AFRICA IS NOW: the Opportunity for Mid-Sized US Companies

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EMERGING LEADERS PERSPECTIVES

AFRICA IS NOW: The Opportunity for Mid-Sized US Companies

By Ikbel Achour, Benjamin Bader, Ross Shelleman, Lisa G. Thomas, Shalini Unnikrishnan and Kuliva Wilburn June 2015

Executive summary While significant risks remain, we challenge those shying away from investing in Africa to consider the Africa has rapidly gained attention as the next invest- following arguments. First, many of the perceived risks ment hotspot and is being called “the final frontier.” are myths. Second, careful analysis will demonstrate A decade ago, the worldwide boom in investing in that Africa is not a monolith, and an informed investor emerging markets initially benefited Africa along with can find the right fit. Finally, this is not a journey that other regions, but today many African countries stand a mid-sized company has to take alone. Resources and out on their own as highly attractive investment op- expertise are increasingly available. portunities. The African continent is home to seven of This paper offers a framework that we call the PAL the top 10 fastest-growing economies in the world, and Principles—Be Prepared, Be Adaptive, and Be Local— foreign direct investment is rapidly increasing. created from discussions with experts to assist mid- European and Chinese companies of all sizes rec- sized US companies in developing and implementing ognized the African opportunity early on and have a a winning strategy for expanding to Africa. head start. Today, American companies are increas- Mid-sized US companies should not ignore Africa’s ingly discussing Africa as a business destination, transformation into a highly attractive business desti- yet many have not taken the leap. According to Josh nation. To capitalize on the burgeoning opportunities, Becker, cofounder and CEO of Impele Consulting the time to act is now. Group, “We are seeing tremendous growth in interest in Africa [from the US], but not the same growth in action. Companies take their notebooks but not their checkbooks.” As growth slows in more developed markets, geographic diversification is a logical next step for businesses of all sizes. Many African markets offer attractive opportunities for mid-sized companies, and as an early mover, a company stands to secure the most suitable options as well as the best talent, partnerships, and incentives.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 1 The Chicago Council on Global Affairs is an independent, nonpartisan organization. All statements of fact and expressions of opinion con- tained in this report are the sole responsibility of the author and do not necessarily reflect the views of The Chicago Council on Global Affairs or of the project funders.

All charts and other graphics by Ikbel Achour.

Printed in the United States of America.

This report may not be reproduced in whole or in part, in any form (beyond that copying permitted by sections 107 and 108 of the US Copyright Law and excerpts by reviewers for the public press), without written permission from the publisher. For further information about The Chicago Council or this study, please write to The Chicago Council on Global Affairs, 332 South Michigan Avenue, Suite 1100, Chicago IL, 60604, or visit The Chicago Council’s website at www.thechicagocouncil.org. Table of Contents

Executive summary...... 1

Introduction: Where Africa stands today...... 4

Chapter 1—Where Africa is heading...... 6

Chapter 2—The opportunity for mid-sized US companies is now...... 14

Chapter 3—Guiding principles for African expansion...... 16

Conclusion...... 22

Appendix: Resources to support expansion and investment...... 22

Acronyms...... 24

The Emerging Leaders Program ...... 25 Acknowledgments...... 25 Author biographies ...... 26

Endnotes ...... 28

Bibliography...... 30 Introduction—Where Africa stands today

“The Indian Tiger and the Chinese Dragon have had 10 countries in North Africa, it also claims 500 million their days, and it’s now the African Lion’s turn.” 1 acres of tropical forest in the Congo Basin and 60 percent of the world’s uncultivated arable land.3 For decades the only news reported about Africa was While challenges still exist, Africa has become a bleak, creating a singular and distorted image of the source of optimism, progress, and economic oppor- continent. Terrorism, famine, political corruption, and tunity. The economies of many African countries are the proliferation of AIDS and other diseases dom- growing at unprecedented rates, following the tra- inated US media, driving the perceptions of many jectory of other fast-paced emerging markets such as Americans. Today, however, brighter and more varied China and India. A flourishing middle class, diversifi- narratives are changing those perceptions. cation of industry, and adoption of leapfrogging tech- Africa is the second largest continent in the world, nologies are other key factors propelling Africa onto with a total landmass greater than the United States, the world stage as the next great opportunity for busi- Europe, India, and China combined. There are 54 sov- ness. Companies who want to be a part of and benefit ereign countries, each with its own unique identity and from this massive transformation must act now. varying economic, social, and political structures. Over This report is based on research and interviews one billion people now live on the continent of Africa, with experts on doing business in Africa from both the with Nigeria topping the list as the most populous private and public sectors. It presents a comparison of country with more than 175 million people.2 English, Africa to other global regions and provides select exam- Arabic, French, or Portuguese are official or co-official ples from individual countries, regional groupings, and languages in every country, with numerous indige- industry segments to highlight the opportunity that nous languages such as Swahili and Hausa still widely exists for US middle-market companies among the 54 spoken. Of the non-native languages, English has the diverse countries on the African continent—each with largest number of speakers—approximately 700 mil- its own distinctive characteristics and prospects. lion. While Christianity and Islam are the dominant For purposes of this publication, the terms “mid- religions across the region, traditional African religions dle-market” or “mid-sized” firms refer to companies still play a significant role, with Judaism, Hinduism, with annual revenues between $50 million and $1 and Buddhism maintaining a minor presence. The cli- billion.4 The authors also employ the broadest defi- matic and ecological regions shaping Africa mirror the nition possible when referring to “investment” or diversity of the individual countries and their people. “expansion,” including the full range of strategic, oper- Though the continent is home to the largest desert ational, and financial options to tap into the various on earth, the Sahara Desert, which stretches across African markets.

4 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 1

Africa’s Diversity

Morocco Tunisia

Western Algeria Libya Egypt Sahara

Mauritania Mali Africa is home to : Niger Senegal Chad Sudan Eritrea The Gambia Burkina Djibouti countries Faso 54 Guinea- Guinea Benin Bissau Côte Ghana Nigeria South Ethiopia 1.1 billion people d’Ivoire Central African Sierra Leone Cameroon Republic Sudan Togo Equatorial million people in the middle class Uganda 370 Liberia Guinea Kenya Somalia Congo Democratic Sao Tome Rwanda 52 urban cities ≥ 1 million people and Principe Republic Burundi Gabon of Congo Tanzania Seychelles Ocial languages (# of countries)*

English (25), Arabic (12), French (21), Portuguese (6) Mozambique Population Angola size (mn) Zambia Malawi Other major languages (# of countries) 75 - 180 Zimbabwe Swahili (10), Hausa (8), Yoruba (2), Oromo (3) 20 - 50 Namibia Mauritius 10 - 19 Botswana *A country may have more than one ocial language 1.9 - 8 Swaziland Madagascar 0.09 - 1.7 South Africa Lesotho

Africa is the 2nd largest continen t 5 diverse regions 60% of the world’s arable land

Larger than 18 countries US Northern Sahara desert combined, India Semi-desert Western including US, China Grasslands/Scrub Eastern China, India, and Sub- Savanna Saharan most of Europe Central Moutain forest/woodland (30,221,000 km2) Southern Tropical rainforest

Economic drivers and enablers A vibrant private sector Committed governments

400,000 companies 45 countries show registered in 2013 improved governance Africa is the 2.5 trillion

2nd most in GDP 32 countries had 29 countries require attractive 57 billion 2+ tech hubs in 2014 ≤15 days to open a business investment in FDI destination worldwide 30 countries using 51 countries undertaking mobile money services 3+ national and/or intraregional infrastructure projects

Source: AfDB, 2014; Ernst & Young, 2014; The Infrastructure Consortium for Africa, 2014; UNCTAD, 2015; World Bank, 2015.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 5 Chapter 1—Where Africa is heading

The African continent is an attractive region for porting cocoa. The move has compelled three multi- investment. national companies—Cargill, Archer Daniels Midland, and Olam—to pay more attention to the region.9, 10 Massive population growth and a rising middle class In addition, as African populations continue to grow, have created millions of new consumers hungry for goods and services will be needed domestically to keep products and services. A variety of economic, politi- up with demand. Regional trade has also been growing cal, and social transformations in Africa are creating and reached $147 billion in 2012,11 including nearly 13 investment opportunities for the next stage of the percent of African exports. region’s growth. Many African countries have insti- tuted meaningful reforms in their governance and An improving investment environment is investment frameworks. New technologies are being increasing capital flow to the region. developed to solve unique challenges in health care, infrastructure, power, and agriculture. Incentives for According to Ernst & Young’s most recent survey of investment are emerging every day. And as the gross business attractiveness, over the last four years Afri- domestic product of many nations continues to rise, ca has moved from eighth of 10 global regions to the these positive trends are expected to continue. second-most attractive investment destination in the world. Sixty percent of businesses surveyed reported Many African countries are experiencing high Africa’s improved investment attractiveness over the GDP growth. past year, and nearly three-quarters believe it will improve further in the next three years.12 Since the end Of the top 10 fastest-growing economies in the world of the global recession, foreign direct investment (FDI) today, seven are in Africa,* with projected growth into Africa has increased every year, with more than rates of 7 percent or more.5 In the past decade, African $57 billion in inflows in 2013.13 The United States and economies have outperformed those in Latin America the United Kingdom remain the top two sources of as well as many developed countries in GDP growth. investment in Africa; however, the number of foreign Such expansion puts these nations on growth trajec- direct investment projects from China, India, and from tories similar to India and China. While today Africa’s new players like Turkey and Brazil are growing at an collective GDP of $2.5 trillion6 is quite modest com- increasing rate. Equally important, in 2013 greenfield pared with more developed nations, it is the world’s projects in services and manufacturing received nearly second-fastest growing region, with a projected growth 90 percent of FDI dollars.** rate of 5 percent for 2015.7 Demographic shifts, urbanization, and Africa’s exports are growing exponentially, with increased purchasing power are driving change broader industry diversification. in Africa. Sales of goods and services to foreign buyers quadru- In the past 30 years, the African population has grown pled between 2000 and 2012, from $148 billion to $641 nearly two-and-a-half times to 1.1 billion people, with billion.8 Although many African countries continue to 70 percent of the population now under 30 years old.14 benefit from traditional exports of oil, gold, diamonds, This growth is due to a decline in overall poverty, bet- rubber, and forest products, national governments ter disease prevention, and increased life expectancy. are diversifying beyond these industries. For example, A large portion of the population has also migrated Côte d’Ivoire, the world’s largest exporter of cocoa to urban centers, seeking jobs and a better life. These beans, has entered the global confectionery market, shifts are creating megacities, a pan-African phenom- now manufacturing chocolate instead of simply ex- enon, and driving a need for massive advances in

*These countries include Angola, Ghana, Ethiopia, Tanzania, **A greenfield project refers to a new project or venture rather than Mozambique, Nigeria, and Zambia. further development of an existing project or venture.

