Herbling, “IBM Reverses Africa Brain Drain with Nairobi Office Hirings,” Business Daily, December 9, 2012.

40. James Bryant, “Will China Turn to Africa for Low-Cost Labor?” Dun & Bradstreet Bizmology, July 30, 2014.

41. The World Bank, “World Development Indicators,”2014.

42. Sara Sjolin, “You Aren’t Investing in Africa—and You’re Missing Out,” MarketWatch, December 24, 2014.

43. Ibid.

44. Kyle Gibson, “The New Tunisia,” presented at US Chamber of Commerce, April 4, 2014.

45. Based on KPMG’s 2013/2014 Fiscal Guides for each country.

46. KPMG Corporate Tax Rate Table, 2015, http://www.kpmg.com/global/en/services/tax/tax-tools-and- resources/pages/corporate-tax-rates-table.aspx.

47. Republic of South Africa, The Department of Trade and Industry, website.

48. Nigerian Investment Promotion Commission, Investment Incentives, accessed May 25, 2015, http://www.nipc.gov.ng/investment.html.

49. Charles Enoch, Paul Mathieu, and Mauro Mecagni, “Pan-African Banks—Opportunities and Challenges for Cross-Border Oversight,” January 2015.

50. World Federation of Exchanges, “Monthly Reports,” December 31, 2014, http://www.world-exchanges.org/statistics/monthly-reports.

51. African Development Bank, “Draft Financial Sector Development Policy and Strategy 2014-2019—Revised,” October 17, 2014.

52. Economist Intelligence Unit, “US middle market firms and the global marketplace: Should I stay or should I go?” September 2012. The survey collected information from 356 middle market companies, defined as com-panies with annual revenues between $10 million to $1 billion, in 15 industry sectors and 45 states.

53. The World Bank, “World Development Indicators,” accessed May 25, 2015, http://data.worldbank.org/indicator.

54. “Top 500 Companies in Africa 2013,” The Africa Report, September 10, 2013, http://www.theafricareport.com/top-500-companies-in-africa-2013.html.

55. National Center for the Middle Market,“4Q 2014 Middle Market Indicator,” 2015.

http://www.kpmg.com/global/en/services/tax/tax-tools-and- resources/pages/corporate-tax-rates-table.aspx



http://www.nipc.gov.ng/investment.html


http://www.world-exchanges.org/statistics/monthly-reports


http://data.worldbank.org/indicator


http://www.theafricareport.com/top-500-companies-in-africa-2013.html



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