Africa’s new business frontiers

Joanne Bushell

A fast-developing infrastructure of flexible workspaces is helping companies explore new opportunities in West and East Africa, writes Joanne Bushell, CEO of Middle East & Africa of Regus

Over the past decade, all eyes have been turned to the economic achievements of the BRICs (Brazil, Russia, India and China) and Asia’s emerging markets. But with much less media fanfare, the markets of Africa have also made huge gains, and they present excellent opportunities for South African businesses and investors. If you haven’t already looked at them, now is the time to do so.

Over the period 2001-2010, six of the world’s ten fastest-growing economies were in sub-Saharan Africa, according to analysis by The Economist.[1] Nor is this a one-off: it predicts that seven African countries – Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria – will be in the top ten during 2011-2015.

Whilst the economies of the West worry about the threat of double-dip recession, Africa’s business communities are optimistic. In the latest edition of the Regus Business Confidence Index, West Africa was at 140 points, 26 above the global average; in East Africa it stood at 151 points, 37 points above the global average. In both regions, the number of companies reporting revenue and profit growth was well above the global average.

However, the mood was less buoyant in South Africa, the African economy most firmly coupled to the West. Here, the Regus Business Confidence Index had slipped 17 points from April 2011, down to 115. With the percentage of South African companies reporting revenue growth also down, businesses here need to explore new options.

Many factors are fuelling the boom in West and East Africa. Trade with non-traditional partners has risen steeply, so that they now account for about half of sub-Saharan Africa’s exports. China, India and Brazil dominate, but there’s also been a rise in intraregional trade.[2] This rise in non-traditional trade insulates Africa’s frontier economies against the problems of the industrialized countries.

Problems in the West have also plugged Africa’s ‘brain drain’ – the decades-long outflow of ambitious workers and students deserting Africa for the employment opportunities elsewhere. A recent BBC report spoke of “thousands, possibly hundreds of thousands, of educated Nigerians who have decided to return because of a combination of strong growth back home, and the economic slowdown in the West”.[3]

Brain drain has now been replaced by ‘brain gain’. One recent ‘repat’ told the BBC, “If you come back and look on the ground [in Nigeria], you’ll see a serious entrepreneurial mindset”

Many different organisations, from charities to banks, are nurturing that entrepreneurial mindset. They’re helping to assemble the building blocks of trade – such as business education, financial management and accountancy training, microfinance, and access to larger-scale finance.

Regus is another organisation putting in place the infrastructural building blocks in Africa’s frontier markets. Already firmly established in South Africa with more than ten business centres across Capetown, Durban and Johannesburg, Regus has responded to demand for flexible workspace elsewhere in Africa. Its network now covers Ghana, Ivory Coast, Kenya, Nigeria, Senegal, Tanzania and Uganda.

Regus plans to expand the network still further, as global demand for flexible workspace soars. Over the next three years, the company will increase its global network by at least 75%, equating to over 800 additional business centres. Africa has and will benefit from this expansion, with Uganda and Ivory Coast among the countries where Regus has this year opened centres for the first time.

This expanding network of ready-to-use, flexible workspace allows both local and international companies, start-ups and existing businesses, to establish a low-risk presence in Africa’s growing economies. They can explore the opportunities in these frontier markets without making lengthy commitments in terms of real estate, equipment or upfront expenditure. They can respond quickly to the more volatile market conditions that prevail in frontier markets: expanding, contracting or withdrawing as they wish.

These two parallel developments – Africa’s economic growth and a developing turnkey infrastructure of finance and flexible business workspaces – present enormous opportunities for local and international businesses.  With the West’s developed economies gripped by anxiety, now is the time for South African businesses to look elsewhere. Like any frontier markets, the economies of West and East Africa offer few guarantees to businesses, but they certainly offer some great possibilities …

[1] “Africa’s impressive growth”, The Economist, 11 January 2011 (figures exclude countries with population of less than 10 million, and Iraq and Afghanistan).

[2] “Regional Economic Outlook: Sub-Saharan Africa: Sustaining the Expansion”, IMF, October 2011.

[3] “Nigeria’s thriving economy lures expats back home”, BBC News, 20 October 2011.

About Regus

Regus is the world’s largest provider of flexible workplaces, with products and services ranging from fully equipped offices to professional meeting rooms, business lounges and the world’s largest network of video communication studios. Regus enables people to work their way, whether it’s from home, on the road or from an office. Customers such as Google, GlaxoSmithKline, and Nokia join hundreds of thousands of growing small and medium businesses that benefit from outsourcing their office and workplace needs to Regus, allowing them to focus on their core activities.

Over 900,000 customers a day benefit from Regus facilities spread across a global footprint of 1,200 locations in 550 cities and 90 countries, which allow individuals and companies to work wherever, however and whenever they want to. Regus was founded in Brussels, Belgium in 1989, is headquartered in Luxembourg and listed on the London Stock Exchange.