6 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 2

Africa’s Unprecedented Growth

Tunisia Morocco Over the past 15 years, the economies of Western Algeria Libya Angola, Ethiopia, Tanzania, Mozambique, Sahara Egypt Nigeria, and Zambia outperformed Latin America and developed countries, all Mauritania Mali while catching up with China and India Niger Senegal Chad Sudan Eritrea The Gambia Burkina Djibouti Faso Guinea- Guinea Benin Bissau Côte Ghana Nigeria South Ethiopia d’Ivoire Central African Sierra Leone Republic Sudan Togo Cameroon Equatorial Uganda Liberia Guinea Somalia Kenya Gabon Democratic Sao Tome Republic Rwanda and Principe Congo Burundi of Congo Tanzania Seychelles GDP average annual % change (2000–2015) Mozambique 2015 forecast (%) Angola 10 China Zambia Malawi India Above 7 Zimbabwe BRIC* 5 - 6.9 Namibia Mauritius 5 Madagascar Africa 3 - 4.9 Botswana USA Below 3 Europe 0 No data Swaziland South 2000 2008 2010 2013 2015f Lesotho Africa

*Brazil, Russia, India, China Source: UNCTAD, 2015; World Bank, 2015.

Figure 3

Exports and Investment Gaining Momentum

4X in African Exports 2000–2012 Africa is the 2nd most attractive 4X in FDI in ow in FDI for services $ billion in 2012 investment destination 641 2000–2013 2013 2014 China North America 93.2 $147 1 USA $ billion 57 India 75.3 billion in 2 Africa Italy Intra-trade 2 Asia # FDI New projects France 44.4 3 Oceania Spain 40.4 2012 31 Services 38.8 2013 Western Europe UK 34.2 4 Manufacturing Netherlands 28.4 5 5 Latin America 14 Germany 2011 9 Extractives Japan, Brazil 8 2000 2002 2005 2013

Source: Ernst & Young, 2014; UNCTAD, 2014.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 7 technology and innovation. Of the 100 fastest-growing Infrastructure in Africa lags, but with additional cities in the world, 25 are in Africa, including Lagos, public and private investment, positive trends Nigeria, Kinshasa, Democratic Republic of the Congo, are emerging. and Johannesburg, South Africa. By 2030 more than Only one in three Africans has access to electricity, half of Africa’s population will live in urban areas.15,16 compared to nine of 10 people elsewhere in the devel- Today, at least 370 million Africans, 34 percent of the oping world. Estimates are that the African continent total population, are part of the new middle class,* loses two percentage points of GDP growth annually strengthening the demand for more and better goods as a result of its infrastructure deficit.18 But massive and services.17 Currently, middle class populations are change is under way. Multiple national and pan-Afri- concentrated in a few of the 54 countries, but contin- can projects have been completed or are in the pipe- ued economic growth and diversification will create line such as building and upgrading highways, rail- wider distribution in the future. ways, ports, power plants, and water stations. China and the African Union launched an ambitious plan to develop road, rail, and air transport routes to link capitals across Africa. African Union chief Nkosaza- na Dlamini-Zuma praised the proposal as “the most substantive project the AU has ever signed with a *Based on the definition from the African Development Bank. partner.”19 While China has been the champion of in-

Figure 4

Africa Powerhouse Algiers Tunis Alexandria Casablanca Cairo Total Population (bn) Tunisia ~1.5 billion Africa Morocco 1.5 India Algeria Libya Western Egypt China Sahara BRIC Dakar 0.5 Europe Bamako Addis Ababa Mauritania USA Niger 2000 2013 2020 2025 Mali Senegal Chad Sudan Eritrea

Burkina Faso Guinea Abidjan Benin Nigeria Sierra Côte Togo South Leone Ghana Central African Sudan d’Ivoire Republic Ethiopia Liberia Cameroon Nairobi Accra Douala Uganda Somalia Kenya By 2025 the Democratic urban population Gabon Republic of Lagos Congo the Congo Rwanda will reach ~750 million Burundi Tanzania

By 2030 the African Kinshasa Malawi African megacities Angola Dar es middle class will Zambia Mozambique Salaam population growth reach ~500 million ~20-35% Zimbabwe Namibia 10 mn Madagascar Mauritius Luanda Botswana By 2030 African 2 mn 2010 consumer spending 2025 Cape Town South Lesotho Johannesburg will reach ~$22 trillion 0 Africa Durban

Source: AfDB, 2014; UNCTAD, 2015; UN Human Settlements Programme, 2015; World Bank, 2015.

8 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 5

Improving Infrastructure

Current Power Water Roads Rail System Ports Airports 43% coverage 68% improved 47% paved in 41 countries 64 ~160*

Tunisia PROSOL Thermal Examples [STEG, $206 mn] Egypt Power plant completed, [IDB; $200 mn] ongoing, and Morocco [AfDB; $107 mn] Sudan (Kartoum) planned UEMOA-Ghana Airport [China; $700 mn] projects Road programme I 2010–2018 [AfDB; $240 mn] Ethiopia - Kenya 1,000 km highway West Africa [AfDB] Rail loop connecting capitals in Nigeria Kenya and Burkina Faso with Konza the ports of Côte [IFC and Kenyan government] d’Ivoire and Benin Chad, Congo, [AfDB; $240 mn] CAR, DRC Angola Multinational- 19 river ports Luanda Lake Victoria [Chinese and Water and Sanitation Power Africa Modernization City with Ethiopia, Ghana, of river ports and Angolan [EIB, AfDB; ~$200 mn] multiple Kenya, Liberia, Palambo dam governments] infrastructure Mozambique Nigeria and Tanzania construction projects Railway system [USA; $20 bn] [France; $300 mn] [AfDB; $450 mn]

*Only international airports included. [Entity financing the project; # $ if available.] See page 24 for acronyms. Source: AfDB, 2014; The Infrastructure Consortium for Africa, 2014; Knight Frank, 2015; UNCTAD, 2015.

frastructure investment in Africa, other players such as continent’s population have Internet access.25 Along Brazil, India, Japan, and the United States have begun with Internet access, Africa has also seen tremendous to emerge as major partners on the continent. The US growth in access to mobile technology. The GSM Asso- government’s “Power Africa” project has committed to ciation reports that Sub-Saharan Africa has 329 million adding more than 30,000 megawatts of power capacity unique subscribers and will become the fastest-grow- in Sub-Saharan Africa.20 In addition, the Infrastructure ing region, with a compound annual growth rate of Consortium for Africa is investing nearly $20 billion in 7 percent through 2020.26 In the same period, overall energy, transport, water, and sanitation infrastructure, penetration is expected to increase to 79 percent, with including $8 billion from private-sector investment.21,22 smartphone connections increasing to over 400 million by 2018.27 As high-speed Internet becomes more Internet and mobile phone use are rising at a prominent and the cost of smartphones and tablets dizzying pace. declines, the better ICT infrastructure and access to While it is still far behind most of the world, African technology can further transform the way people and connectivity has exploded over the past decade. Inter- businesses function across the region. national and pan-African telecommunication operators have invested in information and communication Many countries in Africa are benefiting from technology (ICT) infrastructure to improve connectiv- the adoption of leapfrogging technology. ity and cut costs for both operators and end users.23,24 With little landline infrastructure, mobile technology The region now boasts nearly 10 percent of the world’s quickly became the first choice for phone commu- Internet users, and more than one-fourth of the nication in many African countries. The technology

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 9 Figure 6

Rapid Expansion of Technology

197.6 mn The fastest growing and Over 210 Examples Internet users 2nd largest mobile market tech hubs of tech hubs Klab - Rwanda Coverage 80% users # of hubs CIPMEN - Niger 26.5% in 2014 760 mn in 2013 by country Flat6Labs - Egypt ~50% by 2030 1 bn by 2016 BongoHive - Zambia 1-5 Jokkolabs - Senegal 2 Tbps in connectivity 6-15 20x WikiStartup - Tunisia 2x and bandwidth (2009-2014) 20-30 20x in submarine ber cables 40 ActivSpaces - Cameroon 2x in terrestrial networks ilabLiberia 2011 - Liberia

Source: AfDB, 2014; Fab Foundation, 2015; Hamilton Research, 2015; Miniwatts Marketing Group, 2014; Singer et. al., 2015; World Bank, May 2015.

