The Time is Now for African Investment

Charles Orsel des Sagets


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Africa has a young population and is growing fast


Establishing and supporting businesses in Africa is twinned with risk; but this is not an uncommon partnership. High-risk endeavours usually have the highest rewards. African investment also includes the opportunity to have a positive impact on local and national infrastructure, SDGs, the economy, and the digital divide.


Africa is made up of 54 countries, according to the United Nations (UN). It is larger than the United States, China, India, Japan and the whole of Europe put together.


Most of these countries are underdeveloped, with poor infrastructure and degrees of governmental instability. It has been reported that Sub-Saharan Africa (SSA) was the world’s slowest growing region in 2021. SSA also has some of the most expensive 1GB basket prices globally.


There is a clear international focus on Africa. The second largest continent is receiving significant investment which is financing the roll-out of data centres, fibre connectivity in new areas, and the deployment of mobile networks in key markets.


Africa is home to 1.4 billion people, accounting for 16.72% of the world’s population. This is predicted to rise to 4.39 billion by 2100.


African continent at night, from above. Satellite image with lights. Text: THE TIME IS NOW

It is the most central continent in the world, making Africa the perfect hub for reaching the four corners of the world. It is also the most profitable region in the world. According to the Overseas Private Investment Corporation (OPIC), Africa offers the highest returns on foreign direct investment (FDI) globally. In fact, according to the recent UN Conference on Trade and Development, Africa’s return on foreign investment between 2006 to 2011 reached 11.4%— significantly more than the global average of 7.1%.


Currently, the top three recipient countries in Africa for FDI in 2020 were Egypt, The Republic of the Congo and South Africa. Since 1 January 2021, the African Continental Free Trade Area has been in effect, creating the world’s largest free-trade area with all 54 countries participating. This agreement essentially creates one single market allowing foreign businesses to reach markets that were once difficult to approach.


The median age across Africa is 19.7 years.

Africa has a young and growing workforce: a perfect condition for businesses wanting to invest. Africa is the fastest growing continent, and by the turn of the century will be the only region with population growth.


Six of the world’s 12 fastest-growing countries are in Africa (Ethiopia, Democratic Republic of the Congo, Côte d’Ivoire, Mozambique, Tanzania and Rwanda).


With almost 60% of the population under 25 years old, it is also the youngest continent. There is a surplus of workers that want and need jobs. Unlike other parts of the world, Africa is not in a candidate-driven market; it’s an employer market and that means your business can recruit the best talent, without facing fierce competition. A young and abundant labour market also has the advantage of lowering production costs. Foreign investment will hopefully have the additional advantage of raising wage rates in Africa and improving market efficiency.


Africa is the least-developed continent, barring Antarctica. With its fast-growing population, governments want and need infrastructure projects to support this budding populace. The opportunity for development is huge, and African countries are adopting various measures to attract investors.


Top five growing markets for foreign investment

Map of Africa showing 5 key countries


We will take a look at five of the most important emerging markets in Africa: Nigeria, South Africa, Algeria, Ethiopia and Namibia. We make the business case for investment and also assess the matrix of opportunity versus risk.


Nigeria

Infographic - Telecom stats for Nigeria

Overview


  • Nigeria is the largest market in Africa
  • The main language is English
  • The population is forecast to grow to over 410 million by 2050
  • The legal system is based on the UK system
  • One of Africa’s key oil producers, although currently held back by low production. The economy is heavily dependant on this sector and part of the current economic strategy is diversification
  • The country is facing severe challenges such as rising inflation, high unemployment and widespread insecurity


MNOs

  • MTN
  • Glo
  • Airtel


Opportunities

  • There is a major drive to transform the energy and agricultural sectors through technology
  • Key driver of international trade across all of West Africa
  • The third largest movie industry after Hollywood and Bollywood
  • Deployment of 5G technology and the Federal Government of Nigeria’s broadband penetration target of 70% by 2025 will attract additional foreign investment
  • Nigeria plays an important leadership role in both West Africa and on the African continent. The headquarters of the Economic Community of West African States (ECOWAS) is in Abuja


