Now is the time to stop dithering on Africa

Aug. 22, 2011 - PRLog -- Africa is the new frontier. Investors of all kind – strategic and financial – must have an Africa strategy or risk becoming spectators in a new wave of emerging opportunities.

Africa’s opportunities are fueled by improved macro-economic stability, tangible social development and renewed political reform. Estimates from the African Development Bank show that over 300 million Africans (about 30% of the population) now fall within the middle-class bracket, driving an increase in demand for consumer goods, products and services.

This means new revenue potentials for companies and financial institutions that are committed to Africa. For organizations that are dithering on the sidelines, here are some recent events that should spur some action.

Private equity firm Helios Investment Partners closed a $900 million Africa fund. Helios plans to pursue business formations and leveraged buyouts across high growth sectors that include, financial services, power and utilities, consumer goods and telecommunications.

Visa purchased Fundamo, a South African mobile payments company for $110 million, validating the continent as an epicenter for the next wave of mobile payments opportunities. Fundamo currently has 5 million registered subscribers and has the potential to reach more than 180 million.

There are clear indications that Africa is positioned to lead the global mobile payments revolution. The continent has the fastest growth rates of mobile phone markets in the world, with industry estimates at more than 500 million mobile phone subscribers. Africa is now creating financial solutions that depend on mobile phone platforms, offering services to remote areas where conventional banks have been physically absent.

The Central Bank of Nigeria recently issued licenses to mobile money operators to carry out pilot programs for a mobile financial services system, while Kenya's M-Pesa mobile money now services more than 13 million Kenyans using their phones to pay for goods, access cash from ATMs, receive payments and hold savings.

Investors are pursuing higher returns in Africa. This was demonstrated in the over-subscription of Nigeria’s $500 million Eurobond, a strong showing of investor confidence in the country’s direction and in its leadership under President Goodluck Jonathan. Nigeria’s desperate need for infrastructure development will continue to attract foreign direct investment and create jobs that strengthen the middle class.

This trend is echoed in IBM’s recent assessment - "There is a very intense focus on Africa. There are growth opportunities in the banking sector, public sector and telecommunications.“

Even Walmart is shopping in Africa. Coming out of a 12–year pause on large ticket M&A purchases, the retail giant wrote a $2.4B check to buy 51% of South Africa’s Massmart, which operates 300 stores in 14 countries. This provides Walmart with an untapped growth market, that includes Sub-Saharan Africa, and delivers over 1 billion consumers to the mass retailer.

It is no wonder that major financial institutions and investors are making the move into Africa. Citigroup has announced plans to expand into three African countries, Barclays has decided that it now makes sense to locate its Africa office in Africa, JP Morgan and BNP Paribas will be opening offices in Lagos, Nigeria, and private equity firm Carlyle Group is raising a $500 million fund to target Sub-Saharan Africa in addition to opening an office in the region.

This train is on a roll. Gone are the days of organizations not having a plan for Africa - a strategy is required - and for organizations that do not plan to enter Africa, the strategic question is: how will you respond to your competitor’s successes in Africa?

Otto Abasi Williams is the publisher of Africa Finance Daily - The #1 Daily News Source for Africa's Strategic and Financial Investors - http://www.africafinancedaily.com.  He leads strategic business planning for US and Global banks at Visa joint venture, Syncada from Visa. Otto has held prior role as an investment banker, he is fluent in 3 African languages and has an MBA from the university of California, Berkeley. Email: otto@africafinancedaily.com

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The #1 Daily News Source for Africa's Strategic and Financial Investors. Africa Finance Daily aggregates key financial news on Africa and seeks to mitigate the information risk associated with making Africa business and investment decisions.