was then applied to solve other challenges. A Ken- charged by solar panel systems.30 And smallholder yan-based company, M-Pesa, which provides financial farmers are adopting advances in agricultural biotech- services using a mobile phone platform, processes nology to increase crop production, including maize, nearly $1 billion of transactions per month for over soybeans, and cotton. Currently, crops engineered to 12 million active users.28 The platform has expanded be disease resistant, increase yield, or repel insects are to provide a “pay-as-you-go” service called M-Kopa, grown in South Africa, Burkina Faso, and Sudan, with which allows millions of people living outside the additional crops being tested in seven other African reach of a reliable electrical grid in Kenya, Tanzania, countries.31 In retail, Nigerian-based Mobile Media and Uganda to move from using kerosene directly to Infotech Limited backed by a US mobile payment solar-powered energy.29 Technology is also being used platform provider, has introduced M-Iflo, which acts to create innovation in the health, education, and ag- as a payment intermediary between mobile wallet ricultural sectors. For instance, mPedigree, a technol- providers and online merchants.32 More than 200 inno- ogy company based in Ghana, developed an app and vation hubs, technology labs, science and technology portal to protect consumers from products that may parks, incubators, and accelerators in over 30 African be counterfeit such as medications. Schools in Kenya countries provide a boost to continued innovation and are increasing literacy through e-readers and tablets entrepreneurial activity.33,34

Table 1

Innovation Across Industries

Mobile Solar Health care Education Agriculture Retail Intra-trade money energy kit marketplace

M-Pesa (Kenya) M-Kopa (Kenya) M-Pedigree or ReKindle ECX (Ethiopia) Jumia (Nigeria) moWoza 17 million users. ‘pay-as-you-go’ Sproxil (Ghana) (South Africa) SMS and online 750,000 users and (Mozambique) $1 bn in services. Provides Protects consumers Reinforces based market 450 employees. Reliable goods transactions per reliable alternative from counterfeit content information on Pay on delivery, delivery from month. Present in power to 150,000 medication. presented in supply, demand online or via Mozambique 6 African countries, homes o the 8.5 mn engaged the classroom and pricing. 1 mn mobile money. to South Africa Eastern Europe electrical grid in users in Ghana, requests per Operates in 12 to enhance supply and Asia Kenya, Uganda Nigeria, Kenya month, 80% from African countries chain and Tanzania and India rural areas

Source: Manyika et. al., 2013; Walker, 2014.

10 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 7

Workforce by the Numbers

Workforce Productivity levels Labor profile

People ≥ 15 years old Productivity level by 2040 relative to US (2013) more (m) 1.1 bn workers than 900 17% China China or India India 8% in 2012 500 Africa 5% 382 mn Europe workers 100 USA 55% Agriculture 2000 2013 2015 2020 42% Manufacturing, retail, hospitality and services

Source: The Conference Board, Inc., 2014; Fine, 2012; UNCTAD, 2015.

Although low labor productivity remains entrepreneurs. As political stability continues to take a challenge, current wage differentials are hold and economies grow and diversify, more talented attracting industry. workers are likely to seek employment in the domestic market. Though Africa’s workforce has been steadily increas- Though productivity is too low in some African ing, the average labor productivity for the region countries, the availability of large numbers of lower remains low at about 5 percent of the US level, varying skilled workers can be a comparative advantage in significantly by country and region. Most countries labor-intensive industries such as textiles, agriculture, in Sub-Saharan Africa have rates below the 5 percent and manufacturing. In these sectors, lower wages mark, while many North African countries report account for up to 43 percent of a company’s moti- productivity higher than 15 percent. South Africa is vation to expand into Africa. According to a former currently at the top of the list at 28 percent of the US World Bank economist, in the coming years China level, with Tunisia and Algeria each reporting approxi- may export as many as 80 million manufacturing 35 mately 23 percent. In comparison, India’s productivi- jobs to countries such as Ethiopia, Kenya, Lesotho, ty is about 8 percent of the US level, with emerging and and Rwanda, primarily because of the wage disparity. developing nations in Asia-Pacific posting an average A typical hourly wage for a Chinese worker making of 10 percent. According to the African Development shoes is about $4; in Ethiopia, it is less than 50 cents.40 Bank, the low overall productivity in Africa is primarily African countries should be considered manufacturing because of the lower quality of education and lack of destinations in the near term. training.36 Access to education has generally improved, and enrollment in primary and secondary education Inflation rates have been stable or declining is increasing. But to boost the whole region’s produc- across Africa in the last five years. tivity, more needs to be done. Retaining well-educated Over half of the African countries reporting to the and highly talented Africans which would increase World Bank showed lower inflation between 2009 and productivity levels in the domestic market has also 2013, with an even higher proportion—more than 70 been difficult. The International Labor Organization percent—recording a decline in 2013. Since relatively reports that African countries lose a “substantial lower levels of inflation contribute to a more stable proportion of their skilled labor force through ‘brain economic environment, this is an important trend. drain.’”37 However, in the last decade, many of these Strikingly, 26 African countries had inflation rates of Africans have been returning to their home countries 5 percent or lower in 2013, and 18 African countries to pursue increased economic opportunities.38 Many had inflation rates below the world average of 2.6 are sought by foreign companies for managerial and percent. Inflation in Kenya decreased from 9 percent executive roles,39 while others choose to become to 6 percent for the 2013 calendar year, while Rwanda’s

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 11 ernance reforms, and better crisis management have A Brief Word about Corruption… proven that African countries are moving forward and that political conflict is “not going to be catastrophic” Corruption exists in Africa, as it does everywhere, but for the continent as a whole, according to Paul Col- the type of corruption and how it affects individuals and lier, codirector at the Centre for the Study of African businesses varies significantly by market . According to Economies at Oxford University.42 Thomas Vester, chief Transparency International, roughly 40 percent of the investment officer and fund manager of the nearly $1 African countries included in the Corruption Perceptions Index 2014 scored the same or better than China, Mexico, billion LGM Frontier Markets Fund, agrees and said and Indonesia, all considered attractive emerging invest- that he is seeing a change on the continent. Previous- ment markets . The perception of rampant corruption ly, African government leaders hesitated to commit in Africa usually centers on payoffs to the government . to longer-term projects—such as infrastructure and Building a successful business strategy in Africa may in- housing construction—whereas many now feel more clude having the right connections in the government, but comfortable with planning further ahead because it does not mean paying bribes to government officials . they do not fear being ousted immediately. Vester also In his book Success in Africa, Jonathan Berman points out that strong government relationships are important but, noted a documented correlation between political “That’s true in the United States and in many other coun- stability and long-term economic progress. He pointed tries as well, where lobbying, political contributions, and to Kenya, Ghana, Botswana, and Zambia as countries trade associations each represent an accepted path busi- that will benefit from continued political stability: nesses use to enhance returns by engaging government ”. “Factors like that will give [these countries] a serious Most of the business leaders and other experts we liftoff, where they can enjoy 20 years of trend growth spoke with who have worked in African countries for many of around 6 to 7 percent.”43 After Tunisia’s popular years said that despite rumors on the continent, being asked for a bribe related to a business endeavor is very uprising in 2011 and a steady transition to democracy rare . Africans also know that US companies are prohibited in 2014, investors regained confidence and sought to from paying bribes under the US Foreign Corrupt Practices participate actively in Tunisia’s economy. Rebrand- Act . Low-level corruption such as paying fees at a check- ing itself as “a democratic start-up,” the government point to a local policeman exists as in many other emerg- continues to support the implementation of reforms ing markets, and in some countries it is pervasive . But it is and sustainable economic development.44 Nigeria, not a substantial barrier to doing business . Most African Africa’s largest economy, is the most recent example governments recognize that encouraging investment requires ensuring that corruption is eradicated at all levels, of improved stability with a peaceful transfer of power and they are working to put effective systems in place . between civilian governments after the elections in March 2015. Source: Transparency International, 2014. Most African countries have mechanisms to guarantee the repatriation of profits and inflation rate dropped from 10 percent to 4 percent in capital gains. the same period.41 Inflation is difficult to predict, and Being able to transfer business profits to the home rates in an emerging market can be exacerbated by company from abroad is a key factor for investing in political instability or lack of economic diversity, but any emerging market. However, under what portion of many African governments appear to be developing the tax code the gain qualifies and the amount a com- the right policies to manage inflation risk and keep pany or investor will pay in taxes can vary significantly high inflation at bay. across the different countries. According to global professional services company KPMG, some countries Political stability is still a concern in some have separate capital gains tax rates prescribed in the African countries, but gains are being made. revenue code, such as Kenya with 5 percent,* Nigeria Investors cite political instability as one of the biggest with 10 percent, and Ghana with 15 percent.** Other short-term threats to growth in Africa. Many African *Effective as of January 1, 2015. countries are in transition to more democratically sta- **There are also provisions in the tax code that bring down the capital ble states. Sustained economic growth, increased gov- gains tax from 15 percent for specific exclusions.

12 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 8

Business Regulatory Reforms 2014

5 Sub-Saharan African economies 39 reforms to reduce complexity and cost 36 reforms to strengthen among the 10 top most improved of regulatory process such as eliminating legal institutions, obtain globally in ease of doing business a capital requirement or creating a one- credit and protect in 2014: Benin, Democractic Republic stop shop. 29 countries require less minority investors. of Congo, Côte D’Ivoire, Senegal, and Togo. than 15 days to open a business.

