MAL 25/18 MAL25/18 - Page 42

If we bring this back to business, we know that the political period we are in has the ‘big boys of democracy’ wanting to support regimes that are thought to be progressing the ideals of democracy in the continent. Countries that are seen to be more democratic are then perceived to be more stable politically and thus more attractive for investment – both in terms of private investors or in terms of foreign aid flows. I don’t have the numbers, but I imagine that there is a strong correlation between FDI and level of perceived democracy? The hardcore economists would prove this relationship I am sure. I am not one. So, the fact that in Africa, political stability is varied, the challenge for businesses is to keep a keen eye on political developments and the history of the markets they operate in – political changes, violent or peaceful, do come with business implications. In Tanzania for example, the anti-corruption measures by the current president has affected ‘spending power’ in the market as a common Tanzanian on the street once told me ‘hamna hela’ – and when there In the end, we may look at Africa as ONE – and yes, there may be a number of reasons to carry this notion – from the similarity in some cultural dimensions to the unbeaten spirit of resilience we see across the continent but in business terms, it would be worthwhile to remain sensi- tive to the small yet critical differences that have implications on commercial success in what one would by now, refer to as ‘Many Africas’? is reduced money at hand, consume rs do make changes to their purchase decisions. In Ivory Coast, the regime’s decision to ban some packaging materials for environmental reasons forced some businesses to cut down or shut streams of their businesses altogether. Most recent example in Kenya is where one political side in the last election asked its supporters to boycott products and services of companies they perceived to have supported the government. Whether the boycott call affected the selected businesses or not is a separate discussion – the point is that business and politics are very connected and in Africa with its volatility, it is never the same! It is not one! Now to economic dynamics – most enthusiasts of investing in Africa argue that it is the next frontier – that Africa has countries that are growing faster than the global average, a huge combined GDP of almost 3 trillion dollars, a growing middle class that is exposed to premium goods and services and is ready to spend, huge infrastructural projects that are opening up the continent for regional trade and the list goes on and on. In fact, the very latest effort is what majority of African Union member countries signed off this March in Kigali – the AfcFTA – aiming to take the economic agenda of the AU to the next level by largely removing key trade barriers to Africa trading with itself, which as at 2014, was estimated at a paltry 18%. I am sure nothing much has changed, and all are waiting to see what this FTA will bring forth but from the onset, there are a few countries that are already jittery about the deal, including the giant Nigeria which was not represented at the deal signing conference in Kigali. Over the years, we have seen how the African economies are volatile – and especially the commodity dependent ones which coincidentally are also the biggest – Nigeria, Angola and South Africa are only starting to recover from recent economic slowdown. In Nigeria as an example, the slowdown affected business in general starting from basic foreign exchange challenges due to the depreciation of the Naira to changes to consumer spending which directly and naturally impacted both absolute volume 40 MAL25/18 ISSUE