Businesses 'must seize African opportunities'

British businesses have been urged to invest in Africa, with new Deloitte research suggesting that 15 of its countries could outperform China in the coming five years.

With Nigeria, Ethiopia, Uganda, Tanzania and Zambia all likely to outpace the Chinese economy in the near future, the business advisory firm said companies may lose out if they avoid African investments.

Its report, called Africa: A 21st Century View, indicates that the continent’s emerging consumer sector remains relatively untapped by UK investors.

Expanding middle class

The research team found that the African economy is becoming less reliant on commodities and natural resources.

Deloitte said that oil and mining are no longer the driving forces behind eight of its 12 quickest-growing nations.

With an expanding middle class, growing domestic demand is likely to present new opportunities in Africa’s consumer sector, the firm noted.

Africa set for ‘consumer boom’

Commenting on the report, the group’s head of consumer business research, Ben Perkins, said Africa is currently in a similar position to where south-east Asia found itself three decades ago.

He added that this is something that urgently needs to be recognised by British firms.

Mr Perkins said: “By 2030, over half a billion Africans are projected to be middle class. The population is also dominantly young, with 680 million, or 60% of the total African population, aged below 25.

“These younger Africans will play a critical role in the continent’s economic development, not only because they will want increased connectivity and access to a wider choice of food, consumer goods and entertainment, but also as they bring a more innovative and entrepreneurial mindset.”

Caution urged

While urbanisation is supporting the growth of the African economy, increasing brand awareness among younger consumers is also playing its part, Deloitte’s study shows.

Yet UK companies have been urged to approach the continent cautiously, while staying aware of potential challenges like weak infrastructure, poor governance and security concerns.

Mr Perkins said that rather than looking for “quick wins”, UK firms should adopt a longer-term approach and grasp “opportunities to innovate”.

The expert said that organisations will need to carefully consider the potential risks and rewards before investing in Africa.

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Copyright Press Association 2014