Morocco Tunisia 15 days to request and obtain a building permit 11 days to set up a business Ranked 31 out of 189 countries in ease Ranked 54 out of 189 countries in resolving insolvency of trading across borders 10-year tax holiday for priority projects and regions

Senegal Rwanda 6 days to set up a business, same 37 ease of doing business reforms since 2004 as Norway vs. 59 days in 2005 2–7% corporate tax discount for hiring Rwandans 14 days to import goods, same Training and research costs are tax deductible as Poland vs. 27 days in 2005 Tanzania Nigeria 25% tax rate for newly listed companies for 3 years 20% tax credit for sourcing raw materials. 5–7 year Allowances for plant/machinery: 110% tax holiday for manufacturing telecom equipment for agriculture and 50% for manufacturing

Mauritius Bostwana Most favorable business climate in 10% reduction in tax rate for manufacturing Sub-Saharan Africa: 6 days to set up a busines s Deduction of 200% of training expense for local employees and 2 week s to complete a transfer of property

Source: AfDB, 2014; KPMG, 2015; Mulligan, 2015; World Bank Group, June 2014 .

countries like Senegal and Uganda tax capital gains is about 27.9 percent, above the 23.6 percent global av- at the corporate tax rate, 30 percent in both coun- erage but below the maximum 35 percent US corporate tries. Uganda and others also make an exemption tax rate. However, despite the comparatively higher for profits of a local subsidiary being returned to the rates, many African countries offer tax incentives for parent company abroad. In Uganda these are taxed at particular industries or to achieve development goals a lower rate than the corporate tax rate. South Africa’s such as promoting investment in rural areas or pro- approach to capital gains appears to be unique on the viding training to local people (see Figure 8 above). continent—66.6 percent of capital gains are taxed at South Africa has 12 separate tax and other incentive the corporate rate of 28 percent. Taxation on dividends programs to promote trade, export, and investment in among the countries profiled by KPMG is much lower the country. One such program, the 12I Tax Allowance and seems to operate within a tighter band of rates. Incentive, provides the equivalent of approximately $30 Ghana, Kenya, Nigeria, Senegal, and Uganda claim to $75 million in tax allowances for projects in the man- between 8 to 15 percent as a tax, with some exceptions ufacturing sector. After the program was announced in for double tax treaties with certain countries.45 2010, about 50 projects worth approximately $3.8 billion were approved in eight sectors with the chemical, Average corporate tax rates are higher than in cement and ceramics, and agro-processing industries other emerging markets but may come with leading the way.*, 47 Nigeria has 69 designated “pio- better exemptions and other incentives. neer” industries ranging from integrated dairy produc- According to KPMG’s most recent data for 2014, the tion and tourism to consumer product manufacturing maximum corporate tax rates for the 21 reporting Afri- *The success of this program in terms of valued added investment can countries ranged from 19 to 35 percent, remaining in South Africa, the number of jobs created, and the value chain the same or declining from the previous year.46 Across linkages to small and medium enterprises have prompted the South African government to extend the program another two years the countries surveyed, the average corporate tax rate through December 31, 2017.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 13 and real estate development, which receive seven-year on the African continent, including a regional exchange tax holidays. Additional tax allowances and other for eight West African countries, the Bourse Régionale incentives are offered to established companies that des Valeurs Mobilières (BRVM), and a new exchange invest in economically disadvantaged areas, promote expected to be opened in 2015 in Somalia. The Johan- exports, or create in-house training facilities.48 nesburg Stock Exchange is ranked in the top 20 largest exchanges in the world and dwarfs the other exchanges Continued development of the overall financial in Africa with capitalization of over $1 trillion.50 The system will assist companies in seeking capital African Development Bank’s African Financial Markets and provide exit opportunities for investments. Initiative is focusing on strengthening and diversifying US and European banks such as Standard Chartered, the financial systems across Africa, including the de- Barclays, and Citibank have operated in Africa for velopment of bond, commodity, and foreign exchange decades. In addition, there are 15 domestic pan-Afri- markets, and reinforcing commercial banks and clear- can banks with total assets of more than $15 billion. ing houses.51 This will give companies in smaller coun- Standard Bank, based in South Africa, is the biggest tries access to public markets and help tackle the issues by asset size in this group, posting over $160 billion, of low capitalization and illiquidity of current exchang- with operations in 19 African countries and 11 others es. Regionally integrated markets are also an important globally. Ecobank, headquartered in Togo, has the most vehicle for supporting the growth of financial markets expansive footprint in Africa, with branch operations across the continent, and work is being done to ensure in 35 countries.49 Currently, 26 stock exchanges operate consistency in legal and accounting practices.

Chapter 2—The opportunity for mid-sized US companies is now

Multinational corporations are often the frontrunners Expanding abroad provides opportunities in emerging markets. They have extensive experience for growth and diversification for US middle- and often higher risk appetites, substantial teams, market firms. and seemingly endless resources. Beyond the oil and Though the United States has a large overall market gas sector, several large US corporations have been in with good opportunities for growth and investment, Africa for decades. It is no surprise that Coca-Cola, the strategically minded firms must always consider how world’s largest soft drink brand, has been operating in the business environment is evolving and where future Africa since the 1930s and, in more recent years, com- growth will come from. In spite of the risks, tapping into panies like Microsoft and Walmart have been growing international markets can provide new revenue streams their presence across the continent. But in today’s globalized economy, expansion into emerging markets is not the sole domain of the largest global players. Tapping into international markets can provide new Rapid growth is occurring in many African countries revenue streams that support long-term growth and across a range of sectors, generating opportunities for have the potential benefit of geographic diversification, mid-sized companies as well. The time to access this which can mitigate the impact of events in one market. large and growing market is now, while there is significant latent demand, limited competition, and support mechanisms both in the United States and abroad. that support long-term growth and geographic diversification, which can mitigate the impact of adverse events in one market. Many mid-sized companies already recognize the opportunity abroad and are making plans to expand into foreign markets. According to a

14 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES survey done by the Economist Intelligence Unit and the National Center for the Middle Market in 2012, nearly Attracting Private Sector Investment 60 percent of middle-market companies that responded have operations or sales efforts beyond North America In April 2014 ministers from Chad, Mozambique, Uganda, or intend to expand abroad. And overwhelmingly, the and Djibouti called for an increase in private investment and encouraged legislation to facilitate private sector main reason cited for increasing activity in foreign mar- development . The ministers appealed to domestic and in- kets is to support long-term growth goals.52 ternational private investors to partner with their governments and highlighted initiatives for economic diversifica- The market in Africa is growing, diversifying, tion and regional integration . Ahmed Osman Ali, governor and can support a broad range of market of the Central Bank of Djibouti, described the country’s participants. strategy to attract investment, “We try to facilitate FDI, As highlighted in the previous chapter, African coun- working on legislation, on guarantees, and on transparency, and this work that we have been doing for several years tries offer opportunities to access a group of markets is bearing fruit because we are having investments in tele- in burgeoning economies with expanding middle communication, transportation, construction of harbors, classes. The populations in these countries have and in the management of our ports ”. diverse and increasing needs. Most countries are Source: World Bank, April 2014. developing industries beyond the extractive sectors, ranging from basic consumer goods, manufacturing, and transportation to financial services, telecommu- sectors, a US company may be the only business mak- nications, and biotechnology. Former Ambassador ing an investment or supplying a particular product or Herman Cohen of Cohen and Woods International, an service. In others, US companies may have advantages advisory firm specializing in Africa, remarked, “There in quality and innovation over other foreign compet- is a growing middle class in Africa which is importing itors or local firms. Josh Becker of Impele Consulting everything, as the manufacture of consumer goods lo- Group said that in his experience, “The business envi- cally is still small.” This transformation is an intriguing ronment is more Western than other emerging mar- prospect, not only for companies with large, estab- kets, so it is a shame more US companies aren’t operat- lished markets in the United States seeking additional ing there, especially as US companies are held in high customers, but also for companies with products or regard. People in Africa want and respect the American services that have only a small, niche market. For and European brands. As soon as they can afford it, example, Peppermint Energy, a modular solar panel they will buy it.” Getting into a market early also gives manufacturer based in South Dakota with a limit- a company a significant advantage in tapping the best ed customer base in the United States, has targeted partners and negotiating exclusive contracts. markets in Africa where more than 650 million people do not have access to a reliable electrical grid.53 Other Incentive programs to assist companies US middle-market companies in both innovative and expanding to Africa won’t last forever. more traditional businesses are also finding fertile Another advantage of moving early into these markets markets for investment and expansion in Africa. is that individual African countries are vying with each other for investment and trade. As mentioned in the An early mover in emerging African economies previous chapter, tailored incentives like lower taxes for gains greater access to opportunities and export-oriented manufacturing or other strategic sec- resources. tors; deductions from taxable income for investment As African markets continue to diversify and increased in training, research, or product development; and free capital comes in from multiple channels, a broader repatriation of capital and profits are attracting signif- range of industries will present new options for invest- icant foreign interest. Through various agencies, the ment and expansion. Middle-market US companies US government also has a range of programs to assist can leverage their significant expertise and experi- companies looking to expand abroad and has recently ence in their industry segments to become preferred begun programs to promote investment and trade with providers, partners, or investors. In some markets or African countries, including risk-sharing programs.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 15 Some of the incentives may last for an extended period, players. But the overall pool is still quite small,55 allow- but promotional programs are usually offered for a ing US middle-market companies to have the advan- limited time, restrict the amount of funds provided, or tage of relative scale in many African markets. This is cap the number of participants. To reap the benefits of especially so outside of the big urban centers, such as these programs, companies need to act quickly. Cairo in Egypt, Johannesburg in South Africa, Nairo- bi in Kenya, and Lagos in Nigeria. But even in these What is mid-sized in the US may seem larger markets a mid-sized US company can take on larger in Africa. projects and have a better negotiating position than There are large and growing companies based in key smaller local companies. If a company is perceived markets in Africa, but the competitive landscape still as being larger in the African context, it is also a more has plenty of room for new entrants. According to The attractive prospect for local partners and employees, Africa Report, in 2013 nearly 150 African companies particularly qualified managers. Since many African earned revenues of $1 billion or greater, and more than markets have a shortage of capable management per- 500 African companies had over $200 million in rev- sonnel due to inadequate education and the emigra- enue.*, 54 These domestically grown businesses, many tion of educated professionals, competition for scarce similar in size to US middle-market companies, under- management talent will increase as markets attract stand the market dynamics and know how to navigate additional investment. While more highly educated Af- the operating environment far better than foreign rican professionals with work experience in the United States and Europe are returning, they are still a minori- *By contrast there are nearly 200,000 middle market firms in the ty of the resource pool. Securing this talent early on United States, as companies with annual revenue between $10 million to $1 billion. will provide a solid foundation from which to build. 01 Be Prepared Chapter 3—Guiding principles for African expansion

Gather initial Get on the ground information and conduct and draft a plan due diligence Doing business in African countries is different from interviews with those doing business in Africa to create the United States in innumerable ways, and there is no the PAL Principles, which will help a mid-sized compa- rule book to execute the perfect strategy. We spoke ny to develop and implement its best strategy for with 36 experts in both the private and public sectors African markets. This framework can be applied to any to gain a better understanding of the most effective business, from the moment management decides to approaches for investing and operating in these explore an African market as a potential option to after diverse markets. We have synthesized insights from initial investments have been made.