Challenges

  • Although the economy is predicted to grow around 3.2% in the next few years, this projection is subject to significant risks such as further declines in oil production and heightened insecurity
  • Unfavourable regulatory changes are continuing to have negative effects on business
  • Nigeria ranks 131 on the World Bank's Ease of Doing Business 2020 report — although this is improving year-on-year
  • Unreliable power supply
  • Poor transportation infrastructure
  • Slow judicial system

South Africa

Infographic - Telecom stats for South Africa

Overview

  • South Africa is, in general, the most advanced, diversified and productive economy in Africa
  • The country was hit hard by the COVID-19 pandemic. Poverty has reached levels not seen for more than a decade, while inflation has increased to a 13-year high
  • Telecoms growth has decreased despite the boost in traffic during the pandemic. Future growth is expected to be driven by mobile and fixed-broadband digital services
  • South Africa is a business incubator for new-to-market ideas which then travel to other Sub-Saharan African markets
  • There is widespread use of English for business
  • SA has a robust legal sector


MNOs

  • MTN
  • Cell C
  • Vodacom
  • Telkom


Opportunities

  • Since 2015, over one-third of acquisitions in the African tech space have involved South African companies
  • Significant CAPEX investment in new infrastructure required to evolve telco’s business models to compete with new market entrants
  • According to the Global Connectivity Index, South Africa is one of the countries with the most potential in using ICT to boost growth and achieve several of the UN’s Sustainable Development Goals (SDGs)


Challenges

  • Infrastructure issues continue to hold back the economy and lead to frequent power shortages
  • The telecoms market has suffered from reduced profit margins over the last decade. Value-added services and new technologies will be required to realise new revenue streams
  • The high cost of connectivity and mobile devices, particularly in the current recession and high unemployment, are a barrier to the uptake of new digital services
  • According to the World Bank’s Doing Business project, South Africa’s rank in ease of doing business in 2020 was 84 out of 190
  • One of the highest and most persistent inequality rates in the world

Algeria

Infographic - Telecom stats for Algeria

Overview

  • Algeria is the fourth largest economy in Africa
  • Oil and natural gas historically account for 95% of export revenues and 60 percent of total government revenues
  • Continuing political instability threatens economic reforms
  • The country’s infrastructure primarily relies on 3G and 4G LTE for mobile, and ADSL & fibre for fixed telecommunications
  • Algeria connects to Europe via four fibre optic subsea cables


MNOs

  • Mobilis
  • Djezzy
  • Ooredoo Algeria
  • Algerie Telecom


Opportunities

  • The ICT sector will play a significant role in Algeria’s export diversification strategy as it moves away from oil and gas
  • Mobile adoption rates are high, with the number of mobile connections in 2022 equivalent to 103.5% of the total population. Broadband adoption rates are significantly lower at around 9%
  • Since 2016, Algeria has deployed more than 120,000 km of optical fibre across the country to help close the gap in broadband adoption rates


Challenges

  • Algeria’s state-owned company Algerie Telecom holds a monopoly over the country’s fixed-line and fibre optic networks and it is responsible for developing Algeria’s telecommunication sector
  • Algeria ranked 157 out of 190 on the World Bank’s Ease of Doing Business index in 2021
  • Corruption in state institutions
  • One of the biggest challenges is foreign exchange (Forex) and finance repatriation. It can be very difficult for companies to get their money out

Ethiopia

Infographic - Telecom stats for Ethiopia

Overview

  • Ethiopia is the second-most populous country in Africa
  • It has one of the oldest public telecommunication operators, established in 1894
  • Ethiopian telecommunication is one of the least developed in the world. Mobile connections per 100 people is around 49% and internet penetration stands at 25%
  • Ethiopia is one of the weakest economies in the world
  • As part of its commitment to support Ethiopia’s plan to open up the telecoms sector, the World Bank is preparing a new Digital Ethiopia Foundations project and will invest some $200 million in the country’s digital economy
  • The African Union (AU) is headquartered in Addis Ababa


MNOs

  • Ethio Telecom


Opportunities

  • The Ethiopian government is in the process of privatising state-owned enterprises and has signalled that it will shift toward market-based reforms and more flexibility
  • The Government of Ethiopia (GOE) has committed to building a green economy and reaching UN sustainable development goals (SDGs). Ethiopia will mitigate CO2 emissions by expanding electric power generation from renewable sources
  • The GOE is open to proposals for energy projects using Independent Power Purchase (IPP) agreements for the sale of power from renewable resources


