Category: News

East Africa: Unlocking Sustainable Investment Opportunities in the EAC

  • 25th January, 2024
  • 5 min reading

The economic dynamics and investment landscape in east Africa present numerous business opportunities for investors looking to tap into the growth potential of the region. The East African Community (EAC), which comprises Burundi, the Democratic Republic of Congo, Kenya, Rwanda, South Sudan, Tanzania, Uganda, and the newly admitted member Somalia, offers exciting prospects for investments.

According to IMF’s Regional Economic Outlook for 2023, the East African Community (EAC) is on a trajectory of substantial economic growth, with region’s real GDP accelerating to 5.7 percent in 2024. The region will register the highest regional economic performance in Africa in 2024, with growth figures at over 5 percent, according to the African Development Bank’s 2023 East Africa Economic Outlook 

While the substantial growth is not equally distributed among member countries, the remarkable achievements of the Democratic Republic of the Congo and Rwanda, which are projected to grow at 7.2% and 8.0%, respectively, in 2024, according to the African Economic Outlook 2023, are commendable. The Democratic Republic of the Congo and Rwanda are among the world’s highest-growing economies in 2024, according to the World Bank’s report on Global Economic Prospects. For instance, Rwanda’s robust digital infrastructure, renewable energy capacity, and favourable economic and political landscape make it the largest economy in East Africa and a significant player in Sub-Saharan Africa.

The EAC’s development far outpaces the sub-Saharan African average, demonstrating the region’s economic vibrancy and the efficacy of its collaborative policies.

WHY EAC?

Ranked number one in Africa by sub-regional population, EAC boasts assets such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, all of which make the region appealing to investors.

According to a report from Journal Economic Analysis on the attractiveness of the East African Community (EAC) for Foreign Direct Investment, some of the main strengths of the EAC relevant for attracting FDI include fast economic growth, relatively low general government debt, relatively low cost of labour, geographical proximity to regional markets and international markets (special agreements with the EU, US, China, and India), and a high share of young people involved in primary education.

Additionally, the free visa policies of Kenya and Rwanda will substantially bolster economic activities in the tourism sector of the region, enhance regional integration and economic inclusion, and attract global investors to the region.

Another comparative advantage of East Africa is its vast reserves of critical minerals. According to UNCTAD’s Economic Development in Africa Report 2023, Africa is home to 48% of the world’s reserves of cobalt and manganese, 80% of the world’s reserves of phosphate rock, and 92% of the world’s reserves of platinum-group metals, which are critical minerals in the production of electric cars, lithium batteries, and hydrogen batteries. Like other African regions, East Africa is also endowed with a variety of minerals, including fluorspar, titanium, zirconium, gold, oil, gas, cobalt, nickel, diamonds, copper, coal, and iron ore. These mineral deposits offer an opportunity for the region’s mining industry’s development.

Opportunities for Sustainable and Renewable Energy Investment

Apart from the region’s investment potential in agricultural businesses, supported by its nutrient-rich soils and a climate favourable to crop growth, the renewable energy sector in East Africa offers excellent prospects for investors. Investing in renewable energy in East Africa can have great benefits on sustainable socioeconomic development of the region by catalyzing economic growth, supporting job creation for the teaming youth, and improve the livelihoods of people in the region.

According to Africa’s Development Dynamics 2023 report, investments have been a major driver of East Africa’s recent growth; however, their allocation towards social and environmental sustainability remains insufficient. Current investments in sustainable energy are insufficient to meet the region’s energy access needs. While the region’s renewable energy sector has grown, most of its potential for sustainable investments has remained untapped.

For instance, despite East Africa’s diverse renewable energy assets, encompassing vast hydro, wind, solar, and geothermal energy resources, only 4% of greenfield foreign direct investment inflows into the region were directed at renewable energy projects during 2017–2022, compared to 17% for Africa as a whole. One of East Africa’s economic ambitions today is to develop its infrastructure, especially sustainable energy infrastructure.

In a recent development, in recognition of the low level of clean energy in Global South countries, which include east African countries, at the just concluded Davos 2024, the World Economic Forum announced the launch of a new alliance to provide a platform for developing economies like East Africa and other emerging markets to raise awareness about their clean energy needs, share best practices, and sustainably accelerate their energy transitions.

Past investment in the sustainable and renewable energy sector in the region includes the construction of the first solar photovoltaic park in Tanzania with a projected capacity of 150 megawatts, the second largest solar PV plant in East Africa. Kenya’s Power and Lighting Company launched a Last Mile Connectivity campaign, which was financed by the Kenyan Government and the African Development Bank (AfDB) with the aim of providing electricity access to over 300,000 non-commercial households in the first phase, reports

Similarly, Uganda is endowed with renewable energy sources, particularly hydro, biomass, and solar. Biomass accounts for 94 percent of the country’s energy consumption and is followed by hydroelectric.