Figure 9

Data Collection Experts by business sector Interview topics

Financial Others* Applying alternative business strategies Building relationships services Identifying and mitigating risks and challenges Establishing local partnerships Consulting Consumer Distinguishing factors for success Understanding the legal framework Renewable goods energy Legal Managing the operating environment Accessing resources Public sector Medical devices

* Business network, public policy, agribusiness, construction, manufacturing

16 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 10

The PAL Principles 01 02 03 Be Prepared Be Adaptive Be Local

Africa is a diverse market of 54 With any emerging market, being Ultimately, sustainable success countries. The starting point for able to adapt is often the most will require being local. This can success is selecting the market critical skill. No amount of be achieved by identifying strong, that best aligns with the company’s preparation can alleviate the local partners and building goals, and then doing the proper need to modify plans as the relationships, as well as by hiring due diligence to understand the market environment changes. and building the capacity of the opportunities and challenges local talent. on the ground. Gather initial information (Re)learn to be scrappy Get a local partner and draft a plan Develop two-way relationships Get on the ground Be prepared to change plans Build local capacity and conduct due diligence

01 tap into the African diaspora in the United States, and connect with US government representatives focused Be Prepared on African projects as well as other experts like lawyers and consultants operating in relevant African coun-

Gather initial Get on the ground tries. Burt Lang, senior managing director, Africa, for information and conduct and draft a plan due diligence Varian Medical Devices, said of the resources the com- interviews with those doing business in Africa to create pany leveraged when expanding its cancer diagnostic the PAL Principles, which will help a mid-sized compa- devices to Algeria, “We received a lot of organizational Gather initial market information and draft a plan. ny to develop and implement its best strategy for support from US embassies in Africa, African embas- With any expansion, a lot of work needs to be complet- African markets. This framework can be applied to any sies in the United States, the US Commerce Depart- ed up front. The unique opportunities and challenges business, from the moment management decides to ment, and trade organizations such as the Corporate of each African country make determining where to explore an African market as a potential option to after Council on Africa.” (For further information on organi- initial investments have been made. enter a new market and what strategy to use especially important. A company’s options will vary depending zations providing resources to facilitate investment in on the industry segment, the sophistication of the Africa, see the Appendix). business environment, relative levels of risk, the political climate, the cost required, and the amount of con- trol that company management would like to main- What Resources Do We Already Have? tain. The company should gather as much information An assessment of internal capabilities will also be critical as possible from a wide variety of sources and develop to the execution strategy that a company selects . This a clear plan for expanding to Africa. A lack of resources analysis will define how much of the current infrastructure to collect information and the prevalence of informal the business can leverage for its expansion strategy and economies in Africa mean that detailed market data is how much must be acquired . The acquisition of resources often unavailable or unreliable. So, identifying alter- may mean establishing relationships to access distribution native sources of information is vital. To build a basic networks for exporting goods, hiring local talent with relevant market knowledge, or developing a partnership or picture of the operating environment, it is helpful to joint venture with a local company . speak directly with US and African business contacts,

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 17 Get on the ground and conduct due diligence. 02 Many of the key principles for developing a market entry or expansion strategy, including defining the Be Adaptive market, identifying the competition, and assessing the operating environment, cannot be finalized without (Re)learn to Be prepared being in the country, meeting directly with people, and be scrappy to change plans studying the local business culture. Ken Ihenacho with Latham & Watkins, a highly respected international law firm, said that he spends a lot of time with clients (Re)learn to be scrappy. who recognize the opportunity of the African macro A company needs to be able to adapt to the environ- environment, the growing middle class, and the in- ment rather than trying to mold it to suit the organization. Resources are not always available when needed. Infrastructure like roads and consistent access Getting on the ground is essential. to electricity is often less than ideal, and regulations A company can misjudge the risks and potential sometimes change with the election of new political rewards by not taking time to gather local leaders. But business is still thriving on the continent, intelligence and gain an understanding of how and savvy managers figure out a way around these business works in a particular country. obstacles. Nathalie Gabala, director of investments for Africa for Equator Capital Partners, explains, “Toler- ance of uncertainty and high market volatility is im- creasing urbanization, but do not know how to access portant. What may be perceived as catastrophic in the the market. His first piece of advice is often simply, US context is not always of the same importance in the “Get on the ground.” The numerous onsite confer- African context. Keep changes in the market environ- ences and trade missions being organized are easy ment in perspective.” American companies are known ways to dip a toe in the water and gain insight into for their entrepreneurial drive and ability to innovate the business environment. Without seeing the market firsthand, a company can misjudge the risks and Keep market changes in perspective. the potential rewards, especially in emerging markets “Tolerance of uncertainty and high market where available research and data is insufficient to tell volatility is important. What may be perceived a complete story. In addition, every African market is as catastrophic in the US context is not always of different, and the opportunities and constraints for en- the same importance in the African context.” try into Ghana may be completely different from those for Mozambique or South Africa. A company will need to spend time in the local market it intends to target around problems, skills well-suited to the consider- to understand the business environment and estab- ably different African operating environment. The lish contacts for implementing its strategy. Onsite due determination and ingenuity that entrepreneurs in diligence is also essential for identifying and vetting middle-market US companies have needed to succeed local partners. Finally, and perhaps most important, in the extremely competitive US market will be put to the business culture in much of Africa emphasizes de- the test in many of the African markets. But these traits veloping close relationships. This cannot be done over can give a company a significant advantage over larger the phone or by email. Face-to-face communication is firms and other foreign and local competitors. of primary importance, and a company should build Be prepared to change plans. in time on the ground over multiple visits to ensure it Many companies have found that once they have first- develops robust relationships with the right partners. hand experience in a new market and have begun to understand the operating environment, they need to adjust their original strategy to be successful. Differ- ent customer preferences, unwritten requirements of doing business, and the lack of extensive distri-

18 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Figure 11

Building a Value Chain Model in Kenya—Focus on International Green Structures

Building a Value Chain Model in Kenya Focus on International Green Structures Company Profile Kenya International Green Structures (IGS) manufactures innovative and sustainable Compressed Agricultural Fiber (CAF) panels from biomass, which are used to construct a ordable housing, schools, and healthcare facilities the company calls IGStructures. Founded in 2005 to provide disaster relief housing in the US, the company realized there was limited demand in the domestic market and recognized the signicant opportunity for a ordable housing solutions in developing countries. The company pairs its CAF technology with a pre-engineered framing system to create strong, easy-to-assemble designs that allow for quicker build times, no-waste construction, and cost savings. Since its entrance into the African market in 2012, the company has now created a replicable value chain model utilizing local partners.

A Value Chain Model Local Local Local Farmer Processing Facility Construction Firms

Rice and wheat products are Agriculture products are transported to Panels are then shipped to sourced from local farmers. The a facility owned by a local partner. The local construction rms that straw, which would ordinarily grains are processed for sale, and the leftover are trained and certied by IGS be agricultural waste, is straw is manufactured into CAF panels. in the proper building techniques. also collected.

Mutual Benefit Outcomes

IGS capitalized The local partner ~ 12,000 housing ~ 2,000 local jobs per factory. Impacts IGS on the market knowledge beneted from structures annually Jobs and positioning of a local IGS’s technology per factory can be the local economy by partner to secure a and expertise to built in about 20% about $30 mn. foothold. The machines expand its product of the time as used by the local partners line to include higher traditional cinder Over 100% increase are manufactured margin paneling. block construction. in IGS’s revenues by by IGS in the United States. expanding to Africa.

bution channels are typical factors that may prompt modifications to a company’s expansion plan. Chid Adapting for Success Liberty, the CEO of Liberty & Justice, a clothing manufacturer with a factory in Liberia, explained that they Power generation is a significant challenge in Africa, consider the business plan to be “a living document” which has created an immense opportunity for off-grid that evolves as the market changes. Challenges exist technologies . Founded in 2011, Peppermint Energy is a because of weak infrastructure, inconsistent regulatory portable solar power generator manufacturer based in South Dakota that targets emerging and frontier markets . frameworks, and a lack of access to skilled workers. At A key challenge for the company is product distribution, the same time, as noted above, new technologies are since there are currently no large sales channels on the adopted more rapidly and are fundamentally altering continent . To overcome this challenge, the company built some industries such as mobile money in the financial its own network of small distributors . Peppermint is services segment. Companies need to be nimble and working with about 35 African-based entities in 15 coun- modify their strategies for gaps or changes in the mar- tries in Sub-Saharan Africa with plans to expand to North ket environment. Having a longer-term vision from the Africa in 2016 . outset will ensure the company focuses its planning and resources for success.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 19 practices that US firms find difficult to assess such as 03 verbal agreements rather than written contracts or the Be Local reliance on family members in the business. Inquiries through local legal counsel or other trusted local advi- Get a local Develop two-way sors may help a company explore the suitability of partner relationships potential partners.