Challenges

  • The economy is still emerging from civil conflict in the north which created substantial social and economic disruption
  • The GOE retains control over the utilities sector and prohibits foreign ownership of banking, insurance, and financial services
  • State-owned enterprises dominate the economic landscape, reducing room for the private sector to grow and attract foreign investment
  • There are frequently energy shortages as demand outpaces supply. New hydropower dams struggle to produce at full capacity. Power transmission lines and distribution facilities are also inadequate

Nambia

Infographic - Telecom stats for Namibia

Overview

  • Namibia is a relatively small market with a population of 2.7 million
  • Namibia has one of the most stable political environments in Africa
  • Primary infrastructure (roads, rail, air, energy, and telecommunications) is fairly well developed and modern
  • The economy is mostly export-driven
  • Imports into Namibia are dominated by South Africa, which equate to 45% of Namibia’s total imports


MNOs

  • MTC
  • TN Mobile (formerly Cell One)


Opportunities

  • With the completed expansion of the port at Walvis Bay, Namibia is positioning itself as a gateway to the broader Southern African market and beyond
  • The government launched the National Broadband Policy and Implementation Action Plan, which aims to provide universal 2Mb/s services by 2024
  • The government is trying to speed up a 5G development strategy after it was initially hampered by public concerns over health implications of the technology—this caused the government to order an environmental assessment of 5G in mid-2020
  • Namibia has potential for renewable power investment and plans to build solar, wind, and biomass infrastructure. The government has committed to adding more renewable energy generation sources to its grid
  • The government is seeking to attract foreign investors to participate in public-private partnerships (PPPs)
  • By the end of 2022, Namibia aims to be connected by a 1,050km branch line of Google’s Equiano cable, running between Portugal and South Africa


Challenges

  • High unemployment and critical shortages of skilled labour
  • Demand for electricity outstrips domestic supply. Namibia generally escapes any large-scale power outages, but the country remains reliant on buying electricity from South Africa
  • Corruption and transparency are often an issue


Opportunities in Africa


If you have an opportunity in Africa, are planning an M&A, or want to partner with an African business we would love to talk to you. At Cambridge Management Consultancy we have a number of consultants who have year's of experience and expertise in the African telecommunications markets. They know how to operate and overcome legal and cultural barriers, as well as having the necessary contacts to help you save time and money. We are excited to share our knowledge and skills to support growth, infrastructure and jobs in these regions. If you want to discuss with one of our team directly then please get in touch with Charles Orsel des Sagets, Steve Brookman, or Andrew Kinnear; or alternatively contact us via the website form below.

Contact - Africa

About Us


Cambridge Management Consulting (Cambridge MC) is an international consulting firm that helps companies of all sizes have a better impact on the world. Founded in Cambridge, UK, initially to help the start-up community, Cambridge MC has grown to over 200 consultants working on projects in more than 25 countries. Our capabilities focus on supporting the private and public sector with their people, process and digital technology challenges.


What makes Cambridge Management Consulting unique is that it doesn’t employ consultants – only senior executives with real industry or government experience and the skills to advise their clients from a place of true credibility. Our team strives to have a highly positive impact on all the organisations they serve. We are confident there is no business or enterprise that we cannot help transform for the better.


Cambridge Management Consulting has offices or legal entities in Cambridge, London, New York, Paris, Dubai, Singapore and Helsinki, with further expansion planned in future. 