With investment-appealing features such as political stability, an English-speaking and enterprising workforce, a strategic location, and exceptional natural resources, the region possesses high potential for innovative and sustainable investment to accelerate the uptake of renewable energies and contribute to the productive transformation of the continent. East Africa holds unique potential for renewable energies. The East African region is also seeing a growing interest in the renewable energy sector driven by the high costs of fossil fuels, the need to reduce greenhouse gas emissions, and the challenges of climate change, which make investments in clean yet renewable energy more attractive in the region.

However, ineffective energy regulation, poor energy infrastructure, and unstable macroeconomic conditions, exacerbated by recent global shocks, weigh negatively on investor confidence in most East African countries. Africa’s Development Dynamics 2023 Report noted that suitable and renewable energies are core to East Africa’s goal to expanding access to electricity and clean cooking while supporting entrepreneurship and the region’s productive transformation. At the end of 2020, 49% of the population had access to electricity, and only 14% had access to clean cooking. Nonetheless, innovative enterprises are growing across the region and offer the potential to catalyse more investments in renewable energies and support productive transformation in the region.

According to the United Nations’ Renewable Energy in Africa: Prospects and Limits report, Africa has substantial new and renewable energy resources, most of which are under-exploited. Countries in the region have significant potential for renewable energy, particularly hydropower, solar, and wind. The report noted that only about 7% of Africa’s enormous hydropower potential has been harnessed. Existing estimates of hydro potential do not include small, mini, and micro hydro opportunities, which are also significant. Geothermal energy potential stands at 9000 MW, but only about 60 MW has been exploited in Kenya. Based on the limited initiatives that have been undertaken to date, renewable energy technologies (RETs) could contribute significantly to the development of the energy sector in eastern African countries. Renewable energy technologies (RETs) provide attractive, environmentally sound technology options for Africa’s electricity industry.

In the build-up to the UK-African Summit scheduled to take place in April 2024, UK and Rwandan business leaders, investors, and senior government officials will converge in Kigali from January 29 to 31, for the inaugural UK-Rwanda Business Forum, a Pre-event for the UK-African Investment Summit, to discuss business and investment opportunities in Rwanda and, by extension, the East African region. It is hoped that the forum will attract high-quality British investment in sustainable, yet renewable, energy to the region and further open opportunities for new investments from other parts of the world to East Africa.

As a leading African trade and investment firm focused on guiding existing and potential firms in Africa on their ESG and sustainability investments in Africa, our network of experts on the ground in east Africa can guide you in successfully exploring the untapped potential in the region. From Kenya, Rwanda, the DR Congo, and other countries in the region and across the continent, our experience and expertise will help your organisation successfully navigate the complexities of the East African market.

Image by ASphotofamily on Freepik

Exploring Opportunities in the African Market: Key Considerations

  • 12th January, 2024
  • 3 min reading

Recently, while sharing valuable tips on mastering adaptability in entrepreneurship and navigating career transitions on the BLACK RISE Podcast Series with Flavilla Fongang, ETK Managing Director Bolajo Sofoluwe emphasised that success is a marathon, not a sprint.

The same could be said about doing business in Africa. If you are a company trying to enter the African market in 2024, our advice to ‘newbies’ is to treat doing business in Africa as a marathon, not a sprint.

Do you need a crash course on entering the African market? Our FREE Market Entry Guide will teach you all you need to know, from picking the right partners to selecting the suitable market for your product and service, promotion, and finding your African client base.

Doing business in Africa is a marathon; if you aren’t physically fit, don’t start. African marketplaces require a significant amount of discipline, attention, time, and investment. The goal is to cross the finish line, and whether you’re first or last, the real achievement is getting started and earning the “medal” of success.

Before you get started, it’s crucial to outline your market entry objectives when considering expansion and entry into the vibrant African markets. Whether you’re eyeing Nigeria, Ghana, Kenya, South Africa, or any other country on the continent, consider these key points:

Business Objectives for Africa Expansion
It is critical to define your African expansion goals and how success will be judged. Set precise targets to help you track your development and measure your triumphs as a starting point. Measuring progress and determining whether your strategy is performing as anticipated can be challenging without clearly defined targets. This must be in line with the goals of your firm. For example, if you are expanding into a new African market like Ghana, your objectives could include increasing your customer base, increasing revenue, or enhancing brand visibility.

Understand your Sales Value or Volume
Rather than monetary profit, your targeted sales volume reflects the quantity of products you need to sell in your chosen African market. While it may appear that sales volume is less essential, this is not true. Africa’s growing population presents significant prospects for retail and distribution expansion. As a result, your sales volume is an important sign of the health of your African business. It enables you to monitor the effectiveness of marketing initiatives, assess the efforts of sales personnel, and select the ideal sites for real stores.

Identify Relevant Product or Service
If you have considered direct sales or exporting as your main entry options into your chosen African market, the overall success of your export business in Africa will depend strongly on the products and markets you have chosen to export to.
The right market can give you a competitive advantage and the chance to expand your business. On the other hand, picking the wrong market can lead to low sales, higher expenses, and legal difficulties.

