Finding the business opportunity which will suit you best should never be a random process and always requires a sound strategy.
Your plans must obviously take into account your skills and aptitudes, as well as your interests and previous experience. And while such an approach should never rule out something entirely new, you must know your strengths (and weaknesses) in order to determine what path you plan to follow.
You must also look around carefully to find out what is popular and where there is a gap in the market. And fortunately, Africa is a continent full of business opportunities for both traditional and trailblazing entrepreneurs.
African art and traditional craftwork
Do you know much about the value of African art? You may be surprised to hear that Sotheby’s sold a collection of West African antiques in New York for the staggering sum of $41 million in 2014 (a record sum for African art in the US).
And elsewhere, Nigerian artist Ben Enwonwn’s wooden sculptures sold on the London market for $500,000, – three times more than they were expected to make!
While these are extreme examples, it’s also known that the marketplaces of Egypt and Morocco, for instance, enjoy a buoyant trade in original artefacts and locally created, hand-crafted goods produced primarily for the tourist trade.
There are undoubtedly many reasons for the resurgence of interest in this field, but the spread of multiculturalism and today’s ease of access via the Internet suggest this is a trend set to continue.
Africa’s renaissance farmers
African agriculture suffers from a bad press, associating it with poverty, aging farmers, back-breaking labor and subsistence-level returns.
As a result, there has been a pronounced drift away from rural areas. This industry has become an untapped goldmine crying out for new blood and full of exciting opportunities to develop an ancient industry in exciting new ways.
Sub-Saharan Africa has fertile soils, around three-fifths of the world’s unexploited arable land, an abundant source of agricultural labor and year-round sunshine.
These attributes put the region in pole position to become a major source of food for the world’s markets. This projection discounts the continent’s own ‘home market’ of one billion people – a huge opportunity for young agricultural entrepreneurs to exploit.
Eco-energy for the African market
Would-be entrepreneurs should note that hardly one-fifth of Africa’s population have access to an electricity supply, and even those who do mostly rely on dirty and noisy generators.
With much of sub-Saharan Africa able to enjoy an average of more than 325 days of sunshine a year, the continent has its own source of cheap, clean energy ready to be harnessed to get its people connected to the future.
The market for solar power has huge potential. To take just a single example, the smartphone has emerged as Africa’s most potent tool for communication, but millions have problems finding a reliable source for recharging their phones – especially in rural areas.
Solar energy now benefits from advanced technologies which make it fast and cheap to set up, even in the most remote locations.
In addition, solar-generated energy is a ‘green and clean’ product which makes it an even more attractive proposition for the future.
With equipment prices also falling, many observers believe that African solar power could start making a major contribution to the European energy market.
Africa’s potential education market
There is an ever-growing need for education and training all over Africa which is overwhelming governments everywhere.
For the entrepreneur equipped to meet such demands, there are numerous small and large opportunities right across the sector: in both primary and secondary education, for individual private tutors, in university training, for vocational training as well as professional certification needs of all kinds.
Africa’s growing population of young people see a good education not only as a pathway out of poverty but also as the key to securing a good job with prospects for advancement.
And in the corporate arena, businesses are looking to recruit an educated workforce who can service the needs of a 21st-century economy. For example, these needs alone have created an almost insatiable demand for language teachers.
These are just some of the many gaps in the market Africa now offers the young, dedicated and organized entrepreneur.
So, provided you carefully research the present and future demands of your sector, there are many businesses which could represent an ideal opportunity.
By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.
By BRIAN NGUGI
Kenya has been ranked the third most attractive African market for private equity (PE) funding, indicating the huge promise in East Africa’s largest economy despite multiple challenges arising from a recent pile-up of public debt.
Consultancy EY (Ernst & Young) says in a report that is expected to be published today (Monday) that Kenya’s fast-growing technology sector, nicknamed “Silicon Savannah”, drew the most foreign investor interest, supported by an improved business environment.