Find out more about our telecommunication services and full list of capabilities

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by Pete Nisbet 7 November 2024
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Cambridge Management Consulting Duncan Clubb is a Senior Partner at Cambridge Management Consulting, specialising in data centre and edge compute strategy. Duncan has extensive experience as an IT consultant and practitioner and has worked with many leading organisations in the financial, oil and gas, retail, and healthcare sectors. He is widely regarded as a leading expert and is a regular speaker at industry events. If you or your organisation require support preparing your Digital Infrastructure for the emerging AI-industry, you can read about our array of Data Centre services, and get in touch with Duncan Clubb, through our designated Telecoms, Media, and Technology service page.
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by Pete Nisbet 23 July 2024
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Cuts to park budgets, economic development, culture services, and the reduction in spending on Public Health, education, housing services, children's centres and everything else that local government is responsible for have left many cities, towns and villages looking neglected and often struggling with anti-social behaviour and boarded-up high streets. Behind the scenes, many of the essential back office functions have been stripped to the bone in order to protect frontline services: call centres are understaffed; planning services unable to cope with demand; not enough project managers, accountants or procurement staff to deliver on council ambitions or the transformation projects to reduce costs on essential services; not enough HR staff to support those on the frontline and not enough administrative staff to support the social workers, education & skills teams, the transport teams and the rest of local government trying to prop up essential local services. Local government is the government that touches all of us every day, even if we don’t always realise this. The new Labour government will need to focus on this issue for the benefit of every individual, community and region. How Cambridge MC can Help Local Councils If you are currently working in local government and are feeling the impacts of the economic crisis as outlined here, the Public Sector and Education team at Cambridge Management Consulting can work with you and your council to alleviate some of this pressure in both the short- and long-term. Our skilled procurement and contract management team can help you reduce costs; our programme and project management function offers fractional or interim leadership and full lifecycle support for challenging transformation projects; and our process and change management teams can help with process re-design and automation. 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Picture of African students in a classroom
by Elia Tsouros 8 July 2024
Since the 1960s, significant strides have been made to provide and increase access to quality education for children and young people in Africa. The educational environment has not remained stagnant, and the continent is all the better for it. However, this unfortunately does not paint the whole picture, and there is a poignant reality that lies just behind the statistics. In short, merely having access does not guarantee an improvement to the actual quality of this education; as rightly noted by Faturoti, “Although all African countries have legal provisions recognising the right to education, there is no corresponding law on access to the Internet.” Yet, Africa’s unique combination of challenges has left more than just gaps in knowledge: 2019 saw 17% of African children not attending primary school, and 53% of teenagers not attending upper secondary school . The harsh blow dealt by COVID-19 has only deepened the educational crisis globally. Yet, despite these challenges, there is a resilient spirit that refuses to be extinguished. The pandemic has underscored a powerful lesson: technology, when harnessed with the right connectivity, can be a transformative force, offering a ray of hope in the quest to overcome educational barriers. In this article, we will explore how we can take the barriers blocking this intelligent future and support the growth of a digitally connected classroom, ensuring that no one is left behind in the continent’s transformation. The ways in which learning is conducted has never been more important: to learn is to grow and the progress which begins in the classroom will soon be reflected across the continent. From Challenges to Change: Barriers to a Connected Classroom In the expansive landscape of Africa, a sobering reality appears –only 39.7% of the population is woven into the digital fabric, standing in stark contrast to the global average of 66.3% as reported by the International Telecommunication Union (ITU). This digital divide is not just a technological hurdle but a societal challenge, one that deepens when faced with the simultaneous necessity to invest not only in advanced technology but also in financial literacy. As we grapple with the intricacies of digital inclusion, the first bridge we must construct is one that spans connectivity disparities: the use of online educational platforms can ensure that students not only have access to educational material relevant to their studies, but also that this material is the latest available. Electrical reliability stands as a foundational must-have for the successful implementation of digital learning initiatives. Investment in expanding telecommunications infrastructure , such as laying fibre-optic cables and deploying wireless networks, is crucial to bridge the digital divide and ensure widespread connectivity. Furthermore, enhancements in power generation including the use of traditional and renewable energy sources and distribution systems are essential to guarantee uninterrupted access to online educational resources. Uninterrupted power supply ensures that students can access online lectures, assignments, and collaborative activities seamlessly, fostering a conducive learning environment. Put simply, enhanced learning makes for more engaged and enlightened students. Furthermore, technical support is indispensable for ensuring the effective implementation and maintenance of digital learning infrastructure. However, limited access to skilled