Emerging Africa: An Analysis of New Markets and Areas for Social Reform

July 1, 2015

With Afrolehar’s permission, we have decided to republish this blog on Abrabrand as the topic remains relevant. This blog was written and published by Afrolehar LLC.

By Thomas Omogi, Healthcare Commercial Markets Analyst.

Africa is one of the most ripe emerging markets in the world. A continent full of a predominantly young and eager population, Africa is in the most perfect position for development that it has ever been in during its long history. As more companies gradually invest in Africa and humanitarian organizations help shore up the infrastructure in many of its more undeveloped nations, Africa is becoming a fertile ground for developing industries.

Information technology, health care, education, medical tourism, and business are all areas that are starting to emerge as strong players in the African economy, and further investments in these areas can make Africa competitive with many of the world’s developed western nations, while improving the quality of life for its residents.

Here are some of the things that make Africa so special at this time in history. It’s vast potential in many emerging markets is an important thing to explore. Development in these areas will have a strong impact on Africa, as well as the rest of the world. It is time the world came to understand the potential that is just waiting to be explored and developed in Africa.

Emerging Markets in Africa: An Overview

Africa is fertile ground for many emerging markets to take root. Some are already being developed, though most are just in the beginning stages of development. However, these markets are in a perfect position to skyrocket if the proper investments of both money and time are given to them by foreign countries and corporations. Most African governments are more than ready to become part of the developed world and are eager to cooperate with any potential investors to bring their nations into the 21st century.

The people of Africa are ready for this, too. They are cognizant of the technologies available to the rest of the world, and believe it is their time to benefit from these things, and to show the world what they can do. With the commitment to develop already present among the continent’s governments and people, all it will take is more international interest to make the emerging markets in Africa blossom. Here are some key markets to watch in Africa right now:

Information Technology–Africa is a perfect area for investing in information technology. The Internet is just now making its way to Africa, along with all of the electronic communications machinery that comes with it. The citizens of many African nations are starting to learn about the Internet and information technology in general, where this knowledge was severely lacking on the continent in the past. Improved education is producing a new generation of technologically knowledgeable and savvy young citizens who are ready to develop and run the continent’s information technology infrastructure.

More African governments are seeing that ignorance of information technology is not acceptable in this modern age. Just as many nations have instituted mandatory schooling for children, more and more of them are including instruction in information technology as part of the curriculum. In the past, lack of knowledge of information technology contributed to its failure to take root in Africa. this is changing, and the time is ripe for investment in this area as African nations express a firm commitment to make IT a part of their nations going forward.

The commitment of African nations to adopt, learn, and use IT in every part of their operations can be seen nearly everywhere on the continent. Computers are appearing in offices in the big cities where only typewriters sat just a few years ago. Internet connections are being installed and used in most of the big cities, as well, and efforts are being made to bring the Internet to remote regions, too. Gradually, access to information via computer connections is becoming available to people who never saw computers before, and they are taking to it with enthusiasm.

With an increased emphasis on building the information technology infrastructure in Africa and educating the populace in using and maintaining it, the prospects for IT companies on the continent are virtually limitless. This is truly the definition of a ground floor opportunity for those who take the initiative to invest in IT there. At the current time the main areas of growth appear to be in Internet connectivity, wi-fi access, CD-ROM production, and desktop publishing. Other areas of IT will continue to open up and grow as the continent’s nations attract more investors and start experimenting with new technologies at the top levels of government; these technologies will then gradually make their way into the general population and revolutionize every country in Africa (1).

Health Care–In terms of health care, Africa is still far behind other nations in quality and availability of medical services. It currently relies on investments from foreign governments and humanitarian groups to provide most of its healthcare funding. The governments of Africa met in 2000 to determine the best ways to spend national currency on healthcare. The three main areas they decided to focus on were reducing infant mortality, improving maternal healthcare, and combating AIDS/HIV, malaria, and other epidemic diseases on the continent. To date, only Rwanda, Botswana, Zambia, and Togo have kept up with their promise to spend 15 percent of their national budgets on these healthcare issues. The other African nations that participated in the meeting are spending between 10 and 5 percent of their national budgets on these particular issues, which is far less than what they promised.

Africa has the lowest life expectancy of any place in the world. Most of its deaths come from communicable diseases and infant and maternal mortality. The AIDS and Ebola epidemics are especially severe here, and foreign aid workers are doing all they can to bring sanitation and education efforts to remote villages, while also providing basic medical services for those in need. Africa needs these foreign aid workers, because there are only 2.3 local doctors per 1,000 people on the continent…a number far below anywhere in the western world (2).