“FDI [foreign direct investment] projects in Kenya increased by 44 per cent compared with 2016,” says the Turning Tides, Africa Attractiveness October 2018 report.
The increase, the report says, was “largely because of a conducive environment, including a pool of well-resourced IT developers and a high smartphone penetration rate.”
South Africa and Morocco are ranked as Africa’s top hotspots for PE deals ahead of Kenya, which beat Nigeria, Ethiopia and Egypt – the number four, five and six respectively.
The report says Kenya’s top ranking has benefited from recent government’s action to make the country a viable and competitive technology hub through formulation of policies to drive the initiative.
The country’s performance is described as significant given that 2017 was dominated by election-related investor jitters.
Kenya’s economy grew 4.9 per cent in 2017, its lowest rate in five years, under the weight of a prolonged electoral process and adverse weather.
Top ten countries by Foreign Direct Investment (FDI) Projects
That pace of growth was far below the 5.9 per cent recorded in 2016, according to the Kenya National Bureau of Statistics (KNBS) data.
The last time Kenya’s growth stood at below five per cent was in 2012, also an election year, when the economy expanded by 4.5 per cent.
EY says British investors were particularly active in Kenya last year, having made 10 project commitments, followed by Dutch firms.
“The digital industry remains a key driver of the continent’s growth riding on high mobile and Internet penetration rates coupled with the establishment of technology parks across numerous countries including Cape Verde, Angola, Kenya, Senegal and Rwanda,” says the report. Kenya is expected to remain a hotspot for private equity whose attraction to global deal makers was mainly driven by improved business environment.
“Recent initiatives in Ethiopia, as well as gains by Kenya and Nigeria in the World Bank Ease of Doing Business scores, illustrate that more and more of Africa’s leaders are starting to prioritise reform,” it says.
“Along with that, recent leadership changes in Angola, Ethiopia, South Africa and Zimbabwe are also expected to stimulate policy change, as countries increasingly compete for foreign investment as a key driver for sustained growth.”
Recent studies have echoed similar projections while noting that the improvement in ease of doing business, high return potential across all sectors, a well-diversified economy and consolidation in sectors such as financial services has created an avenue for increased PE activity.
In the financial services several analysts have said they expect consolidation in the banking industry and innovations to be the main drivers of activity.
“We remain bullish on PE as an asset class given the abundance of global capital looking for opportunities in Africa, the attractive valuations in private markets compared to public markets and better economic growth in sub-Saharan Africa compared to global markets,” investment firm Cytonn said in an outlook earlier.
The Treasury has recently upgraded Kenya’s economic growth projection to six per cent from 5.8 per cent, a move that was seen as having been informed by renewed private investor confidence and increased agricultural output.
Heavy rains in the second quarter of the year and the March 9 truce between President Uhuru Kenyatta and opposition chief Raila Odinga — popularly known as the ‘handshake’— are likely to lift growth to a seven-year high, Treasury secretary Henry Rotich said earlier.
Kenya’s economy last expanded at the projected pace in 2011 when growth was 6.1 per cent.
Economic activities last year buckled under the weight of a biting drought in the first half, which hit farming activities hardest, and elevated political uncertainties following a bruising presidential election contest in the second half that put on hold a raft of investment decisions.
That, together with the debilitating effect of a sharp drop in loans to the private sector due to legal ceilings on loan charges starting September 2016, resulted in the slowest growth in national wealth in five years at 4.9 per cent.
Source – Business Daily
Finance minister Matia Kasaija has said government has put on hold the Standard Gauge Railway (SGR) venture and has instead turned attention to revamping the old metre-gauge railway network until unresolved issues with Kenya and China have been concluded.
“It is apparent the SGR is going to take us a lot of time to complete. First, we have to wait for Kenya to reach at the Malaba [border] point then we can start,” Mr Kasaija told Daily Monitor Monday.
He said government, in the interim, is refurbishing the old railway line as “an alternative” to lower transportation costs for traders.
Uganda and Kenya first agreed to construct the SGR in 2008 but the arrangements were only concretised in 2012.
