Why invest in COMESA? Because COMESA, just as it is the case in the rest of Africa, currently offers and is projected to continue offering top returns on investment in all sectors. This is the bottom-line. COMESA is one of the building blocks of what is now considered to be the last investment frontier, Africa.
Many have already said it: not investing in Africa at this time is like missing out on Japan and Germany in the 1950s and Southeast Asia in the 80s. According to the World Bank, Africa could be on the brink of an economic take-off, much like China was 30 years ago and India 20 years ago.
A Growing Consumer Market
Africa is now witnessing a commodity-boom which is driven by diversifying economies, a growing middle class of over 313 million consumers and consumer spending breaking through the one trillion dollar mark, and projected to reach USD 1.4 trillion by 2020. Furthermore, the number of African cities with a population over three million is expected to more than double from 16 in 2012 to 34 in 2030. Investors in Africa are now increasingly market-seeking. While opportunities in the natural resource sectors remain huge, new opportunities in all other sectors are emerging. Opportunities from different sectors complement each other and together give rise to new ones.
According to Ernst and Young’s Africa Attractiveness Survey 2014, three predominantly consumer-facing sectors — financial services, TMT and RCP — have been the primary beneficiaries of FDI projects. The financial services sector was the largest recipient of FDI projects in Africa between 2007 and 2013. Foreign banks and other financial services companies are either launching or expanding operations in Africa to tap the growing but under-serviced financial services market. In 2013, for example, UK banking company Standard Chartered announced that it will invest USD 100 million in Africa, with the aim of doubling the size of its business by 2018. Growing investor interest is not just limited to foreign companies. Regional banks and other financial services firms in Africa are ramping-up their presence across the continent.
Global Access to a Large Diversified and Resilient Market
Because of COMESA agreements, today Seychelles is exporting its tuna to Egypt and they are buying it duty free says Hon. Danny Faure, Seychelles’ Vice President. COMESA’s most obvious benefit to investors is indeed its fully-functional free trade area offering duty-free access to 15 of its 19 Member States which together are located on strategic world trade routes which as the Suez Canal, the Red Sea, the Mediterranean Sea, and the Indian Ocean, and in close proximity to global markets include Europe, the Gulf, Asia and the rest of Africa. COMESA provides a larger market space for businesses to operate and where procedures and policies are being further simplified and harmonized.
A Tripartite Free Trade Area is currently being negotiated between COMESA, the Southern African Development Community (SADC) and the East African Community (EAC) bringing the total number of states to be included to 26, covering a market of close to 620 million inhabitants, and a GDP of almost USD 1.2 trillion.
Investment opportunities in all sectors abound throughout the COMESA region. Opportunities exist both at national and regional levels. While COMESA regional projects are more concerned with infrastructure needed to facilitate investment and trade across various Member States, national projects can be found in the sectors of road, air, sea, and rail transport infrastructure, energy, mining, ICT, real estate, agriculture, agro-processing industries, fisheries, and livestock, tourism, manufacturing, logistics, hospitality, trade, and more.
As said by H.E. Cheick Diarra, Former Prime Minister of the Republic of Mali “Organisations like COMESA provide opportunities that go beyond countries or regions because the stakeholders go well beyond borders”.
Real and Sustainable Growth
As related by the Economist in its March 2013 article Cheerleaders and Naysayers, “This time the continent really is on the rise, the engines of development are still going strong. Democratic governance, political participation and economic management look set to improve further. Many reforms already introduced have yet to take full effect. New infrastructure, better technology, growing urbanization and the return of emigrants will keep fueling business. Some economists believe that Africa’s GDP numbers, if anything, underestimate its real growth.”
With a total GDP of USD 596 billion in 2012, the COMESA Economy is larger than the following economies, just to name a few: Morocco, Vietnam, Qatar, Chile, Singapore, Malaysia, Denmark, UAE, South Africa, Autria, Argentina, Belgium and Norway.
In terms of GDP average growth rate, between 2011 and 2012, the COMESA Economy grew faster than Portugal, Hungary, The Netherlands, Belgium, France, UK, Germany, Brazil, Singapore, Canada, US, South Africa, Turkey, UAE, India and Vietnam.
Perception Vs. Reality
Many do not realize that times have changed in COMESA and Africa. Investing in Africa is not like investing in South America, Europe, Asia or elsewhere; the way to do business is necessarily different. That said, while economies are liberalizing and diversifying, opportunities are multiplying. Either investors seize the chance and adapt to the business culture or others will move in, the fastest emerging of which are African businesses. First-movers have already been there for a long time.
According to Ernst and Young’s Africa Attractiveness Survey 2014, when asked if they believed Africa’s attractiveness had improved over the past year, 73% of respondents who were already established in Africa thought it had improved vs. 39% who were not established. When asked if they believed it would improve over the next three years, 87% of those who were established in Africa thought it would, vs. 51% who were not established. Finally, when asked if they had a specific strategy for investment in Africa, 67% of those which were already established in Africa responded yes, vs. 10% of those who were not established.
Polling of business leaders by the global professional services firm PricewaterhouseCoopers shows CEOs in African markets more confident about growth than their global counterparts. On a more granular level, the African business community’s confidence in governance is seen in the way companies approach long-term planning.
In its ease of Doing Business Report, the World Bank continued to move COMESA Member States towards the top of the list: Mauritius has been in the top 20 countries for more than 6 years, Rwanda is ranked 32nd, better than France, South Africa and Qatar, and Rwanda, Burundi and Djibouti are among 2013’s top 10 reformers list, all of which clearly reflects the overall strength and stability of COMESA Member States.
What people don’t know:
- There are over 120,000 millionaires in Africa
- There are over 150 billion-dollar companies in Africa, and more than 500 with annual sales of USD 100 million
- Africa has a larger portion of its population entering the workforce than any other region in the world
- There are 600 million African mobile users, more than in Europe or North America
A Growing, Increasingly Qualified, and Less Dependent Workforce
As related by Aidan Heavey, the CEO of Tullow Oil, “I’ve noticed in the last thirty years a huge difference in the education system in Africa and the people that you’re dealing with, an enormous difference. Today you’ll be sitting across the table from somebody and learn the man’s been to Oxford, Cambridge, and Harvard and speaks six languages. I barely speak English”.
Africa’s labour force is estimated at 382 million people, and is expected to grow to over 500 million by 2020, more than any region in the world. By 2035, the continent’s total labour force will be on par with the US and Europe, and about half will have received a secondary or tertiary education.
COMESA as part of Africa has the youngest population in the world. Four out of ten Africans are below the age of fifteen. The median age is twenty. Today, that means a very high portion of COMESA’s population is dependent on the adult workforce. Tomorrow, however, it means that the workforce will be massive, and the ratio of dependents to workers (the dependency ratio) will be the lowest in the world.
COMESA a market of over 456 million people, i.e., a market 2.5 times bigger than Brazil, 1.5 times bigger than the USA, 3.5 times bigger than Mexico, almost 3 times bigger than Japan, almost 2 times bigger than Indonesia, etc.