For stakeholders in Africa’s business sector, none of the remarkable accomplishments recorded by the Republic of South Africa since it became a democratic nation-state in 1994 are as spectacular as the country’s giant strides in investing in other African countries, in spite of the manifold challenges.
Shortly after the United Nations (UN) lifted sanctions on South Africa in the early 1990s, the country’s leading companies took the bold step of growing their business profile through investments in other African countries. The trend was driven by need to smartly take advantage of post-apartheid and Mandela-good-feelings business opportunities that were worth undertaking then.
That trend also made it possible for retailers, banks, telecommunications companies and others to follow the footprint of SABMiller, South Africa’s most successful brand. Even during the apartheid regime, the beverage maker spread its tentacles across the continent, becoming a market leader in alcoholic drinks in several other countries.
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Although some of the South African companies got their fingers burnt in some countries such as Kenya, Malawi, Uganda and Nigeria, they forged ahead and never looked back. Subsequently other South African investors joined in the race for expansion into other regions within the continent and the rest, as they say, is now history.
In 1994, South Africa was only making $11 million from Nigeria. Within a decade, that figure shot up to $11 billion. Other South African companies such as Shoprite, Pep, Mr. Price, Woolworths, Promasidor, Naspers, Tiger, Nampak and MTN, which is South Africa’s most successful brand overseas after SABMiller, are raking in stupendous turn-over from Nigeria.
The biggest lesson to be drawn from the South African experience, according to Taiwo Ogunlesi, newspaper columnist and public affairs commentator, is how intra-African commerce could help propel the continent to greater economic prosperity.
“It is meant to inspire and embolden a new generation of African entrepreneurs and businesses to spread their wings across their possibility-filled continent, and build business empires the world will take notice of,” he said.
Ogunlesi further noted that as the world’s last investment frontiers, countries in Africa stand the chance of attracting additional Foreign Direct Investment (FDI) as a result of the successes so far recorded across the continent by groundbreaking companies. In other words, their growing investment portfolio in the continent is paving way for other foreign investors aspiring to do business in Africa as well. After all, charity they say, begins at home.
The development, according to him, is really groundbreaking because one of Africa’s big tragedies is that so little of its trade is carried out among its countries, adding that only about 12 percent of all African trade takes place among African countries, which is the lowest in the world as compared to about 50 percent for Asia and North America, and 70 percent for Europe. “From such a low base, there’s great potential for new grounds to be conquered across Africa,” he stressed.
Lending credence to this trend is Morris Kirugu’s article, entitled “How South African Companies Are Successfully Taking Over Business in Africa.” He notes that their aggressive investments into other sub-Saharan countries have had many rewards despite the challenges, adding that since 2013, sub-Saharan Africa has contributed more to SABMiller’s profits than Europe.
“In some cases, the successes have been far much higher than within the home market. Just five Shoprite stores in Angola, for example, sold more Red Bull cans than all of Shoprite’s 382 stores in South Africa. Nineteen Shoprites in Angola also sold more bottles of JC Le Roux, a sparkling wine, than the South African stores. Another good example is DSTV subscriber numbers in Nigeria, who are double the numbers in South Africa.”
In addition to exporting South African brands, Kirugu goes on to show the success South African companies have had investing in foreign companies:
“South African investment giant, Sanlam, bought listed Pan Africa Life in 2005. In the brewing industry, 26 percent of Kenya Wines and Alcohol Limited (KWAL) was sold to Distell Group in 2013. MTN Business acquired UUNet Kenya while Altech increased its share in Kenya Data Networks. In manufacturing, Tiger Brands currently has a 51 percent stake in Haco industries and also bought Rafiki Mills and Magic Oven Bakeries.”
South Africa is not doing badly on its own soil when it comes to business development either. According to the World Bank Ease of Doing Business Index, South Africa is the second highest ranking country in sub-Saharan Africa, after Mauritius. As one of the continent leading economies, South Africa, according to Ogunlesi is in a class of its own.
“Nigeria’s emergence last year as Africa’s largest economy notwithstanding, South Africa continues to be the bigger brother. It single-handedly accounts for half of the continent’s entire manufacturing exports, is the only African country in the G20, and its financial markets and infrastructure remain miles ahead of the rest of the continent.”