Build Develop two-way relationships. local capacity In most markets, the business community tends to be relatively small and a company can quickly get to know the key players. Building a reputation at the outset as a company that wants to work with local Get a local partner. businesses helps to establish relationships that pro- Successful businesses know that their ability to com- mote acceptance and support. Burt Lang of Varian pete in any market depends on the people they employ Medical Systems explained the importance of these and do business with. If the opportunity exists, some relationships: “Previously, Varian operated through companies may want to acquire a local firm or enter long-standing distributor partnerships. Now, there is a into a joint venture to gain access to the market. How- major initiative to increase our long-term presence. In ever, even if a company does not require a local foot- some cases, this will mean strengthening our part- print, it will need to work with reliable, local partners nerships with distributors, and in other cases, creat- that can assist in navigating the market to properly ing legal entities and joint ventures. For example, we execute the company’s strategy. These “navigators” can just announced a joint venture in Algeria that we are provide significant advantages such as in-depth market implementing right now.” The need to build contacts knowledge; access to networks for financing, human within the government depends on the industry. It is capital, and other resources; and the ability to maneu- usually helpful if the relevant government ministry ver within local regulations and the unique operating understands the company’s plans and how they will environment. International Green Structures (IGS), affect the local community. More extensive relation- an innovative, fiber panel manufacturer operating in ships may be needed to gain insight into how to access the United States and emerging markets, expanded to certain incentives or get permits approved. Compa- Africa three years ago. The CEO of IGS, Richard China, nies might also build relationships with local village explained the importance of local partners to the com- leaders, country directors, and staff of international pany’s strategy: “The key risk for us is not being able organizations operating in the area, local business to identify all of the risks that exist—it is the unknown. associations, and trade organizations. The mitigation for this is having good local partners who already know the nuances of the market.” Build local capacity. Many firms providing support for entry into African Businesses with any presence on the continent are markets advise that local partners can be critical faced with a choice for their staff—bringing in expa- to success, depending on the country and the type triates or hiring local talent. In the long run, building of business. And having a partner whose interests local capacity is much more likely to yield sustain- align with the company’s goals is essential. Bobby J. able success. Hiring expats from the United States Pittman, who heads up Kupanda Capital, commented, or Europe may limit a company’s execution strategy “More often than not, the partner should be local and because of the potentially higher expense to transfer on the ground, but finding the right partner can be a an entire team or to compensate for an undesirable challenge. You also need the right amount of incentive location. If expats are willing to go to more rural parts and alignment.” Local partners can be difficult for for- of Africa with fewer available resources, they may want eign companies to identify because foreign managers higher compensation. In addition, foreign staff have a do not always understand the local market dynamics, learning curve, and some argue that expats will never and publicly available information is in short supply. fully understand the nuances of the local culture. How- Many local companies rely on more informal business ever, the benefit of bringing them in is that they are

20 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Identifying Local Partners

Even with extensive onsite work, executing a successful market entry strategy often requires a permanent local presence or a partnership with a local entity . For companies selling goods, access to distribution networks and salespeople is imperative, since building an onsite presence from scratch is expensive and time consuming . Most experts we spoke with said that a company should find a local partner with market expertise and a network of contacts . Though often a key element of success, finding reliable local partners is one of the main risks of operating in Africa . Part of this is a shortage of deep expertise in specific industries . Very skilled Africans are running successful local businesses, but they may not have the experience in the industry that the company is targeting . However, these local business people know how the business environment operates, have a track record of overcoming challenges in the market, and possess the relationships to enable successful strategy execution . Sometimes the company will need to make tradeoffs to find the “right” partner . For example, a partner with a network of relationships may be more important than one with industry knowledge . Identifying partners in any market is always a challenge, but in a new market with different regulations and norms, a company may feel that it does not have enough knowledge to make a qualified assessment . The companies we spoke with said they identified partners through a variety of sources . Just as in the US market, management should start with people it trusts and respects . Before arriving in the designated African market, it is helpful to talk to US and European companies already doing business there and speak to members of the African diaspora in the company’s local or regional community . Many Africans living abroad maintain strong relationships with people in their home countries and often have business interests of their own . The company should then speak to sources on the ground . Consulting and law firms in the United States and Europe can often help to put companies in touch with trusted contacts and potential partners . Local legal counsel can also assist with background checks on specific individuals and companies . In addition, a number of local advisory firms employing both foreign and African experts specialize in assisting companies with market entry and with introductions to reliable local partners . US embassies typically maintain lists of local experts and reliable service providers . If a company has a contract with a US government program, local partners will be vetted as part of the selection process . Finally, a growing pool of highly educated Africans with work experience in the United States or Europe are returning to their home countries to start businesses or provide advisory services . These individuals can create enormous value by bridging the gap between the different business cultures in the United States and their home countries . But, even with this advantage, companies need to conduct the same onsite due diligence as with any other local partner to be certain that the person has the skills and contacts that the company needs . If the person has been living abroad for many years and just returned, knowledge of changes in the operating environment may be out of date .

highly qualified, are often from the home company, to see a larger talent pool of mid-level management. and therefore understand the context of the business. At some stage, perhaps not too long from now, there There are several options for hiring local talent will be a tipping point, which will lead to all recruiting while still achieving business objectives. One alterna- being done on the continent rather than sourcing from tive is to hire US-educated Africans and transfer them abroad.” In fact, one survey found that 70 percent of back to their home country, which does not always African MBA students studying in the United States save money, but supplies staff who can bridge the cul- and Europe plan to return to their home countries. tural gap between the US company and the local oper- Many companies use a combination of strategies, but ating environment and implement US standards in the eventually hire and train local people who can take local context. An additional alternative is to hire local over the management of the operation. Investing in talent, which is generally cheaper and comes with training for local partners and on-the-ground staff cre- built-in knowledge of the market, including how and ates a sustainable model for the company to grow and when to interact with government officials. Currently, generates goodwill in the local community. a large pool of qualified and highly trained professionals are not typically available in most African markets. But this is changing as education and training advance. In a conversation with Josh Becker at Impele Consulting Group, he said, “The quality of education is improving in many of the countries, so we are starting

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 21 Conclusion

Africa has reached an inflection point for investment Expanding into Africa requires a long-term view of with enormous potential for a wide range of business- success. Being willing to modify initial plans, maneu- es. Immense challenges of infrastructure, electrifica- vering through unforeseen challenges, and having the tion, and political stability still exist but are balanced right local partners are critical elements for thriving by expansive growth, rapid adoption of technologies, in African markets. This is especially true for mid- and the diversification of economic sectors. US middle sized companies, where more time and talent will be market firms have much to gain by looking now for put forth to establish and maintain the right strategy. opportunities in Africa. The 54 markets in the region Companies will need to effectively deploy resources to are diverse and offer companies an array of options in grow and adapt with the market over time. the political, economic, and investment climate they International expansion is not the right answer seek and the sector they choose to operate in. for all middle-market businesses, but the increas- Given the variances between countries, no overall ingly global economy has changed the playing field. report on Africa can be a specific guide, but there are Ultimately, we hope to stimulate companies to con- some core principles for expansion. This report offers sider a move they may have otherwise thought to be three guiding principles for a successful strategy—Be beyond their scope. Investing in Africa can mean a Prepared, Be Adaptive, and Be Local. In addition, a dramatic growth opportunity for US middle-mar- growing set of resources—local, national, and inter- ket firms and for the development of the region as a national—can be accessed to navigate the complex whole. Exploring the opportunity is the first and most landscape. From investment promotion programs of important step in the process. The prospective return individual African countries and US government trade on a correctly executed approach in Africa is signifi- missions to industry groups focused on Africa and net- cant and has the potential of outpacing other markets working with members of local African diaspora, mar- for decades to come. ket intelligence is becoming richer every day.

Appendix: Resources to support expansion and investment

A range of domestic and international, public, and pri- ipating in trade missions. In addition, a limited but vate resources is available to US companies looking to growing number of specialized advisory firms have an enter the African market. Many US government agen- Africa focus and can provide targeted services for US cies now have a mandate to promote Africa-related companies that were not previously available. projects and investments. Multilateral agencies such The table on page 23 provides examples of organi- as the World Bank, the International Finance Corpora- zations in various categories and the types of resources tion (IFC), and the African Development Bank (AfDB), they offer that will help US companies in gathering are also known for their support of business in Africa. information, establishing contacts, and accessing More recently, commercially focused private sector funding to expand to African markets. This is by no resources have also become available. Industry asso- means a complete list of all available resources, but it ciations and chambers of commerce have recognized provides a sample of the breadth and depth of what the growing opportunity in Africa and are developing exists to assist companies with building a strategy for information databases for their members and partic- investing in Africa.

