Africa is the cradle of humanity and the last big global growth opportunity. Africa has a very special lure for us on many levels. Escaping into the African bush takes us back to our origins and reconnects us with the earth and nature. As with finding wildlife and the wild places, so it is getting harder and harder to find investment yields and growth opportunities.
I remember my first safari experience so clearly. Flying into Dar es Salam as newlyweds, pouring rain, transferring to the ramshackle domestic terminal where no-one seemed to know anything about our flight. A tanned, young French pilot wearing the obligatory Aviator sunglasses and khaki shorts and shirt eventually found us and showed us to a four seater plane. He asked if we knew the way to the camp and once aloft asked me to take the controls while he viewed the map. He assured me it was easy, stay level and head for that hill on the horizon. I am not sure who was more scared me or my wife. The clouds parted and the plains stretched out below us. We were low enough to see game and after 3 hours we had to buzz the landing strip to scare off some zebra and giraffe before landing and sheltering from the sun under the wing until Chris Fox, our safari host and guide arrived. “Do you want to see some wild dogs or go back for a shower?” We opted for the shower but fortunately he ignored us, what did we know? We sat in the open land rover under a baobab, with wild dogs all around us. Later we found a leopard devouring its kill up a tree and watched for ages. We did game walks with Chris and an armed guide, the tracks and spoor were analysed and stories told, it all came to life. We saw more in 5 days than many people ever see. We felt safe, we knew where to look and how to react, we were very well looked after. The whole experience was magical and why…because we had a superb guide. Chris and his trackers knew every inch of Ruaha and had a deep understanding of and feeling for their surroundings. They helped us get the very best out of the experience and avoid the risks and inconveniences. A real adventure with wonderful rewards!
Doing business in Africa can be a similar experience. You would not dream of arriving from abroad driving into the bush and getting out for a stroll and some game viewing on your own. Identifying the right opportunities is key, as is recognising the risks and what to do about them. Unless you have the time and patience to learn the lessons the hard way it is sensible to choose someone to help you safely navigate the business environment too. Someone who knows the ropes, understands the different cultures. African markets are fragmented, particular and evolving fast, keeping up with developments and regulatory changes is a challenge but also an opportunity. Making good returns requires careful planning and analysis as does safe-guarding the value of your returns and making sure you can repatriate them, when and how you want to. Risk mitigation is an art rather than a science it requires specialist and local knowledge and can make the difference between eating and being eaten.
The COVID pandemic has caused a severe USD liquidity squeeze in most African nations and we are working with numerous firms finding alternatives ways of accessing liquidity and repatriating funds for them. Having your money trapped in-country is not simply annoying it can kill your business. The secondary investment market is not yet developed in Africa but as in 2008 a liquidity squeeze will mean forced exits and intrinsically sound opportunities available at a discount to real value. The secondary market is still fairly shallow but is attracting attention and that will mean new investors and more liquidity.
The US is reaping the benefits of a comparatively successful COVID vaccination programme, positive sentiments in US government bond markets are likely to see the USD strengthen this year and though commodity demand is also strong the inherent weakness of many African countries will see their currencies come under further pressure. COVID has stressed already fragile economies and the recovery will be slow. There are significant opportunities in spite of and because of this. Digitisation has speeded up and digital products will play a big roll once they are better understood and regulated. Access to market intelligence will give decision-makers a competitive edge. Real-time, reliable intelligence means knowing when to strike and when to lay low.
Make sure you are the hunter, not the hunted!”