Regional integration, economic reforms, technological advances and infrastructure development among key factors enabling business growth in the region
Report released by Dubai Chamber in cooperation with the Economist Intelligence Unit (EIU) ahead of Global Business Forum Africa 2019
Growing momentum behind regional integration, economic reforms, technological advances and infrastructure development are among the key factors fuelling business growth in sub-Sahara Africa, according to a new whitepaper released by Dubai Chamber of Commerce and Industry in cooperation with the Economist Intelligence Unit (EIU).
The report, entitled Promise and Perils: Scaling up businesses in sub-Sahara Africa, was issued ahead of GBF Africa 2019 in Dubai. The findings shed light on the current business climate in sub-Sahara Africa and examined attractive business prospects offering the most potential for investors in the UAE and wider GCC region.
Key growth drivers
The report highlighted the importance of regional integration initiatives such as the East Africa Economic Community, Single African Air Transport Market and African Continental Free Trade Area (AfCFTA) in removing trade barriers and driving business exchange.
The AfCFTA is expected to liberalising trade and investment policies and ease easing operational challenges related to international money transfers and payments. Combined, these allow African SMEs to expand operations across markets, creating attractive opportunities for investors too.
Expanding telecommunications networks are facilitating the growth of internet connectivity, mobile money and new digital services that build on it. Mobile money, which facilitates money transfers and payments, is also a growth enabler as it moves into business lending.
Improved internet connectivity is expected to drive the next wave of technological innovation, enabling companies to develop new, digital services for consumers on the continent. By 2025, 3G mobile network coverage is expected to account for 60% of the mobile phone connections.
Progress in road, rail, water transportation projects are improving physical connectivity within and between countries in Africa and driving operational efficiencies. These promise to give businesses access to markets that were previously out of reach. Stronger energy networks will deliver a more reliable supply of electricity, driving efficiencies and reducing business costs.
A changing business landscape
UAE companies with expertise in infrastructure development and emerging technologies are capitalising on Africa’s scaling-up potential and facilitating much-needed expansion of telecommunications networks. The improvements in internet connectivity is spawning a host of digital startups that can access new consumers online. International infrastructure construction companies and operators from China and the GCC have identified opportunities to participate in critical infrastructure development projects in Africa too.
Corporations are fuelling African business expansions, through direct stakes and venture capital funds. Investments by prominent global players, as well as African corporations, prove that blue chip brands still believe in Africa’s growth story. Offering more examples of successful scale-ups in Africa will encourage more investors to seize on the opportunities of the continent.
Gulf investment in the region is concentrated in East Africa, with the UAE leading the charge. The UAE is among the top ten source countries for foreign direct investment in SSA. Gulf investors must work with a longer time horizon in mind in order to benefit from business opportunities that are emerging in the region.
H.E. Hamad Buamim, President and CEO of Dubai Chamber stressed the importance of conducting relevant and informative research and analysis to provide clarity on Africa’s evolving business landscape and identify key sectors offering investment potential for UAE companies, enabling them to make well-informed decisions.
“Today, Africa is among the world’s leading investment destinations, with the continent witnessing massive growth that continues to gain momentum. The findings of the latest report on sub-Sahara Africa complements Dubai Chamber’s efforts to assist and guide our members and other UAE businesses than are keen to enter the African market and benefit from trade and investment potential that the continent offers,” he said.