The healthcare picture may look bleak in Africa, but its problems point the way to its solution. The market is wide open for healthcare investments in Africa. There is a very plain need for a better healthcare infrastructure there. The governments of Africa recognize the need for this, and would likely be willing to provide financial incentives and even matching funds to companies that invested in the market by building private doctor and specialist offices and hospitals with state of the art equipment. Investments by educational institutions in training local doctors would also be a welcome and eagerly accepted thing by the populace and the governments of the continent.

With so much excellent health care technology available to the rest of the world, Africa is the most fertile place in the world for expanding that technology. As other foreign investments are made in the nation to improve the IT, business, and education fields, the citizens of Africa will increase their incomes and be able to pay more for medical services. While initial investments may rely largely on international and local government support to stay profitable, a long-term commitment to Africa in the healthcare field will ultimately prove to be profitable on its own as the nation emerges fully into the modern age.

Medical Tourism–Even with the overall lesser state of healthcare in Africa compared to the rest of the world, there are still some areas that are emerging as medical leaders. With healthcare costs reaching sky high levels in the United States and Europe (and many insurances not covering certain procedures), the relatively metropolitan nations of South Africa, Tunisia, and Egypt are emerging as popular medical tourism destinations. Most of the tourists who come to these nations for medical treatment are from Europe, due to the proximity to Africa, but some come from the United States and Australia. This is a market that is ripe for developing.

South Africa, being the most technologically advanced African nation, is emerging as the leader in the African medical tourism industry, where many procedures can be had at one-third of the cost of the same procedures in the western world. Further, South Africa is known for its high level of medical research and the quality of its medical procedures. Egypt and Tunisia don’t have nearly the number of medical tourists that South Africa does. However, while South Africa is known as a nation to go to for just about any procedure, Egypt and Tunisia are carving out their own medical niches.

Egypt is now the go-to place for dental work and cosmetic surgery, thanks in part to its burgeoning film industry and increasing number of homegrown celebrities who need this type of work. Those who go to Egypt also get the opportunity to visit some of the world’s most famous historical sites. Tunisia, on the other hand, is becoming known as the place for Europeans to go to enjoy beaches and balmy climate. Its doctors specialize in cardiology, urology, and gynecology procedures. Medical tourism companies are already operating for all three nations, bringing in new clients and handling all of the hospital, hotel, and tourist arrangements for their guests (3).

Africa is a really well-kept secret in the medical tourism world. However, Europeans are bringing the word to their home countries. The medical tourism companies that operate in South Africa, Tunisia, and Egypt are improving in their marketing methods, as well, and letting people know quality and affordable healthcare is available in those nations. The countries in Africa that are the medical tourism hubs are already known as vacation spots. It makes sense for those who are within proximity of travel to go there to get the procedures they need at affordable prices, and the governments of these nations are eager to encourage this industry to prosper. The more medical tourists visit their nations, the better and stronger their national economies will become.

South Africa, Egypt, and Tunisia are already regarded as being generally safe, so most people have no problem visiting them for medical tourism purposes. With low costs in all three nations and highly standardized levels of care set by the Medical Tourism Association of South Africa for that country, the market is set to boom in these places. While most international medical tourists come from the UK and other part of Europe, it is only a matter of time before other nations discover the benefits of getting certain procedures done in Africa.

With strong marketing efforts by the governments of all three nations and additional medical companies that are willing to invest in these countries by opening clinics there, it won’t take much to make the medical tourism industry explode. When this happens, the economies of all three nations will become rock hard and this will help improve the quality of life for everyone who lives within their borders.

Education–Education is making great strides in Africa. While it is still falling behind other areas of the world in primary and secondary education, it is gaining ground all the time through government and charitable initiatives. There was a 16 percent rise in the number of children attending primary school in Africa between 2000 and 2009 (from 60 percent to 76 percent), which are impressive figures for the continent. Secondary school enrollment increased from 10 percent to 34 percent of eligible children during that same time period. This still means that most African children are not going beyond primary school in their education, but this is gradually changing as Africans are getting greater access to education and realizing the difference it can make in their lives. Parents want to send their children to school. When the opportunities present themselves and the benefits are clearly visible to parents, they make education a priority for their kids.