technical personnel, inadequate training, and insufficient resources present significant challenges. Training and capacity-building programs must be enhanced to equip individuals with the necessary skills to support complex ICT infrastructure effectively. There are many projects already underway which promise to forge this change and training. Investing in training programs, certification courses, and apprenticeship initiatives promise to cultivate a skilled workforce capable of delivering and, importantly, sustaining these changes. Addressing these interconnected challenges requires a holistic approach, encompassing political commitment, infrastructure investment, educational reform, and skills development initiatives. Without sustained political commitment and investment, efforts to expand internet access and improve electricity reliability risk being compromised, perpetuating the digital divide. The strategy was endorsed by the Thirty–Sixth Ordinary Session of the African Union Executive Council held in February 2020 , who recognised this: only through collaborative efforts and sustained investment can Africa bridge the digital divide and unlock the transformative potential of digital learning for all its citizens. Looking Forward and Building Change Yet, by overcoming these challenges, the future is bright and worth investing in. We must recognise what is at the core: education is a basic right to all communities, globally. Results are already beginning to bear fruit: UNESCO’s forum on quality public digital learning reveal how bright the prospects could be. Van Manen et al. (2021) emphasise the remarkable impact of digital learning on advancing SDGs , highlighting how it enables countries to address key challenges such as poverty, inequality, and access to quality education without the need for extensive physical infrastructure investments. By leveraging digital technologies, governments can reach underserved populations, bridge educational divides, and empower individuals with the knowledge and skills needed to uplift themselves and their communities. The continent’s digital uptake has also been staggering and speaks to a unique adaptability and adoptability when faced with change. In a 2020 study conducted by GSMA, it was revealed that over 1.4 billion subscribers on the continent utilise their mobile phones as powerful tools for educational enrichment , underscoring the widespread recognition of digital learning's value in shaping the future of African youth. From accessing online courses and educational apps to engaging in virtual classrooms and interactive learning platforms, mobile devices have become indispensable companions on the journey towards academic achievement. This should not be ignored: beyond mere convenience, this shift represents a democratisation of learning, where access to knowledge is no longer limited by physical proximity or socioeconomic status. Instead, digital learning empowers individuals to take ownership of their educational journey, enabling them to learn anytime, anywhere, and at their own pace. Yet, the role of ICT initiatives in classrooms can go even further, providing a visionary tool for tackling existing education inequalities. Behind stark statistics lie the stories of over 129 million girls’ dreams , which are deferred by the harsh realities of poverty, gender-based violence, and early marriage. Each day, countless young minds are forced to miss out on the transformative power of education: girls miss up to 50 days of schooling each year due to the lack of sanitary wear according to Life Healthcare . ICT-equipped classrooms do not promise to solve these issues but bridge the gap: if remote learning becomes a possibility, so does change. Key stakeholders are also ready, able, and actively engaging with the modern education landscape to make the path to learning easier. We’ve seen initiatives take root here in the UK, with Mobile network operators (MNO’s) offering zero rated connectivity packages for education platforms such as BBC Bitesize . Yet, these changes can be seen across the globe and felt deeply: in Kenya, Nigeria and South Africa, initiatives have revealed whole new possibilities for access to information . With software providers also offering free subscription platforms with available content and data, it is clear that the future is brighter than ever. Amidst these challenges, digital learning platforms emerge as powerful allies, tearing down barriers and extending the hand of opportunity to every corner of the globe. Through the magic of digital tools, students are no longer confined by the limitations of geography or circumstance. Instead, they can connect with specialists and mentors from across the world, unlocking new realms of knowledge and inspiration. Conclusion Connected classrooms provide a bridge to change, change which is exciting and necessary. Access to a learning which is digitally engaged promises to enrich education opportunities and better the outcomes for future students. Yet, beyond mere access, digital literacy becomes a lifeline, empowering individuals to navigate the complexities of the modern world with confidence and resilience. In the midst of a rapidly evolving digital landscape, these skills serve as a passport to a future where no dream is too big and no obstacle too daunting. How We Can Help At Cambridge Management Consulting, we stand out from the crowd, particularly in the dynamic and intricate landscape of Africa. Our commitment goes beyond quick fixes; it's about crafting tangible and enduring impacts that resonate with the unique challenges and opportunities present in this diverse continent. Just as digital education offers a cost-effective avenue for countries to enhance their performance on Sustainable Development Goals (SDGs) without the need for expansive physical infrastructure, our consulting philosophy embraces innovative solutions that recognise and leverage Africa's unique dynamics. At the heart of our approach lies our handpicked team of experts, deeply passionate and intimately connected to the pulse of Africa. With a nuanced understanding of the challenges and opportunities this diverse continent presents, we strive to positively impact businesses in the most authentic and sensitive manner, echoing this article's recognition of the transformative potential of digital education in Africa.
Row of old analogue telephones
by Clive Quantrill 24 June 2024
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