Kenya is currently constructing the 120km line from Nairobi to Naivasha at $1.7bn to be followed by a 266km line from Naivasha to Kisumu port at $3.6bn, and later embark on the 107km line connecting from Kisumu to Malaba border with Uganda which is expected to cost $1.7bn.
The first phase of Kenya’s SGR line running from Mombasa port to the capital Nairobi, that cost $3.8bn, was commissioned last year and is operational. The trains’ daily tonnage has increased to more than 800 containers, out of the 1,700 that arrive at the port of Mombasa.
Uganda’s first phase of SGR, the eastern line running from Malaba to Kampala, about 273km (338km rail length), is expected to cost $2.3bn.
Mr Kasaija admitted that Uganda has currently taken a back seat on the SGR venture, but will resume “serious discussions once Kenya is about to reach” the Ugandan side.
President Museveni, according to sources familiar with the venture, in recent months had been directly involved in discussions on the project, and had hoped to secure financing for the first section of the railway line during his visit to China last month when he attended the seventh Forum on China-Africa Cooperation (FOCAC) summit. But he returned empty-handed.
However, Mr Kasaija revealed that during the discussions in Beijing, it was agreed that “Uganda and Kenya will embark on joint financing negotiations” after Kenya has completed the current Nairobi-Naivasha section.
“Kenya also has its own problems which we cannot speak about in public. We shall wait for them to settle but on our side, we have already compensated people from Tororo to Iganga. When they finish their part, we shall proceed with it,” Mr Kasaija said.
For some time now, Ugandan government officials have blamed Kenya for failing to commit themselves to financing the remaining two—Naivasha-Kisumu, and Kisumu-Malaba—sections. Kenya’s non commitment, according to sources, is mainly debt concerns but also the fact that there is little economic activity in Uganda to justify such an investment.
However, a Kenyan government official told Daily Monitor Monday on condition of anonymity that Nairobi is “committed to the project” and said Ugandan officials were using Kenya to “cover” for what he called their “confusion.”
Uganda’s SGR project since conception has been subject of various controversies.
The Ugandan State Minister for Works and Transport, Gen Edward Katumba Wamala, told Daily Monitor separately that government is “still on course, and is continuing to work with Kenya to tie up all the loose ends and synchronise the project.”
“We are even meeting in Kigali next week to continue discussions on the matter,” Gen Katumba said.
One of the key conditions made by the Chinese funders, EXIM Bank, is the seamless movement of the train from Mombasa to Kampala for it to make “economic sense.”
Early this month, the European Union offered Uganda €21.5mn for revival of the old metre gauge railway line from Tororo through the districts of Mbale, Kumi, Soroti, Lira to Gulu “to contribute to a better performance of the value chain for key products and the development of the private sector in Northern Uganda.”
The line is expected to open up an alternative route to the Northern Corridor, connecting strategic trade routes with South Sudan, which is now a major trade and investment destination for partner states of the East African Community.
Once revived, the 500km old railway line could as well be key in transportation to Uganda’s oil belt—Albertine Graben—and ease the burden on the existing and yet to be constructed transport infrastructure required for developing Uganda’s oil sector.
Revival of the railway line has been attempted before by Rift Valley Railways (RVR), the concessionaire for the Uganda-Kenya railway line, which collapsed early this year after each party accused each other of reneging on the concessionary terms.
Is SGR worth the cost?
The entire SGR, to cover the whole country, is pegged to a cost $12.8bn. The government has been in constant back and forth engagements with Beijing to release the first tranche of funding for the eastern line, particularly with prospects of paying back when oil revenues start flowing in 2020 but is unlikely. Several experts have said while the SGR could be a game-changer in reducing transportation costs, it might do little service for Uganda which is import reliant.
The main concern is that because the government imports more and exports less, the government will have to charge more fees on imports to offset the cost of exporting; Uganda imports goods worth about $4b and exports just about less than half of that. However, the government has noted that the project is sustainable, insisting that it will generate enough revenues to repay the loan.
