From: Martin Tumasang <tumasangm@hotmail.com>
Date: Tue, Apr 29, 2014 at 12:06 PM
Subject: [cameroon_politics] Francophone West Africa from the eyes of a Nigerian Investor
To: "camnetwork@yahoogroups.com" <camnetwork@yahoogroups.com>, "cameroon_politics@yahoogroups.com" <cameroon_politics@yahoogroups.com>
Cc: imma kusia <immakusia@hotmail.com>, "ivoesong@hotmail.com" <ivoesong@hotmail.com>, "juliuskusia@yahoo.com" <juliuskusia@yahoo.com>, "ledon12@yahoo.com" <ledon12@yahoo.com>
Francophone West Africa from the eyes of a Nigerian Investor
It has become increasingly apparent that the fine line that separated Anglo- and Francophone Africa has continued to solidify. It’s actually much more than a language barrier. In this write up and subsequent ones, I hope to provide insight on this region, from the perspective of a resident investor, bringing to bear things I continue to see, feel and experience firsthand.
I will provide a high level introduction and overview of the region in this write up, to be followed by a deeper dive into specific sectors and opportunities in subsequent articles within the series. For better structure and for reasons which I will discuss later, I will focus on the 8 countries that make up the West African Economic and Monetary Union (WAEMU) – Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Senegal and Togo.
People and culture
In my view, with respect to temperament, I generally find the people more passive or less aggressive than the average Nigerian. The level of passiveness however varies from country to country within the region, albeit marginally. On a broader note, I hold the view that passiveness or aggressiveness might actually be tied to “space constraints”. For example, whilst WAEMU with 95 million people has a population density of barely 27 people per sq.km, Nigeria has close to 200 people per sq.km. Interestingly, Lagos has as many as 6,000 people per sq.km, ranking as one of the top 10 in the world. So, indeed, Nigerians might just be captive to the basic biological correlation between space and aggression.
On a more serious note, the temperament of people within the region has material implications for Nigerian investors seeking to play within that space. Given the general perception of Nigerians as aggressive, it’s pertinent for Nigerian investors to actively engage local partners early in the process. And I mean, active local partners with a voice. This should help minimize the usual defensiveness that greets any planned Nigerian venture.
With respect to the quality of human capital, the region boasts of good educational institutions which continue to produce skilled graduates. Thanks to a partnership with UNESCO decades ago, some of these institutions have been earmarked as centres of excellence, and have thus continued to attract funding and international support. As a consequence, investors can be assured of the adequacy of skilled talent locally should they plan to enter the market.
Economic Activity and Investment strategy
The Francophone countries of West Africa have a collective GDP of ~$87billion (17 percent of Nigeria’s rebased GDP), and are on average growing at ~4 percent annually. By the way, I never lose any opportunity to remind my Francophone friends and colleagues that their collective GDP is significantly lower than Lagos’ (pre-rebasing). In general, growth in these countries is largely driven by agriculture and extractive sectors. Cote d’Ivoire stands out as the largest economy (~$25 billion) as well as fastest growing (8.7 percent), albeit from a low base.
On the back of relatively supportive economic metrics, this region has continued to attract FDI, growing at ~7 percent annually on average to about $2 billion, with telecoms and real estate attracting the greatest share of investment. Barring the dampening effects of the now subsided conflicts in Cote d’Ivoire and Mali, the real estate and hospitality sectors have shown significant promise, largely underpinned by strong and steady growth in international visits. Related sectors, including restaurants, retail and wholesale trade etc. have grown off the back of this. Senegal’s hospitality sector is actually the most developed in the region, followed directly by Cote d’Ivoire’s. However, given the scale of development in these markets, the emerging competitive terrain might limit the upside in the near term.
Notably, regional integration within the WAEMU zone has proven to be a game changer with respect to investment strategy. Some of the key elements of this integration include the adoption of a single currency (CFA Franc), unbridled trade between countries, a common law code etc. This has played a key role in shaping the landscape of business, dramatically broadening the scope and scale of business interactions within the region. Thus, for example, whilst Senegal with a population of ~14 million might not provide a compelling case for consumer based investments, a regional strategy targeting the WAEMU adequately does. Investors have therefore capitalized on this broader base, and targeted platform investment opportunities or sometimes repositioned erstwhile local companies for a regional focus.
Considering only the relative size of these economies however doesn’t do justice to the immense opportunities available for potential investors. Besides the several attractive sectors which a top down analysis shows, there are significant benefits even from a portfolio diversification standpoint with respect to mitigating country risk. These Investors also stand to enjoy the first mover advantage in certain sectors which we will discuss subsequently.
Kelechi Okoro
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