The countries where primary and secondary school enrollment are currently the highest (aside from the larger, more western-like nations such as South Africa and Egypt) are Mozambique, Senegal, Ethiopia, Burkina Faso, and Tanzania. Other countries are working on catching up, and are making real strides in doing so. Of course, disparities in access to education still exist, and these are being addressed. Gender is still the most common barrier to education in Africa, with boys receiving much better access than girls, even to primary education. The importance of educating girls is still something many nations are struggling to get across to parents who have been raised believing girls don’t need to learn academics because they will become housewives.

The poor and some ethnic minorities also have trouble accessing education, either because they can’t pay the school fees or because they are made to feel unwelcome in areas where prejudice is high. Children in rural areas often don’t have access to school because there are no schools in their region. All of these areas present opportunities for foreign education institutions and humanitarian organizations to come in and make a difference.

The importance of an educated populace is so apparent and important to African governments that many nations have instituted “second chance” programs that target teenagers and young adults who did not have access to education in their early years. African governments know that educated people are less likely to be dependent on government subsidies to survive. They will be less of a burden on society, and will even improve it by going to work and paying taxes. With most African governments cash-strapped and in dire need of taxpayer money, educating its citizens so they can contribute in this way makes a lot of sense (4).

This opens the door to private educational institutions to come in to under-educated African nations and set up adult education centers. Government subsidies and scholarship programs funded by private donors could help people to attend and keep these companies profitable in the beginning. After a while, the next generation of adult learners will start to come, and be able to pay their own way through work-study programs, or through the financial contributions of their parents who attended the programs and are now working and making good incomes.

As far as higher education goes, the most attended and respected universities in Africa are in the north, where most of the more developed cities are located. The only exception to this is in the very modern and practically western nation of South Africa. Otherwise, university attendance in sub-Saharan Africa is less than five percent of the population. This doesn’t mean the demand for higher education isn’t there. In some communities, extended family members get together to pool their money to send one member of the family to college, knowing the education that person gets will ultimately benefit them all.

All of the world’s wealthiest nations (with the exception of Switzerland) have university enrollments of more than 50 percent of the college-age population. In fact, South Korea’s move from third world country to major international economic player coincided with a ten-fold increase in university enrollments (5). The same thing can happen in African nations. Higher education is the key to improving economies and bringing these nations into the 21st century by producing a skilled and technologically savvy workforce in a variety of specialized fields. Private universities and technical schools will find a willing and eager population in Africa that will do what they can to avail themselves of the services of these schools. The more higher education facilities are made available to the African people, the more they will use them. That makes the higher education market an excellent field for investment in Africa at this time and into the foreseeable future.

Africa and the Environment: What We Can Learn

Not only is Africa in an excellent position to more fully develop several key market areas to become important players in the international arena, thus improving their economies while attracting foreign investors, it is also an important area for studying climate change. This is something that affects the whole world, and Africa is an ideal classroom for seeing what climate change may do to the planet if it is not repaired. Scientists from all over the world are converging on Africa in different areas to see first-hand what is going on, what the effects of climate change are on the environment and the people who live in it, and to discover ways of reversing the damage that is being done.

Of all of the continents, Africa is the most susceptible to the effects of climate change. It is also the least likely to be willing to make changes to mitigate or stop it right now, as bringing in new industries, many of which deforest and pollute the environment, is seen as being a higher priority for these emerging nations than keeping the environment clean. In Africa, the priority is economic development first, environmental protection somewhere else far down on the list.

Africa is currently experiencing a variety of serious environmental problems, including:

Deforestation
Water pollution
Biodiversity loss
Land degradation
Drought
Desertification
Reduced soil quality

These problems mean a lack of useable farm land, famine, diseases among people and animals, and illnesses from bad water. The way environmental changes affect people and wildlife is nowhere more apparent to the international community than in Africa.

As urban areas continue to grow and develop in Africa, the pollution produced by the industrialization of these areas affects the more rural, agriculturally dependent areas negatively. The amount of land available for agriculture is also reduced. In a place where two-thirds of the population of the continent is dependent on agriculture for survival and income, the push toward urbanization and technological development in Africa, while admirable, is also pushing more and more of its rural farmers into poverty. Africa does need to be modernized, but environmental scientists are seeing first-hand that this must be done in a way that allows for the development of the continent while mitigating the environmental impact of such development as much as possible (6).