Define your Target Market or Markets
When expanding into Africa, one of the major areas to consider is market size. While most African countries can boast of a sizeable population, a market worth targeting should be sizeable enough to be profitable, have growth potential, not already be swamped by competitors, be accessible, and fit with your firm’s mission and objectives.

Allocating Resources for Project Success
Funds and resources play a vital role in the success of your expansion into African markets. You might have a great idea to compete in the sustainable energy market in Africa. However, it is a business that is capital-intensive. What this means is that you will either need a lot of money or must be able to raise funds. The question then is: does your organisation have the resources to do business in Africa?

Is your business eyeing economic opportunities in Africa? Our team of African business expansion experts is ready to guide you in achieving your African market entry goals.

Fascinating Insight into ETK Clients’ Profile

  • 5th January, 2024
  • 3 min reading

A warm welcome to 2024! As we begin yet another remarkable year, it’s a moment for us to reflect on the distinctive characteristics of the businesses that placed their trust in our services throughout 2023. To offer a fascinating insight into our customer base, we’ve taken the opportunity to categorise them.

Join us as we explore the diverse and prevalent categories of clients that ETK Group had the privilege to collaborate with in 2023.

1) Enterprise Catalysts for Growth (ECG)

These risk-takers are major contributors to economic growth in Sub-Saharan Africa. They are energetic business owners with a strong desire to succeed. They have strong managerial and ownership control over a huge portion of African enterprises and are responsible for an estimated 80% of jobs on the continent. Despite the continent’s current economic predicament, this set of clients continues to strive for the top. Their business goal is to become more structured and to develop their businesses into scalable African enterprises. They ensure that their teams have the appropriate competencies across a range of functional areas with our bespoke organisational transformation and capacity-building solution for African MSMEs.

2) The Market Frontier Navigators (MFN)

This clientele consists of daring risk-takers who have had success in other markets or have gotten it right with their products and services on other continents. They, like the three wise men, have heard of Africa’s immense potential and are eager to capitalise on it. However, they are hampered by a lack of advice and knowledge about African markets. They frequently come to us for guidance on how to strategically marshal each market on the continent. Our team of professionals assists them through the market entry process, giving assistance, insights, and research to ensure their success on the continent.

3) The Impact Development Partners (IDP)

This group of clients is less concerned with profit and more concerned with the well-being of their host communities. Non-profit companies, development institutes, foundations, and charities are looking for highly qualified individuals to implement, manage, and oversee their projects in Africa. They are looking for progress partners who might be their third eye on their impact projects in Africa. Our team of Africa-based consultants got to work, providing monitoring, evaluation, and reporting services to maximise the success of their impact investments in Africa through our project management and implementation services.

4) The Global Expansion Pioneers (GEP)

These are resilient enterprises that weathered the storm, mastered the skill of doing business in a specific African country’s market, and gathered sufficient expertise to establish, maintain, and expand their operations in the dynamic marketplace of the continent. They embody the potential to drive economic advancement and make meaningful contributions to Africa. These clients face the challenge of extending their thriving local operations to new markets within Africa or across other continents. They’ve successfully ventured into markets not only in Africa but also in the United Kingdom, Europe, and various other continents by leveraging our state-of-the-art market expansion solutions, and they are eager to explore additional markets.

5) The Enterprise Stewards for Global Success (ESGS)

These customers come to us for long-term, in-person management of their enterprises. These clients are MSMEs, family-run businesses in a range of sectors, who have worked hard to manage and scale to a desirable level within Africa’s difficult business climate, attain their full potential, and attract investors. These companies have achieved success and sustainability by investing sweat, equity, and personal finances to ensure that they not only survive but thrive. However, for various reasons, they must ‘japa’ to other regions of the world but do not want to abandon their businesses. These clients are confident in the viability of their enterprises but are unsure who to turn to. We ensure the stability, success, and security of their businesses throughout their extended absences by providing managed business services. We collaborate with them to provide additional layers of management to ensure that these enterprises’ high standards are maintained throughout their ‘staycation’ abroad. This enables them to continue focusing on providing outstanding service to their clients and consumers while remaining profitable.

As experts in assisting businesses to expand and scale, we are committed to delivering a variety of business support services aimed at assisting Africa-focused businesses and organisations to achieve their objectives. Whether it’s entering a new African market, expanding into other African markets, strengthening institutional capacities, providing trade support services, or managing environmental, social, and governance (ESG) activities in Africa, our services have been proven to help our clients achieve their goals.

Regardless of where your company is on the growth curve, ETK can provide insights to guarantee that your targets and goals are met.

Ready to increase your business success in Africa? Let our expert consulting services be the catalyst for your success. Contact us today, and let’s embark on a journey of innovation, growth, and unparalleled achievements together in 2024.

