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Africa ripe for SME growth

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Africa ripe for SME growth

Despite the recent prediction by the World Bank that economic growth in sub-Saharan Africa will slow in 2015, the region is still home to one of the fastest-growing middle classes in the world.
As a result, there are vast opportunities on the continent for progressive African entrepreneurs and small and medium enterprises (SMEs) to take advantage of.

Charles Brewer, MD of DHL Express Sub-Saharan Africa (SSA), says one sector providing plentiful prospects is the agricultural industry, which is Africa’s largest economic sector representing 15% of the continent’s total GDP and more than $100-billion per year. “It is estimated that more than 60% of the globe’s available and vacant land is situated in SSA(3), which suggests that the sector still offers incredible growth.”

Another industry seeing significant growth is the banking sector, which has grown extensively over the last decade and has become a substantial player in emerging-market banking. Brewer says that the rising middle class and “unbanked” African consumers should continue to drive the industry. “Other industries experiencing growth and offering prospects on the continent include technology, consumer goods and telecommunications.”

In addition to these thriving industries, Brewer identifies five unexpected ‘boom towns’ and cities that are enjoying growth on the back of these industries, therefore providing opportunities for African businesses:

* Bobo-Dioulasso, Burkina Faso – this second city is blossoming due to substantial growth in the food and agriculture sector. Many small and medium enterprises are setting up factories to locally produce products for both the domestic and export markets, with the main products being fruits, cereals, cotton, vegetable oil, soap and other artisanal products.

* Ebène, Mauritius – this is an up and coming technology hub which, due to its advanced infrastructure and facilities, has attracted many financial institutions and international legal firms.

* Mbarara, Uganda – Mbarara is a growing industrial town 280km from Uganda’s capital Kampala, which is located in the centre of the dairy farming district. As a result of its location, favourable climate and abundant land availability, it has attracted investors involved in the manufacturing of dairy products, as well as breweries and beverage companies expanding to the area.

* Farafenni, the Gambia – situated on the north bank of the Gambia River, about 120km inland from the capital Banjul, the town is home to numerous banks and insurance firms. It is experiencing fast growth mainly due to its geographical location on the main road between Dakar and Casamance (the southern area of Senegal), and its close proximity to the ferry to cross the Gambia River.

* Konza Techno City, Kenya – having just finished its infrastructure phase, the new technology city is situated 60km southeast of Nairobi and will focus on four economic sectors; namely education, life sciences, telecommunications and business process outsourcing. It is predicted to significantly stimulate technology spending, investment and growth in Kenya.