It is easier to do business in Africa
Jul 16, 2007
ON June 27, Kampala hosted the 2007 Kikonyogo Capital Markets Award and Gerald Mahinda, Group MD East African Breweries gave the keynote speech. Below is the edited version:
ON June 27, Kampala hosted the 2007 Kikonyogo Capital Markets Award and Gerald Mahinda, Group MD East African Breweries gave the keynote speech. Below is the edited version:
DID you know that there were 193 countries in the world and 53 of them are in Africa? Africa’s land mass is greater than the US, Europe and China combined.
Nine hundred million people live in Africa and they speak over 1,000 languages – one estimate puts it closer to 2,000 – and most people speak at least two if not three or four languages.
Africa has four main economic hubs:
North Africa, that includes Egypt, Morocco, Libya and Tunisia is separated from the rest of the continent by the Sahara desert and have economies that are more closely linked with those of the Middle East and Europe than the rest of the continent.
Southern Africa includes Botswana, Namibia and South Africa, which is Africa’s largest economy.
West Africa – that includes Nigeria – which is Africa’s most populous country, with close to 140 million people.
And finally, East Africa, that includes Kenya, Tanzania and Uganda.
Let me focus on countries south of the Sahara, namely sub-Saharan Africa.
Is the time right for sub-Saharan Investment? What do most people think of when you mention Africa?
I think the following would probably spring to mind: wars, famine, disease, conflict, corruption, chaos, HIV/AIDS, military dictatorship, political repression, and so on. In short, a difficult place to do business.
But we think that Africa faces a brighter future. Starting with wars, it is true — at least 22 sub-Saharan African countries or so around half the total – suffered wars during the 1990s. But between 1999 and 2005, the number dropped from 13 to four – allowing governments to focus more on development.
Most wars were civil and in fact there has not been a war between African countries since 2000, when the war between Ethiopia and Eritrea ended.
Turning to military dictatorships, it is true that from the early 1960s to the late 1980s, Africa had more than 70 coups and 13 presidential assassinations. But since then, many countries have been showing strong signs of progress towards democracy.
In 1973, only three African heads of state were democratically elected. Now that figure has risen to above 30 and infamous countries such a Zimbabwe are very much the exception as opposed to the rule, but on that point, I am not making a prediction — but do not write Zimbabwe off just yet. President Robert Mugabe’s elections are scheduled for 2008 and Zimbabwe has the highest adult literacy rate on the continent at 90%.
On HIV/AIDS, it is true – Africa is by far the world’s most affected region and accounts for two-thirds of all people living in the world with HIV and AIDS. It is a pandemic and overall, it is not getting better, but it is increasingly being recognised for what it is and a few countries have had some success in fighting the tide.
For example, Uganda’s policies are credited with helping to bring adult HIV prevalence down from around 15% in the early 1990s to less than 7% in 2005.
In Zambia, government initiatives to provide anti-retroviral drugs appear to be stabilising infection rates. And in Kenya, there are now 350 voluntary testing centres.
So Africa is not an easy place to do business? It is true, but last year the World bank and IFC issued their “Doing Business report 2007†in which Africa moved from the last place to third in the rankings for reforms that encourage new business.
In all, 45 regulatory changes in 30 countries reduced the time, cost and hassle for businesses to comply with legal and administrative requirements.
These included simplified business regulations, strengthened property rights, eased tax burdens and increased access to credit.
So taken as a whole, we think the picture is improving and we believe that a wind of change is blowing across the continent.
The writer is the Group Managing Director, East African Breweries Limited
DID you know that there were 193 countries in the world and 53 of them are in Africa? Africa’s land mass is greater than the US, Europe and China combined.
Nine hundred million people live in Africa and they speak over 1,000 languages – one estimate puts it closer to 2,000 – and most people speak at least two if not three or four languages.
Africa has four main economic hubs:
North Africa, that includes Egypt, Morocco, Libya and Tunisia is separated from the rest of the continent by the Sahara desert and have economies that are more closely linked with those of the Middle East and Europe than the rest of the continent.
Southern Africa includes Botswana, Namibia and South Africa, which is Africa’s largest economy.
West Africa – that includes Nigeria – which is Africa’s most populous country, with close to 140 million people.
And finally, East Africa, that includes Kenya, Tanzania and Uganda.
Let me focus on countries south of the Sahara, namely sub-Saharan Africa.
Is the time right for sub-Saharan Investment? What do most people think of when you mention Africa?
I think the following would probably spring to mind: wars, famine, disease, conflict, corruption, chaos, HIV/AIDS, military dictatorship, political repression, and so on. In short, a difficult place to do business.
But we think that Africa faces a brighter future. Starting with wars, it is true — at least 22 sub-Saharan African countries or so around half the total – suffered wars during the 1990s. But between 1999 and 2005, the number dropped from 13 to four – allowing governments to focus more on development.
Most wars were civil and in fact there has not been a war between African countries since 2000, when the war between Ethiopia and Eritrea ended.
Turning to military dictatorships, it is true that from the early 1960s to the late 1980s, Africa had more than 70 coups and 13 presidential assassinations. But since then, many countries have been showing strong signs of progress towards democracy.
In 1973, only three African heads of state were democratically elected. Now that figure has risen to above 30 and infamous countries such a Zimbabwe are very much the exception as opposed to the rule, but on that point, I am not making a prediction — but do not write Zimbabwe off just yet. President Robert Mugabe’s elections are scheduled for 2008 and Zimbabwe has the highest adult literacy rate on the continent at 90%.
On HIV/AIDS, it is true – Africa is by far the world’s most affected region and accounts for two-thirds of all people living in the world with HIV and AIDS. It is a pandemic and overall, it is not getting better, but it is increasingly being recognised for what it is and a few countries have had some success in fighting the tide.
For example, Uganda’s policies are credited with helping to bring adult HIV prevalence down from around 15% in the early 1990s to less than 7% in 2005.
In Zambia, government initiatives to provide anti-retroviral drugs appear to be stabilising infection rates. And in Kenya, there are now 350 voluntary testing centres.
So Africa is not an easy place to do business? It is true, but last year the World bank and IFC issued their “Doing Business report 2007†in which Africa moved from the last place to third in the rankings for reforms that encourage new business.
In all, 45 regulatory changes in 30 countries reduced the time, cost and hassle for businesses to comply with legal and administrative requirements.
These included simplified business regulations, strengthened property rights, eased tax burdens and increased access to credit.
So taken as a whole, we think the picture is improving and we believe that a wind of change is blowing across the continent.
The writer is the Group Managing Director, East African Breweries Limited