This need makes Africa a perfect place for companies to come in and provide both education and services in reconciling modern development with the need to protect the environment (and in turn, the people who are dependent on the quality of the environment to survive). It is also an ideal place for scientific companies to set up shop to study what is going on with the environment in Africa. By observing what is happening with the environment while Africa struggles toward modernization, solutions may be found to help the rest of the world deal with similar issues that are happening on a smaller scale elsewhere. Africa may be the model that leads to the solution for the whole planet regarding technological development and protecting environmental integrity for the health, wellbeing, and prosperity of future generations.

How Politics Affects Emerging Market Development in Africa

With a few notable exceptions such as South Africa, Egypt, Nigeria, and Tunisia, Africa has some of the poorest nations on the planet. Most of the very poor nations are in sub-Saharan Africa. For many decades, these nations have been in chaos, changing regimes time and time again, with little political stability for long enough to create sustainable economies.

As BRIC nations have grown, developed, and stabilized, they have left Africa in the dust. Places like India and China once had levels of poverty comparable to sub-Saharan Africa, but have since improved to be competitive with most western nations. Africa is still experiencing poverty in rural areas and lesser developed countries where much of the population lives on less than U.S. $1 a day. It is difficult to build up a sustainable economy when the political situation is never stable for more than a few years (or less) at a time. People are struggling to survive civil wars and military coups, and when they are in that situation, economic development takes a back seat (7).

Of course, not every African nation has had difficulty in achieving economic stability, and even prosperity. While nations like Ethiopia and Sierra Leone are extreme examples of African poverty, other places like South Africa and Egypt are examples of African prosperity. These nations can act as models for what the rest of the continent could become, given the opportunity. Africa is a continent that is flush with plentiful natural resources of great value. It is also an excellent tourist destination in places where the political climate and overall social conditions are safe and stable. Those nations that have been able to achieve stability have been able to exploit their natural resource and tourism benefits to their economic advantage, and the government and people of those nations prosper as a result.

Achieving stabilization in all African nations must be a priority for the governments of the nation and for other countries, as well. As long as parts of Africa are politically unstable, the continent won’t be able to attract the types of investors it needs to become a real modern player in the international markets. Only a few lucky African nations will be able to take part in this economic boom. It is best to start with the nations that seem on the verge of stability, bring in international aid and charitable workers to achieve full stabilization, and then bring in the investors to shore up the infrastructure. This will bring profits to both the investors and the governments, which will trickle down to the people of these nations, as well. As these nations become stabilized, work can begin on the more chaotic nations.

It may take some time to achieve full stabilization and a strong commitment to the continent among foreign investors. When it happens, though, Africa will be a continent to contend with, and an economic powerhouse. The potential for it is already there. The international community just needs to see and care about the potential of Africa to be a major contributor to the world’s economy and work to bring it to this pinnacle of success.

The African Economy and Emerging Market Development

Despite its large number of poor countries and the difficulties those countries are facing, the picture for Africa as a whole is very positive. Many of the more developed areas in the northern part of the continent (plus South Africa) are creating real commercial success and technological change. Because of these handful of nations, Africa’s total GDP grew by 4.9 percent from 2000 to 2008, which was more than twice its growth during the previous 20 years. The overall GDP of the continent is now $1.6 trillion, which is about equal to the BRIC nations of Brazil and Russia. Some places in Africa are growing in economic strength and prosperity more rapidly than any other places on earth.

Areas of the economy that are seeing great success in Africa include banking, retail, construction, and telecommunications (8). The countries where these things are going on are attracting their share of foreign investors, which is driving the growth even more. If this growth could be translated to all African nations, the entire continent would prosper. The good news is that the potential is there. What the world decides to do with it remains to be seen. With its abundant natural resources, booming IT industry, renewed commitment to improving and modernizing healthcare, and the demand for secondary and higher education, Africa is a gold mine for companies that are willing to invest in it. While investments may take a few years to pay off in less developed countries, they will eventually pay big as long as the investors remain committed to improving conditions in the countries in which they invest. Investments in nations that are already economically strong will yield more immediate returns.

With a combination of investments in both developing and under-developed countries, nearly any business can turn a strong profit in Africa. Its long-term economic prospects are strong, and this should give any investor confidence that Africa is the place to put their money if they want to achieve long-term riches. The population is eager to learn and ready to work. Skilled and unskilled laborers are available for a variety of positions. Giving jobs to these people will only improve the economies of their countries, which will improve profits for investors. Investing in Africa is both a humanitarian and economic enterprise that will pay huge dividends in both areas for investors who are willing to experience the thrill and potential windfall of profits that come from staking a claim in this wild and exciting emerging market that has almost unlimited potential for success given the proper nurturing.

Sources

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