Key Topics from COP28: An African Perspective

  • 2nd December, 2023
  • 5 min reading

COP28: What to expect from this year’s annual gathering on climate change by Brent Barnette

As sure as December brings Mariah Carey, for the last few years, it has also meant that world leaders, climate activists, journalists, business leaders, civil society organisations, representatives from NGOs, and interested members of the public once again gather for another COP. And while all Mariah wants for Christmas is you, climate activists and world leaders, particularly those from Africa and the global south, are hoping for meaningful progress on the UN agenda for dealing with the threats and challenges brought about by climate change. With the objective of limiting global warming to 1.5 degrees Celsius above pre-industrial levels slipping out of reach, the push for financing meaningful support for the most affected and vulnerable communities is gaining greater urgency. 

For better or worse, COP is where the world comes together to try and agree on ways to address the climate crisis and meet the goals set out in the Paris Climate Accord. The 28th COP this year is being held in Dubai in the United Arab Emirates, and the parties will be hoping to find consensus on solutions to the many challenges facing the global community as the planet experiences year after year of ever-hotter temperatures. 

The COP agenda

As at past COPs, the agenda this year focuses heavily on the development of technology solutions to help reduce carbon emissions, the financing of those solutions, and the financing of adaptive approaches to help those most affected by climate change address the after-effects of climate-induced disasters and disruptions.   

The 2023 agenda is organised around 32 thematic areas over 12 days. The themes included are broadly outlined below (with some of the specific themes from COP28 in parentheses): 

  • Fostering solutions to address climate change (Innovation and Entrepreneurship; Climatetech Ecosystem Building; Technology for Climate) 
  • Creating adaptive solutions for impacted communities (Children; Gender and Inclusion; Youth; Industry / Just Transition / Indigenous People) 
  • Financing the transition to a sustainable future (Finance; Finance / Trade / Gender Equality / Accountability) 
  • Systemic challenges resulting from climate change (Education and Skills; Energy; Food; Agriculture and Water; Land Use and Oceans; Multi-Level Action; Nature; Relief, Recovery & Peace; Trade; Transport; Health). 

One of the key objectives for this year’s COP will be to resolve details around the implementation of carbon offset schemes as laid out in Article 6 of the Paris Agreement. Another key objective will be securing the necessary financing for the Loss & Damage Fund, which was agreed to last year at COP27 in Sharm El Sheikh, Egypt. 

This year also includes a global stocktake of how well individual countries are doing in meeting their commitments to reducing greenhouse gas emissions. The stocktake is a mechanism for assessing global progress towards achieving the emissions reduction goals as set out in the Paris Climate Accord. The current stocktake (which is also the first) began in 2021 in Glasgow at COP26 and is set to conclude this year at COP28. 

Why this is so important

If the goal of limiting temperature rises to 1.5 degrees Celsius is to be achieved, carbon emissions must be cut by 43% from 2019 levels by 2030. That means cutting CO2 emissions from 2019 levels of roughly 33.2 gigatonnes per year to 18.9 gigatonnes per year by 2030. At current growth rates, by 2030 we will be emitting closer to 50 gigatonnes of CO2 per year. Reversing current trends is crucial if the planet is to avoid a worst-case scenario of a greater than 2 degrees Celsius increase in global temperatures. 

Country representatives during the endorsement of the UAE Declaration on Climate Health at COP28. Image source: cop28.com

Climate change in Africa has arrived

Reducing carbon emissions and working towards a net-zero future are essential goals in order to ward off the worst effects of climate change. However, many of the impacts of a warming planet are already evident in the increasing climate disasters witnessed around the world over the past few years. Africa has been particularly hard hit. Of the 30 deadliest climate disasters recorded since record-keeping began in 1900, six have occurred since 2022. These include: 

Improvements in scientific techniques have made it possible to directly link any particular climate event to changes resulting from human-caused climate change. This new area of study is called attribution science. Since 2000, anthropogenic climate change has been directly linked by scientific attribution studies to more than 20 extreme weather events in Africa, including 13 droughts, seven floods, and two heat waves. 

COP28 and the African agenda

Africa is represented at all of the COP proceedings by a group called the African Group of Negotiators, or the AGN, which is currently chaired by Zambia. The AGN speaks collectively on behalf of Africa, arguing for climate justice, a just energy transition, and adequate funding to help the continent deal with the impacts of a changing climate. While Africa is responsible for less than 5 percent of global greenhouse gas emissions, the continent is disproportionately impacted by the effects of climate change. Some of the areas that will be covered from a specifically African perspective during the scheduled COP proceedings include the following:

  • Greater use of blended finance to support sustainability initiatives in key sectors such as energy, agriculture, water, and sanitation. There are untapped resources available for sustainable development financing, but to date these resources are underutilised. What can be done to mobilise this capital?  
  • The Africa Green Industrialisation event will be jointly hosted by the COP28 Presidency and the Government of Kenya. This event looks to highlight the implementation of the Nairobi Declaration and the UAE-led investment of $4.5 billion in the green industrialisation of Africa. The objective is to look for opportunities for green industrialisation, showcase successful renewable energy projects, and propel Africa towards a carbon-neutral future. 
  • The African carbon market story is a Heads of State event that will launch Carbon Market Activation Plans for Ghana, Rwanda, Nigeria, Mozambique, and Malawi to develop carbon markets in these countries. 

