Article:

Africa Rising: "Today, we have Investment in Africa from Mauritius, by Mauritius and through Mauritius"

27 December 2016

Investor's, Kervin Victor |

What are your feelings concerning business opportunities in Africa?

The business opportunities in Africa are immense but we cannot focus on Africa as it is not one county or one market but 54 markets with different specificities and different opportunities. North Africa is very different from West Africa which is predominantly francophone. Southern Africa has some exciting prospects including South Africa even though there is a political challenge, as it remains a major economic powerhouse.

The East African region offers a multi dimensional prospect as investing in one country can give you access to others. Kenya, Tanzania, Uganda, Rwanda are looked as one market although the investment framework is different and each one has its own characterisitc. Rwanda is smaller but offers stability. Kenya has a dominant private sector which makes it easier to have local partners. On the West Africa, Ivory Coast seems to have rediscovered its attraction as it is emerging as the hub for west African businesses.

The opportunities exist because the economies in Africa are opening up and becoming more investors friendly. The sheer size of the population and the stage of development of the 54 countries create inherent opportunities in each one of them but the interest has to be well evaluated given the investment climate, legal framework and ease of doing business. There are resource rich countries, there are countries which are landlocked, there are countries which are failed states, there are countries where Government is involved in the business environment and others simply unstable or politically challenged. By and large, Agro Business, Retail and Financial Services are areas which seem to be more attractive.

 

What are the key sectors, best investment opportunities for Mauritian operators?  

Mauritian operators are already in the Sugar sector in Kenya, Tanzania, Ivory Coast and are also present in Uganda and Rwanda. There is a certain ease of doing business for Mauritian operators in East Africa given that the rule of law, ease of doing business, strong private sector which makes the region more attractive. In terms of sectors, Agro business, Retail and Financial Services are key areas where growth is likely to come from Real Estate and City Hotels are also areas where the Mauritian “know how”can be exported. It is pleasing to note that the State Bank of Mauritius has announced its footprint in Kenya and BDO is pleased to have been involved with this transaction. I am sure this will bring more businesses into Kenya.

 

Has the Mauritian financial sector finally became the gateway to Africa or is it still an unfulfilled ambition?

Without a doubt. Mauritius is very much the preferred platform for inbound investment into Africa. It is also the preferred platform for African companies investing within Africa. Today we have Investment in Africa from Mauritius, by Mauritius and through Mauritius.

It is gaining even more traction because of the quality of professionals operating the services that Mauritius has to offer: Banking, Legal, Accounting, Administration and even in creative industries like Advertising. We still have a long way to go in making African business a large part of our business but we are definitely on the right track.

We still have to win the logistics battle as this will trigger more trade. At the moment, the business case of investing in some of the countries in Africa is over whelming but there is a limited business case for trading with Africa. This is where the SMEs operate and there is limited success story on that front.

 

What are the barriers to doing business in Africa?

The barriers are industry specifics and country specifics. Mining and Infrastructure are popular areas for large investments in Africa. Both require heavy capital investment and inter action with Government which are important barriers. There is also invisible barrier which is due to local business culture or political aspect of the industry or country. The taxation is an important barrier as rules are not always clear like in Madagascar. The main barriers within Africa remain logistics as access to internal markets by road, rail or air are not always timely and cost effective. In addition, access to and from Africa by air or sea is also an important element in bringing goods to access the relevant market. The country that wins the logistics battle will certain enhance the competitiveness of its operators to trade with Africa.

 

What is the secret recipe to ensure success in Africa?

There is no secret to succeed in Africa. First, one has to understand that investing in Africa requires a clear Strategy. This is not about being opportunistic with a strategy of hope. The underlying reasons for a company to succeed in its home country does not guarantee success when expanding in Africa. Second, Market Knowledge is critical. Major investments needed up front in visiting and evaluating the business opportunity.

There is often hype and a leap of faith when investing in Africa. Investment opportunities need to well evaluated. Third, it requires a high level of due diligence which includes financial, fiscal, legal and political to clearly asses the risk. Fourth, to have the right local partner which has a shared vision and shared values. Fifth, to get the capital structure of the investment right. Sixth, having the right people and finally invest in professionals who have the knowledge of terrain to accompany the investors.