Africa is a region of remarkable diversity: 54 countries, more than 3,000 distinct ethnic groups, and more than 2,000 languages, it’s a heterogeneous place with numerous niche markets each with their own idiosyncrasies, making expansion by transnational businesses difficult.
For example, contrary to the classic consumer habits of the global middle class, traditional, “informal” retail options still dominate the landscape, even among the growing middle class. About 90% of commerce in Africa occurs at these informal retailers, such as at small independent stores, kiosks, and non-organised open-air markets.
Although much of the attention is on the big economies – such as Nigeria, Ethiopia and Angola – some smaller countries offer promising opportunities for businesses looking to gain a foothold in the continent.
Although it’s one of Africa’s smallest countries by land area, Rwanda punches above his weight in many ways. Rwanda has an efficient government and strong macroeconomic indicators that can support international retailers offering basic packaged goods, as well as financial service providers who can tap into the growing demand for savings and investment products.
And despite being landlocked, the country has invested intensively in improving infrastructure and logistics of doing business in the country, such as streamlining business registration, import and export procedures. In addition, Rwanda’s open door policy towards immigration, particularly from the region, has spurred economic growth and market opportunities.
Gabon has a population of just 2.2 million, but with a $19 billion economy it has a per capita income of $14,500, the third highest in Africa. Retail sales have grown about 13% annually in the past few years; though formal retail makes up only 3 to 4% of grocery retail, so there remain solid opportunities in Gabon despite the small population.
Foreign firms are active in the country’s three main sources of income and exports: petroleum, manganese, and timber. The government is seeking to accelerate investment and steer the economy towards higher value-added activities in order to reduce its oil dependency, building on policies such a ban on unprocessed timber exports.
Like Gabon, Congo-Brazzaville is largely dependent on oil exports, accounting for 80% of government revenues, but is looking to diversify by investing in infrastructure and manufacturing.
The annual growth rate of the economy is expected to reach 7.6% from 2014 to 2016, on the back of government's diversification policies and investments in infrastructure; stabilisation of oil production with the discovery of new deposits over the coming years; and the prospect of mining exports from iron ore and potash coming onstream.
The infrastructure challenge is great, but therein lies the opportunity – the country is still without a fully paved road to connect its distinct commercial and political capitals of Pointe Noire and Brazzaville, respectively, or a reliable railroad system to connect inland iron ore and timber resources in the north and west of the country to the port of Pointe Noire.
Copper exports make up the bulk of Zambia’s government revenue, but world copper prices have been on the downward trend for the past 12 months, putting a squeeze on public coffers.
But authorities are looking to unlock the country’s latent tourism potential – although tourism is a major export earner, it is still a largely underdeveloped sector and is a priority for diversification and growth in the country’s Sixth National Development Plan (2011-2015).
The country’s attractions hinge on its great watercourses—the Zambezi, Kafue, Luangwa, and Luapula that form part of the Great Rift Valley—and its pristine natural environment. There is opportunity for investment as the government looks to invest in infrastructure to support tourism, particularly roads, airports, communication networks, and visitor centres.
Although constrained by being landlocked, and having volatile growth year-on-year for the past decade, Burkina Faso has much potential particularly in agro-processing and livestock exports.
Burkina Faso is Africa’s top cotton producer, and the country’s world market share for cotton increased from 0.9% in 1980 to 3.2% in 2009. If productivity improves, there are opportunities to capture more value by moving up the value chain – such as by processing animal feed, cooking oil, biogas, medical and hygiene products, and textiles.
In addition, livestock has consistently been among the top 10 exports in the past decade, and there is an opportunity for the industrial production and exports of meat, milk and butter.