In addition to these events, a key area of discussion from an African perspective will be what it means to achieve a just energy transition. This is seen as an essential element in the ongoing economic development of Africa, allowing governments to lift people out of poverty and to provide electricity and reliable sources of energy for cooking. In practice, what this means is allowing for the continued exploitation of carbon-based sources of energy and for oil-producing states to continue to invest in oil exploration and extraction activities. Proponents of this approach say that it allows African economies to replicate the industrialisation process that allowed advanced economies to grow and prosper. Critics say it dangerously extends the timeline for achieving net-zero emissions targets and diverts investment away from renewables and other sustainable sources of growth. 

Endorsers of the COP28 UAE Declaration on Climate, Relief, Recovery, and Peace. Image Source: cop28.com

In conclusion: What all this means

Many world leaders have converged in Dubai with fresh reminders of the costs and impacts of climate change on their countries back home. African leaders will arrive to the talks with especially recent events in mind and will want to ensure that the countries most responsible for creating the climate crisis pay a fair share of the costs of helping those most affected deal with the impacts. 

Indeed, who foots the bill for what is probably the simplest summary of all the various discussions that will be taking place. Beyond paying for the costs of recovery, the mechanisms of financing the transition to a sustainable future will also be very much on the table for discussion. Whether there are disagreements over how to fund a just energy transition, financing the shift to a more sustainable industrialised future, or unlocking blended forms of financing to help pay for all of this, the question of who pays will no doubt dominate the talks. 

As the world continues to warm at an alarmingly rapid rate and as the very real impacts of climate change continue to disproportionately affect those least able to adapt, the imperative to find solutions—and to pay for them—gets greater every day.

About the Author.

Brent Barnette is a Director at ETK. He leads on our climate change agenda and in the development of service offerings to help clients pursue sustainable growth strategies, including the development of an African-focused ESG reporting framework. He writes on topics of climate change and economic growth and is passionate about creating solutions to address the problems caused by climate change in the global south.

Is Lagos ready to be a powerhouse in its own right?

  • 23rd November, 2023
  • 4 min reading

Lagos means different things to different people across the world. To some, it is the heartbeat of Africa’s economy, the place where everything in Africa goes to ‘ make it’. At the same time, others see it as a missed opportunity to be more than what it currently is. We can offer many other descriptions of what Lagos is, but one thing most people will agree on is that Lagos is unlike anywhere else in the world.

Lagos is Nigeria’s biggest economy and is responsible for around 20 percent of the country’s gross domestic product (GDP). If Lagos were a country on its own, it would be in the top 10 economies in Africa. Lagos is Nigeria’s commercial capital and is known for its high energy and vibrancy, with a significant influence on commerce, entertainment, technology, education, politics, tourism, art, and fashion across the continent.

This year, Lagos was featured as the first African representative in the 800-year-old Lord Mayor’s Show in London, with organisers saying Lagos was invited to participate in the London procession because of the state’s “growing economic prominence.” Lagos Governor, Mr. Babajide Sanwo-Olu, said his state’s participation was an invitation to the world to explore “the myriad of opportunities” available in Lagos. “Lagos isn’t just open for business—it’s open for transformative, groundbreaking projects that shape the future,” he added.

For context, the Lord Mayor’s Show is one of the most iconic events in London. It is an annual ceremony that dates back to the 13th century, and it is held to mark the first day in office of the Lord Mayor of the City of London (not to be confused with the Mayor of London, who has a complementary but very different role). The event is the ceremonial procession from Guildhall (the ceremonial and administrative centre of the City of London) to the Royal Courts of Justice, where the new Lord Mayor swears allegiance to The Crown. Basically, it is a big deal, and it is used as an opportunity to spotlight interests, investments, and partnership opportunities within the city and further afield.

For Lagos to be on this platform as a standalone entity and for the accompanying messages to follow suggests an intentional attempt to push a strategic narrative about Lagos as a powerhouse in its own right. Historically, the story of Lagos has been embedded in the wider Nigerian story. So this Lagos-specific narrative represents one of the most significant global showcases of Lagos in recent times.

It is not uncommon for cities and states to pursue their own interests. Cities like Paris and New York are known to have their own unique narratives that are independent of the wider narratives of the countries they represent. Incidentally (or perhaps intentionally), The Lord Mayor plays a key role in ensuring that the City of London remains a global hub for finance and professional services, commerce, and culture. Perhaps Lagos is making a play to be mentioned in the same breath as these cities?

Also, when you consider that Nigeria’s new President Bola Ahmed Tinubu (from the same political party as the Lagos state governor) has made a lot of consistent noise about his desire to open Nigeria to increased foreign investment, the message that the country’s biggest economy and shining light is open for business can be seen as a call to action for global investors.