22 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Appendix: Resources

Trade Name of Organization* Missions/ Export Business Funding/ Network Data/ Reports Current Conferences Assistance Counseling Incentives Statistics News

US Government Agencies US Dept of Commerce International Trade Administration US State Department Bureau of African Affairs US Trade and Development Agency USAID Overseas Private Investment Corporation (OPIC) NGOs and Private Organizations Corporate Council on Africa Continental Africa Chamber of Commerce Africa-USA International Chamber of Commerce and Industry African Development Foundation US Chamber of Commerce – Africa Investment Promotion Agencies Nigerian Investment Promotion Commission Tanzania Investment Centre Foreign Investment Promotion Agency of Tunisia Eastern Cape Development Corporation Southern African Development Community US Embassies, Consulates, and Diplomatic Missions (in 50 African countries) Africa Near East African Union Networks/Diaspora Communities African Diaspora Network Tunisian American Young Professionals (TAYP) African Diaspora Marketplace World Africa Diaspora Union (WADU) International Diaspora Engagement Alliance Africans in the Diaspora Bilateral and Multilateral Agencies African Development Bank International Finance Corporation International Monetary Fund African Export-Import Bank Portals/Statistical Databases World Development Indicators International Monetary Fund data African Development Bank data United Nations Conference on Trade and Development (UNCTAD) statistics fDi Markets Other Resources African Business Magazine Ventures Africa (News) allAfrica (News) Africa – All Things Business (Discussion Group) US Business School Conferences on Africa (Harvard, University of Chicago, Wharton, etc .) *Hyperlinks are embedded in the organization name . THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 23 Acronyms

AfDB – African Development Bank AU – African Union BRIC – Collectively, Brazil, Russia, India, and China BRVM – West African Regional Stock Exchange (French acronym) CAF – Compressed Agricultural Fiber CAR – Central African Republic COMESA – Common Market for Eastern and Southern Africa DRC – Democratic Republic of the Congo EIB – European Investment Bank FDI – Foreign Direct Investment GDP – Gross Domestic Product GSMA – GSM Association ICA – Infrastructure Consortium for Africa ICT – Information and Communication Technology IDB – Islamic Development Bank IFC – International Finance Corporation IMF – International Monetary Fund IPA – Investment Promotion Agency NGO – Nongovernmental Organization OPIC – Overseas Private Investment Corporation SMS – Short Message Service SSA – Sub-Saharan Africa STEG – Tunisian Company of Electricity and Gas (French acronym) TBPS – Terabytes UEMOA – West African Economic and Monetary Union (French acronym) UNCTAD – United Nations Conference on Trade and Development UN-Habitat – United Nations Human Settlement Programme USAID – United States Agency for International Development

24 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES The Emerging Leaders Program

The Chicago Council on Global Affairs’ Emerging president, Fifth Third Bank; Clement Fondufe, head of Leaders Program is a two-year program that draws the Africa practice, Latham & Watkins; Nathalie Gabala, di- best and the brightest emerging leaders from across rector of investments, Africa, Equator Capital Partners; business, civic, government, and academic sectors Ambassador (ret.) William Garvelink, senior advisor, in the Chicagoland area. The program provides the International Medical Corps; Hatem Goucha, member, Emerging Leaders (ELs) with a deeper understanding Tunisian American Young Professionals; Brian Gramm, of global issues and Chicago’s place in a globalized chief executive officer, Peppermint Energy; Adam world. ELs also develop a strong network of contacts Hartmann, head of operations and investor relations, with current civic and business leaders and, perhaps Frontier Investments Group, ACCION International; more importantly, with their Chicagoland peers, who Kem Ihenacho, partner, Latham & Watkins; Rachid are also grappling with global challenges. In short, Izzar, vice president commercial–international, Astra- they emerge better prepared to assume key leadership Zeneca; Bahija Jallal, executive vice president, Astra- positions in this new era. Zeneca, head of MedImmune; Pete Jenkner, president, Isovac products LLC; Katrin Kuhlmann, senior advisor Acknowledgments to the president, Corporate Council on Africa; Burt Lang, senior managing director Africa, Varian Medical The members of this team all contributed over the Systems; Chid Liberty, chief executive officer, Liberty course of two years to the discussion and debate in and Justice; David Makovsky, director, Project on the the development of this topic and report. Throughout Middle East Peace Process, The Washington Institute; the second year they were briefed by experts in Wash- Mohamed Malouche, chairman of the board, Tuni- ington, DC, and Chicago, who provided invaluable sian American Young Professionals; Anis Mnif, project insights for their research. The Chicago Council would manager, Tunisian Handicraft Export Program, Tuni- like to express our gratitude to the following individu- sian American Young Professionals; Michael Murai, als for taking time out of their busy schedules to brief senior investment officer, Frontier Investments Group, this group and share their experiences and views: ACCION International; Don Niss, deputy coordinator, Tahar Achour, president, National Chamber of Renew- Power Africa Initiative, USAID; Kara M. Palamountain, able Energy (Tunisia); Leila Aridi Afas, director, Export research assistant professor and executive director, Promotion, USDTA; Edwin Barber, advisor, GoodWorks Global Health Initiative, Kellogg School of Manage- International LLC; Josh Becker, cofounder and chief ment, Northwestern University; Bobby J. Pittman, executive officer, Impele Consulting Group; Matt Bell, managing director, Kupanda Capital; Robert Sham- chief operating officer, Medimmune; Euler Bropleh, bora, chief executive officer, AGES-Athena Global founder and chief executive officer, VestedWorld Man- Energy Solutions; Jacob Sitati, managing principle, agement of Fortis Microfinance Bank, Abuja, Nigeria; Maurice+Fischer LLC, lecturer, International Studies Richard China, chief executive officer, International at Valparaiso University; Karina Wong, independent Green Structures, LLC; Lee Clegg, president, Africa emerging markets consultant. Business Portal; Ambassador (ret.) Herman J. Cohen, Council staff Molly O’Donnell worked with the president and chief executive officer, Cohen and group throughout the two-year process and Council Woods International, former ambassador to Gambia intern Emma Swanson assisted in editing. Ellen Hunt and Senegal, former Africa director for the US National of Hunt Communications edited drafts of the report. Security Council, former US assistant secretary of state Ikbel Achour created all graphics. None of this great for African affairs; Senator Dick Durbin, US senator work would have been possible without the vision, for Illinois and assistant majority leader; Theodore E. leadership, and support of John F. Manley and Shirley Deutch, US representative for Florida, House Judicia- Welsh Ryan, both vice chairs of The Chicago Council’s ry Committee, House Ethics Committee, and House Board of Directors. They, along with the other mem- Foreign Affairs Committee; William Finn, senior vice bers of the Emerging Leaders Selection Committee,

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 25 invested significant time in selecting the members of Benjamin Bader this class. Managing Director Their efforts have resulted in another great group Jones Lang LaSalle that The Chicago Council is proud to have as Emerging Benjamin Bader leads the transaction advisory ser- Leaders. Our sincere appreciation goes to the Robert R. vices group for Jones Lang LaSalle. In his 17-year McCormick Foundation and the Patrick G. and Shirley tenure at the firm, he has had extensive experience W. Ryan Foundation for their support of the Emerging managing global relationships and has executed Leaders Class of 2015. transactions on five continents. He has twice been recognized with the firm’s LaSalle Club Award, won Ivo Daalder President, The Chicago Council on Global Affairs the 2008 JLL Collaboration Award, and has twice June 2015 earned CoStar’s “Power Broker” Award. Prior to joining JLL, he worked at China Enterprises, Inc., an import-export company trading Chinese goods with Author biographies US and European customers, which included three Ikbel Achour years living and working in Qingdao, China. He was Director of Precision Health, University of Arizona a summer associate at Andersen Consulting’s China Vice President Development, Tunisian American Young Strategy Group. Bader serves on the board of directors Professionals Organization of the British-American Business Council of Chicago, is a licensed broker in Illinois, and holds a Six Sigma Ikbel Achour works to translate cutting-edge science Green Belt certification. He earned a BA in interna- into patient care. As director of precision health at tional studies from Vassar College and an International the University of Arizona, she leads and manages the MBA from the University of Chicago’s Booth School of research and development team in translational re- Business. search and computational biology at Lussier’s Group. She focuses on developing precision medicine-based Ross Shelleman technologies, integrating genomic data with patient President and Chief Executive Officer medical records to predict and improve clinical out- Target Data comes as well as repositioning and rescuing drugs. As Ross Shelleman serves as president and CEO of Target funding chair of Women In Bio (WIB), Achour works Data, a marketing analytics and services company. with both the academic and business communities of Prior to founding Target Data, Shelleman held various Illinois and beyond to promote career development senior business development positions across a mul- and entrepreneurship. In addition, as vice president of titude of industries, including technology, health care, development for the Tunisian American Young Profes- and managed services. He also cofounded Australian sionals Organization and a part of the Tunisian dias- Portable Storage, a holding company that owns and pora in the United States, she is deploying initiatives operates moving and storage franchises throughout to promote economic opportunities for investment Australia. In addition, he serves as chairman of Arco and partnership with US companies in North Africa, Capital Partners, an investment holding company that particularly Tunisia. In the last four years, she has also makes angel investments and leads small private equi- actively participated in “Tunisia, a Democratic Start- ty transactions. He also serves on the advisory board of up” initiatives to empower individuals and businesses. Flow Equity, a holding company that operates a series Achour earned her PhD in immunology (immunoge- of poultry farms in Ethiopia. Shelleman is a member netics) from the Institute Pasteur-University Paris VII of the Economic Club of Chicago. He earned a BA in and her BE in biotechnology and bioindustry from the English from Franklin and Marshall College. National Institute of Applied Science and Technology in Tunisia.

