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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Sun May 08 2011 - 13:30:01 EDT
CEO Blog: It's Time for Africa
Published: Sunday, 8 May 2011 | 12:25 PM ET
Brian Herlihy
.....Misperceptions about GDP and growth rates in Sub-Saharan Africa cause
many investors to write off the region. That is a big mistake. Africa has
the third fastest growth rate among regions of the world, and many countries
are experiencing exceptional growth. For example, Ghana has the second
fastest GDP growth in the world at 14%, with Eritrea and Ethiopia ranked
fourth and fifth respectively.....
CEO, SEACOM
Map of Africa
Source: AP Images
_____
Contrary to popular opinion, the best investment bet that you can make in
2011 is in Africa. You wouldn't know it if you turn on a TV or read a
newspaper, since U.S. and European media focus relentlessly on areas of
unrest and instability, but the reports beyond the front page tell a very
different story. Record GDP growth, the rise of homegrown corporations and
increased foreign investment are all evidence of Africa's rapid economic
progress and remarkable potential.
I speak from experience as CEO of <http://www.seacom.mu/> SEACOM. We were
pioneers in bringing broadband access to eastern Africa and we are now
driving the development of an integrated communication culture across the
continent.
Misperceptions about GDP and growth rates in Sub-Saharan Africa cause many
investors to write off the region. That is a big mistake. Africa has the
third fastest growth rate among regions of the world, and many countries are
experiencing exceptional growth. For example, Ghana has the second fastest
GDP growth in the world at 14%, with Eritrea and Ethiopia ranked fourth and
fifth respectively.
Underpinning this growth is an emerging class of corporations expanding
across the continent. A new report,
<http://igdleaders.org/documents/IGD-Dalberg_Pioneers-on-the-Frontier.pdf>
Pioneers on the Frontier: Sub-Saharan Africa's Multinational Corporations,
released this week at the World Economic Forum on Africa in Cape Town,
highlights the success of SEACOM and other African-based companies that are
making their mark across the continent.
The investment community should pay close attention to this new class of
companies spanning a variety of industries. Sub-Saharan Africa's
multinational corporations have firsthand knowledge of local conditions,
which often means the difference between success and failure when doing
business in Africa. They are working more closely with their governments to
accelerate local development and further improve the investment climate.
These corporations can serve as local partners, suppliers, and purchasers of
goods and services, as well as providing solid opportunities for investment.
The expansion of these companies requires a burgeoning financial services
industry, as well as connected exchanges and public debt markets.
To date, these opportunities are being supported by African based financial
services, while being largely ignored by the greater financial markets. To
me, this seems to be an opportunity missed. Many possibilities exist across
the continent where returns outweigh perceived risks, such as mezzanine
rates for senior debt financing.
Our story at SEACOM has been organically African: our debt and equity came
from African markets and our demand is driven by African GSM operators, ISPs
and local telecommunication companies. We've entered new markets by driving
win-win partnerships to collectively grow a nascent data market, replacing a
previous reliance on expensive satellites for bandwidth. And the future
looks bright, as consumer demand is projected to continue rising. The growth
of the middle class has brought Africa to a tipping point, where demand from
consumers with increasing expendable income outstrips the supply of products
and services. This presents a tremendous opportunity for business expansion
and investment.
Of course, Africa is not risk-free: current policy barriers still restrict
expansion in some cases. However, the spread of democracy is gradually
opening up entrepreneurial opportunities and economic integration is
beginning to eliminate barriers to cross-border commerce. Companies entering
Africa now are experiencing the benefits of first-mover advantage including
high profit margins, access to local resources and unfettered brand
recognition.
Over the next decade, Africa is projected to continue experiencing high
growth, greater integration and improved policy environments. Now is the
time for U.S. and European companies to start investing, or they will miss
the wave.
Brian Herlihy is CEO of SEACOM, a Mauritius-based company that provides
communications bandwidth across Africa, and a member of the
<http://www.igdleaders.org/sections/whatwedo/whatwedo_frontier100.asp>
Initiative for Global Development's Frontier 100 network of African, South
Asian, U.S. and European business executives working to increase investment
and reduce poverty in Africa.
C 2011 CNBC.com
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