However you look at it, there is no shortage of opportunity in Lagos. There is also no shortage of challenges and hindrances to success. For Lagos to truly fulfill its potential, it will need more than international spotlighting. It will need to address some of its well-documented challenges, including those listed below.

  • Infrastructure deficits: Nigeria’s infrastructure, in general, is underdeveloped, which can make it difficult to transport goods and services. Lagos State will need to make significant progress on this front to make it easier for investors to come in. Otherwise, the cost of developing their own infrastructure, such as generators and water pumps, may become a hindrance to potential investors.
  • Currency volatility: The Nigerian naira is volatile, which can make it difficult to predict returns on investments. This exposes investors to undue currency risk and can also be a hindrance to making any significant long-term commitments.
  • High taxes: Nigeria has a high corporate tax rate, which can make it difficult for businesses to make a profit. The head of a tax reform committee set up by the new administration recently announced that the new regime is aiming to reduce the number of taxes levied by federal and state governments from more than 60 to fewer than 10. This would be a very helpful development if it happens.
  • Lack of skilled labour: While Lagos fares better than most of Nigeria, the shortage of skilled labour makes it difficult to find qualified workers. For companies looking to succeed and grow in Lagos, they have to spend the required time properly vetting candidates to be hired and prioritise getting referrals from their professional network to find the right talent.

Despite these challenges, Lagos still represents a very exciting and promising prospect. With a rapidly growing population, a burgeoning middle class, and a strategic location in West Africa, Lagos presents an attractive landscape for investors seeking high-growth opportunities.

  • Real Estate: Real estate remains a cornerstone of investment in Lagos, driven by urbanisation, population growth, and increasing demand for housing and commercial spaces. Investing in residential properties in high-growth areas like Lekki, Ibeju-Lekki, and Ajah can yield substantial returns over time. Commercial real estate, including office spaces, retail spaces, and warehouses, also offers lucrative prospects due to Lagos’s thriving business environment.
  • Technology and Innovation: Lagos has emerged as a hub for technology startups and innovation, driven by a young, tech-savvy population and a supportive entrepreneurial ecosystem. Investing in tech startups or innovation hubs can provide access to high-growth opportunities in areas such as fintech, e-commerce, and agritech.
  • Infrastructure and Construction: As Lagos continues to expand, investments in infrastructure development, including road construction, housing developments, and commercial complexes, can be profitable. The government’s commitment to infrastructure projects creates opportunities for private sector involvement in financing and construction.
  • Agribusiness and Agriculture: While Lagos is an urban centre, there are significant opportunities for agricultural investments in the state’s rural areas. Poultry farming, fish farming, and agribusiness in areas like Epe and Ikorodu offer promising avenues for investors seeking exposure to the growing food and agriculture sectors.
  • Tourism and Hospitality: Lagos’s vibrant culture, diverse attractions, and growing tourism industry present opportunities for investment in hotels, serviced apartments, and short-term rentals. Areas like Victoria Island, Ikoyi, Lekki, and Ibeju-Lekki are particularly attractive for hospitality investments due to their high tourist traffic and demand for accommodation.

There are so many other opportunities that make Lagos attractive and validate what seems like a push to establish itself as a global powerhouse in its own right. However, without the issues being addressed, the conversation about unfulfilled potential may linger for longer than Lagos State’s leadership may desire.

Images Source: Voice of Nigeria https://bit.ly/3Rdh3Qb and Nupo Deyon Daniel on Unsplash

Global Gender Gap: Encouraging More Women in Senior Positions

  • 22nd November, 2023
  • < 1 min reading

The benefits of a diverse workforce are increasingly evident, as more women have joined the global workforce in recent years. This shift is also reflected in the changing landscape of women’s senior leadership roles.

According to the World Economic Forum’s Global Gender Gap Report 2022, there has been a steady global increase in women’s share of senior and leadership roles over the past five years (2017–2022). The global gender parity for this category has reached 42.7%, the highest gender parity score recorded. Despite this progress, women hold less than a third of leadership positions worldwide.

In a recent interview with BBC News, Bolaji Sofoluwe, our Group Managing Director, stressed the significance of “more women going for senior positions.”

Bolaji, recognized on Power Media’s Black Powerlist 2024 as one of Britain’s 100 Most Influential Black People, discussed the importance of having “women who look like me in the boardroom.”

She shared insights into her various roles, including being the chairwoman of a women’s forum, chairwoman of BGEN International , and a mentor at the UK Research and Innovation

You can read the full interview here: https://bbc.in/49MRcpu

Economic Comeback: Sub-Saharan Africa anticipates a 4.0% growth surge in 2024, says IMF

  • 26th October, 2023
  • 2 min reading

Sub-Saharan African countries have faced yet another difficult year in 2023. For a region still recovering from the COVID-19 pandemic and inflationary shocks from Russia’s war in Ukraine, which have resulted in higher interest rates and lower demand, economic growth is expected to be slow. According to the International Monetary Fund (IMF), Africa’s growth rate in 2023 is predicted to be 3.3 percent.