26 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES Lisa G. Thomas In these roles Unnikrishnan was based within the Director of Investments – Asia government and worked alongside the core members Equator Capital Partners LLC of the president’s team. Unnikrishnan earned a BA in Lisa G. Thomas is the director of investments-Asia for economics and sociology from Davidson College in Equator Capital Partners LLC (ECP), a fund manage- North Carolina, an MBA from the Wharton School at ment company that manages private equity funds that the University of Pennsylvania, and an MA in interna- invest in economies throughout Africa and Asia to pro- tional relations from the School of Advanced Interna- mote sustainable economic, social, and environmental tional Studies, Johns Hopkins University. development through private sector investments. She Kuliva Wilburn is responsible for sourcing and managing attractive Senior Consultant investment opportunities that fit the company’s social Health Management Associates mission. Prior to joining Equator Capital, Thomas was vice president of capacity building and operations for Kuliva Wilburn is a strategic planner with extensive CapitalPlus Exchange, ECP’s capacity-building partner. experience in the philanthropic sector, building In this role, she was responsible for developing the cross-sector partnerships and analyzing health policy. infrastructure of socially oriented financial institutions Prior to joining Health Management Associates, Wil- in Asia and Africa to meet profitability and impact burn served as the senior program officer for health at goals. She has also worked in investment banking, the Chicago Community Trust. She provided oversight research, and consulting in New York and Chicago. for the foundation’s health grant-making portfolio of Thomas serves on the board of Khushhali Bank Limit- more than $11 million, representing health-care pol- ed, the largest microfinance bank in Pakistan, as well icy, advocacy, and system integration in the arenas of as on the advisory board of VestedWorld, a US-based improved access, reform implementation, and obesity online investment platform connecting investors to prevention. Previously, Wilburn oversaw planning opportunities in emerging markets. She is also an advi- and development for a federally qualified health- sor for start-up companies in Impact Engine’s 16-week care network. She managed an $8 million portfolio accelerator program based at 1871, Chicago’s entre- of community health grants from private and public preneurial hub for digital startups. Thomas earned an institutions, led community assessment processes, MBA from the University of Chicago Booth School of and facilitated strategic planning, fundraising, and Business in 2006 and a BS in business administration program development. Wilburn’s previous work and (finance concentration) with honors from the Univer- academic background in biotechnology have afforded sity of Oregon in 2000. her opportunities to work with NASA as well as several large pharmaceutical companies. She also has many Shalini Unnikrishnan years of experience consulting on and researching Principal community health initiatives. Ms. Wilburn received Boston Consulting Group a BS degree in biochemistry from Drexel University Shalini Unnikrishnan is a core member of Boston Con- and an MPH degree from the University of Illinois sulting Group’s (BCG) health care and social impact at Chicago. She is currently a student in the doctoral practices. In health care, she advises clients in the program in the University of Illinois at Chicago School biopharmaceutical, medical technology, and payer ar- of Public Health. eas on a broad range of strategic issues. Unnikrishnan serves as BCG Chicago’s office node and works globally across public education, global health, and economic development teams. Unnikrishnan has also worked for former UK Prime Minister Tony Blair’s nonprofit Africa Governance Initiative, first as a private sector development adviser to Rwanda’s largest government agency, Rwanda Development Board, in 2009 and 2010. Then in 2012 she was a special adviser to President Joyce Banda in Malawi and the head of Blair’s Malawi team.

THE CHICAGO COUNCIL ON GLOBAL AFFAIRS – 27 Endnotes

1. Alex Court and Holly Brown, “Africa is doing amazing– 20. USAID. it’s our turn to shine,” CNN Online April 16, 2015. 21. African Development Bank, “Tracking Africa’s Progress 2. The World Bank, “World Development Indicators,” 2015. in Figures,” 2014. 3. Acha Leke, Susan Lund, Charles Roxburgh, and Arend 22. The Infrastructure Consortium for Africa, “2013 van Wamelen, “What’s Driving Africa’s Growth,” Annual Report.” McKinsey Global Institute, June 2010. 23. Ibid. 4. National Center for the Middle Market, “4Q 2014 24. Safaricom, “Safaricom Limited FY 14 Presentation,” Middle Market Indicator,” 2015. May 12, 2014, http://www.safaricom.co.ke/images/ 5. World Economic Forum, “The Global Competitiveness Downloads/Resources_Downloads/FY_2014_Results_ Report 2014-2015,” 2015. Presentation.pdf. 6. The African Development Bank, “Tracking Africa’s 25. Internet World Stats, “Internet Usage Statistics for Africa Progress in Figures,” 2014. 2014,” http://www.internetworldstats.com/stats.htm. 7. International Monetary Fund, “World Economic 26. GSM Association, “The Mobile Economy 2014: Sub- Outlook,” April, 2015, http://www.imf.org/external/ Saharan Africa,” 2014. datamapper/index.php. 27. Informa Telecoms and Media, “Africa Telecom 8. The African Development Bank, “Tracking Africa’s Outlook 2014.” Progress in Figures,” 2014. 28. Safaricom Limited FY 14 Presentation, May 12, 2014. 9. Ibid. 29. M-Kopa Solar website, http://solar.m-kopa.com/ 10. Peter Guest, “Bittersweet Success for Cocoa Farmers,” about/company-overview/. African Business Magazine, April 1, 2015. 30. Katie Linendoll, “E-readers Bring Hope to Africa’s 11. The African Development Bank, “Tracking Africa’s Schools,” CNN, August 22, 2014, http://www.cnn. Progress in Figures,” 2014. com/2014/08/20/tech/mobile/worldreader- 12. Ernst & Young, “Africa Attractiveness Survey readers-kenya/. August 22, 2014. 2014,” 2014. 31. Young Africa Leaders Initiative, “Advances in Crop 13. United Nations Conference on Trade and Development, Technology Benefit Africa’s Smallholder Farmers,” “UNCTAD World Investment Report 2014,” 2014, http:// January 28, 2015. unctad.org/en/PublicationsLibrary/wir2014_en.pdf. 32. Richard Walker, “Africa: Innovation Hubs Galore,” 14. Susan Njanji, “One-Third of Africans Have Entered the African Business Magazine, July 21, 2014. Middle Class,” Yahoo! News, Yahoo! October 27, 2014. 33. The World Bank, “Tech Hubs Across Africa (as of 15. United Nations, Department of Economic and Social February 2014),” Information and Communications Affairs, Population Division, “World Urbanization Development (IC4D) blog, accessed May 25, 2015, Prospects: The 2014 Revision, Highlights (ST/ESA/ http://blogs.worldbank.org/ic4d/files/Kelly_ SER.A/352),” 2014. Techhubs_0.pdf. 16. The United Nations Conference on Trade and 34. Fab Foundation, “Public List of African Innovation Development, “Total Population, Annual, 1950-2050,” Spaces,” 2015, https://www.google.com/fusiontables/ 2015, http://unctadstat.unctad.org/wds/TableViewer/ DataSource?docid=1zcE1JNl5IqaIrEleIvfl1kE-- tableView.aspx. WAKPsber4x4jhAP#rows:id=1. Accessed May 25, 2015. 17. Susan Njanji, “African Development Bank data,” 35. The Conference Board, Inc., “Global Productivity October 27, 2014. Slowdown Moderated in 2013–2014 May See Better Performance,” 2014. 18. The Economist Intelligence Unit, “Investing in African Infrastructure,” September 16, 2014. 36. African Development Bank, “Africa’s Competitiveness,” April 10, 2012. 19. “AU, China agree big infrastructure deal,” News24, January 27, 2015, http://www.news24.com/Africa/ 37. International Labor Organization, “Labor Migration News/African-Union-China-agree-big-infrastructure- at the Heart of Africa’s Integration and Development deal-20150127. Agenda,” February 18, 2015.

28 – AFRICA IS NOW: THE OPPORTUNITY FOR MID-SIZED US COMPANIES 38. Homecoming Revolution, “African Diaspora Statistic,” October 10, 2013. 39. David Herbling, “IBM Reverses Africa Brain Drain with Nairobi Office Hirings,”Business Daily, December 9, 2012. 40. James Bryant, “Will China Turn to Africa for Low-Cost Labor?” Dun & Bradstreet Bizmology, July 30, 2014. 41. The World Bank, “World Development Indicators,”2014. 42. Sara Sjolin, “You Aren’t Investing in Africa—and You’re Missing Out,” MarketWatch, December 24, 2014. 43. Ibid. 44. Kyle Gibson, “The New Tunisia,” presented at US Chamber of Commerce, April 4, 2014. 45. Based on KPMG’s 2013/2014 Fiscal Guides for each country. 46. KPMG Corporate Tax Rate Table, 2015, http://www. kpmg.com/global/en/services/tax/tax-tools-and- resources/pages/corporate-tax-rates-table.aspx. 47. Republic of South Africa, The Department of Trade and Industry, website. 48. Nigerian Investment Promotion Commission, Investment Incentives, accessed May 25, 2015, http:// www.nipc.gov.ng/investment.html. 49. Charles Enoch, Paul Mathieu, and Mauro Mecagni, “Pan-African Banks—Opportunities and Challenges for Cross-Border Oversight,” January 2015. 50. World Federation of Exchanges, “Monthly Reports,” December 31, 2014, http://www.world-exchanges.org/ statistics/monthly-reports. 51. African Development Bank, “Draft Financial Sector Development Policy and Strategy 2014-2019—Revised,” October 17, 2014. 52. Economist Intelligence Unit, “US middle market firms and the global marketplace: Should I stay or should I go?” September 2012. The survey collected information from 356 middle market companies, defined as companies with annual revenues between $10 million to $1 billion, in 15 industry sectors and 45 states. 53. The World Bank, “World Development Indicators,” accessed May 25, 2015, http://data.worldbank.org/ indicator. 54. “Top 500 Companies in Africa 2013,” The Africa Report, September 10, 2013, http://www.theafricareport.com/ top-500-companies-in-africa-2013.html. 55. National Center for the Middle Market,“4Q 2014 Middle Market Indicator,” 2015.

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