However, there is reason to be optimistic, with the IMF Regional Economic Outlook for Sub-Saharan Africa projecting a rebound to 4.0 percent in 2024, with growth picking up in four-fifths of Sub-Saharan Africa’s countries and strong performances in non-resource-intensive countries. Africa’s macroeconomic imbalances are also improving, owing mostly to lower inflation and more sustainable uses of public finances.

Is it time to celebrate?

While the projection calls for some sort of celebration, the IMF has cautioned that growth is not inevitable because obstacles such as financial constraints, higher debt payback costs, and expensive debt servicing remain.

The IMF suggests that Sub-Saharan African nations could delay the predicted economic rebound due to a slowdown in their reform efforts, rising political instability, or external risks that might harm growth potential. To achieve the anticipated increase, the IMF has proposed four policy actions.

Managing inflation: To start with, inflation remains in the double digits for 14 African countries, which is far higher than the target in most countries. Addressing inflation in countries where inflation is firmly on track to target levels may be required, whereas monetary tightening may be required in nations where inflation is growing until there are clear indicators that inflation is dropping.

Managing exchange rate volatility: Exchange rate fluctuations remain a major concern across Africa, causing significant challenges for businesses in the region. The IMF has proposed aligning monetary policy demands with the anchor country in order to maintain external stability and avoid further reserve losses. Currency movements in countries with floating exchange rates should be allowed to adjust as much as feasible, because efforts to block fundamental-based movements come at a high cost. Other policy measures, such as tighter monetary policy to keep inflation under control and structural changes to enhance the export industry, should accompany the adjustment, according to the IMF.

Debt management and prudent spending: Debt management while making room for development spending African countries’ debt risks are increasing. Borrowing rates are still high, and rolling over debt is a burden for African countries, with half of the region’s low-income countries at high risk or in economic crisis. Effective domestic income mobilisation, a deliberate approach to expenditure, careful borrowing, and debt restructuring may also be required.

Raising living standards, especially in resource-rich countries: while the recovery is underway, economic disparities within the area are expanding, with per capita incomes in resource-intensive economies remaining subdued. According to the research, increasing income per capita through structural reforms such as strategic investment in education, better natural resource management, improved business, and a true commitment to trade integration will guarantee the growth projection, according to the IMF.

To ensure that the coming rebound is more than a passing fad, African countries must heed the cautions of the global finance agency in that economic stabilising policies are put in place while focusing on reforms that address the region’s development needs.

Photo by Douglas Bagg  and Joecalih on Unsplash

UK-Francophone Trade – the perfect time for a win-win partnership?

  • 24th October, 2023
  • 3 min reading

On October 18, 2023, the second edition of the UK-Francophone West and Central Africa Trade and Investment Forum was held at the IET Savoy in London. The event was organised by UK Export Finance (UKEF), the UK’s export credit agency, and DMA Invest, and it brought together prominent representatives from Benin, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo, Guinea, Senegal, and Togo to discuss new trade and investment opportunities with their UK counterparts.

The event included a variety of discussions that focused on the UK’s offer to Francophone West and Central Africa, its strength and depth, women and youth development, de-risking and mobilising private capital to drive growth, and various opportunities across sectors and countries. The event’s purpose was clear: the United Kingdom was making a huge pitch to Francophone West and Central Africa, and the region was open for business.

Speaking ahead of the event, the UK’s International Trade Minister, Nigel Huddleston, intimated that “West and Central Africa is a huge investment opportunity for the UK”. He added that “the Francophone markets have a clear vision for delivering economic growth and prosperity, and the UK is ready to support those countries by building long-term, modern partnerships that are mutually beneficial.”

Many people might raise an eyebrow at a trade relationship between the United Kingdom and Francophone West and Central Africa. However, in light of current world developments, the timing of these discussions makes more sense. On the one hand, the desire from Francophone African countries to seek additional economic and political allies outside of France has grown in recent years. The French continue to be the de facto partner for the majority of Francophone countries, but there appears to be a greater demand for other partners these days. In contrast, post-Brexit Britain is looking to create new relationships to drive economic growth. In contrast, post-Brexit Britain is looking to create new relationships to drive economic growth. The UK has also set an ambitious objective of £1 trillion in exports by the end of the decade, which will necessitate finding new markets to sell goods and services in.

A deeper examination of trading and investment flows reveals a potentially win-win situation. For example, of the £5 billion invested in Africa by UK Export Finance in the last five years, £700 million has gone to Francophone West and Central Africa. Various Francophone African countries have also achieved tariff-free and quota-free market access for crops such as bananas and sweetcorn, offering an effective route-to-market for African agricultural exports in the UK.

At the same time, economic growth in the eight-member West African Economic and Monetary Union is projected to rise to 7% this year as many of the countries recover from the shock of the Russia-Ukraine crisis. When you consider the United Kingdom’s experience in other regions of Africa, as well as the continent’s much-reported increasing middle class, establishing a trading connection that covers the continent makes a lot of sense.

It is also worth noting that there has been a big push (driven by African countries) to transition the continent towards greater industrialisation. The African continent as a whole has developed a reputation as a destination for raw materials that are typically traded with other countries for various stages of refinement and value addition. In many cases, these refined raw materials are then sold back to the continent. However, this narrative is beginning to change, with increasing investment in local processing and refinement facilities on the continent. There has also been significant growth in the continent’s financial services and creative industries, offering significant trading and investment opportunities.

The necessity for successful collaboration, rather than the old “we will build it for you” approach that hasn’t served Africa’s interests well over the years, was a frequent topic throughout the keynotes and fireside chats. Several delegates consistently stated that only a collaborative effort will result in a win-win outcome for all stakeholders.

Another recurring topic was the necessity for reliable partners on the ground to support project delivery. According to the conversations during the event, there was definitely a desire for UK companies to investigate the Francophone West and Central Africa region, and the region was also open. However, because this is a new relationship, some resources will need to be committed in creating the essential trust and confidence on both sides before everyone can transact efficiently.

If the meetings in the foyer are any indication, it is safe to believe that the event is already producing results. It should be noted, however, that this is not the first conversation regarding opportunities in Africa. Many of these occurrences have occurred over time. What is frequently lacking is the essential work and commitment to turn these opportunities into jobs and other tangible realities. As previously stated, for this cooperation to thrive, it must be mutually beneficial, based on respect, and take into account what the respective countries want and need.

Unlocking the African Market: 6 Key Strategies for Success

  • 20th October, 2023
  • 3 min reading
Diving into the vibrant African market?

Here are some essential tips to pave your way into this diverse continent with a growing middle class and an abundance of untapped potential.

Embrace Cultural Diversity:

Africa, the world’s second-largest continent by area and population, is unique with national and regional differences.

With this kind of diversity, it’s understandable that each African country also has its own unique identity, culture, and way of life. Although Africans have diverse cultures, they share common ground.

By taking the time to immerse yourself in the local culture and learn about their day-to-day #business practices and business etiquette, you can overcome some of the challenges that are faced when expanding into Africa.

Find Your Niche:

Finding the correct target market for your products or services is the key to effective African market expansion. Africa’s growing economies provide great potential for B2B and B2C expansion.

With around 1.3 billion consumers now and an anticipated increase to 1.7 billion by 2030, the future of retail and consumer spending seems promising. However, African income levels have not been increasing at a steady rate since household expenditure on the continent has remained largely static.

While studies demonstrate that African consumers are sophisticated and loyal to brands, the vast bulk of consumer purchasing on the continent currently occurs in informal, roadside marketplaces, even in countries with well-developed retail and distribution industries.

A well-defined niche in Africa will benefit from less competition and will produce significant commercial growth while using fewer resources.

Phase Your Entry:

Market expansion can be a daunting task; doing things carefully and strategically is essential. When entering new markets, and not just Africa, you may as well test the waters with one foot. Rather than incurring the risk of fully establishing a company, developing strategic alliances with local enterprises that are already taking the risk and navigating the market can be a wonderful strategy with fewer risks. Consider a staged approach to entering the African market.

This will allow you to adapt and alter as needed, as well as test different ideas and approaches before committing to setting up in a specific location.

Leverage Import-Export Opportunities:

When considering expanding your business in Africa, you have several options available to you, each with its own set of advantages and problems. From marketplaces to local sales reps, local branches, subsidiaries, or joint ventures, there is something for everyone.

Similar to how businesses in other markets search to export or import from different markets, #African businesses look for strategic import-export prospects both within and outside the continent. Strategic collaborations can give your product or service access to new markets, such as Africa, as well as shared expertise and reduced resource expansion.

Establish Local Roots:

Having a solid local presence and focusing on your expertise can give you the confidence to extend your company into African markets. Local knowledge can assist businesses in better understanding the legal and regulatory environments of emerging markets, such as Africa.

African countries, like the United Kingdom, Europe, and the United States, have legal systems. What is legal in the United Kingdom may be illegal or strongly regulated in another country. Businesses that lack local knowledge may find themselves in violation of these restrictions, which can result in large penalties and legal action. Having local experience in the form of legal advice or #consultants can thus be quite beneficial in assuring compliance with local laws and regulations.

Harness the Power of Connections:

In the dynamic African market, relationships matter. Building strong ties not only keeps you ahead but also streamlines your supply chain and product availability. Cultivate these connections to stay competitive and enhance your market penetration. Cultivate these connections to stay competitive and enhance your market penetration.

Remember, the African market is as diverse as it is promising. Embrace your uniqueness, find your niche, and nurture relationships—these are the building blocks for your success. Here’s to thriving in the heart of Africa!

Photo by kurt arendse and  pius quainoo on Unsplash