The SGR classification is in line with the African Union SGR protocol, of upgrading and linking the continent’s railway system to facilitate continental integration. Other countries that have upgraded to SGR include Moroco, Ethiopia, Algeria, Egypt, South Africa, and now Kenya and Uganda ongoing.
Source – Business Daily
By JOHN KAMAU
There is excitement over the historic direct flight from Kenya to US, what is the economic significance of this milestone?
The flight marks a historic moment in US — Kenya relations. The new flight will strengthen our people-to-people ties by making it easier for Kenyans and Americans to fly between our countries. Tourists, business people, students, academics, officials, and all our citizens will be able to travel more quickly and efficiently.
Economically, we believe the direct flight will open new doors for trade and investment, and in fact we already have a trade delegation from the US coming to Kenya on the flight the week after next.
Today, our trade in goods is about Sh100 billion annually. But there are possibilities to do a lot more, particularly under the African Growth and Opportunity Act (Agoa).
This was a decade-long wait for Kenya. What accelerated the approval of Category 1 and why did it take so long?
The highest priority has always been to ensure the safety and security of travellers. Our two governments, working closely over several years with the Kenya Airports Authority, Kenya Civil Aviation Authority, and Kenya Airways, greatly strengthened safety and security at Jomo Kenyatta International Airport (JKIA).
As a result of that hard work, in early 2017, the airport and airline achieved US Federal Aviation Administration (FAA) Category 1 safety standards. Later in 2017, the US Department of Transportation authorised economic authority for Kenya Airways to start the flights, and in August, the US Department of Homeland Security’s Transportation Security Administration determined that JKIA meets US security standards.
With the direct flights, what do you foresee for this emerging tourist market and what opportunities exist that Kenyans can tap in the American market?
In recent years, more than 100,000 Americans have visited Kenya annually, more than from any other country. With the direct flights, travel time will be as short as 14 hours. Other flight options, which include a stop in Europe or the Middle East, can take twice the time.
So, this flight will offer US tourists an opportunity to maximise their time seeing Kenya’s diverse culture, amazing wildlife and stunning scenery.
Agoa offers a duty-free market to the US. What efforts has US put in place to make the country the export destination for Kenyan goods?
The US is helping Kenya’s entrepreneurs become more competitive in many economic areas, from agriculture to the Silicon Savannah. Our USAID Trade Hub directly supports efforts by Kenyan businesses to improve their products and better market their exports. And, the Trade Hub is working to reduce barriers to regional trade.
Besides being a diplomatic triumph, what should Kenyans look forward to?
US — Kenya relations are on a roll. At the August 27 meeting at the White House, President Trump and President Kenyatta elevated our relationship to a strategic partnership and established a strategic dialogue with working groups on security and on trade and investment.
This is happening under your tenure, does it make you feel good?
When I arrived in 2012, many Kenyans told me how much direct flights between our countries would strengthen bilateral relations. I am proud of the new direct flights and of all that the Embassy team has accomplished over the last six years..
Source – Daily Nation
The International Monetary Fund (IMF) now says that Kenya faces a moderate risk of debt distress. The fund has just raised its assessment of the chance of Kenya’s external debt distress to moderate from low, a situation it attributes to increasing refinancing risks and narrower safety margins.
Whichever way you look at it, this a significant pronouncement. First, the IMF has blown up the balloon the National Treasury has been flying by persisting in the belief that our public debt situation is still sustainable. We are hearing from a credible third party- the IMF- that things are headed in the wrong direction in so far as the country’s external debt position is concerned.
You can argue that there is nothing new in what the IMF has said because we have known all along that our debts have mounted to worrying levels. But the pronouncement that the Fund has made about our currency is even more significant. The fund has found that the shilling is over-valued by 17.5 per cent.
The fund now says that Kenya’s currency is ‘managed’- not market-determined- and has been artificially kept where it is by regular interventions by the Central Bank of Kenya(CBK). Kenya’s forex regime is being reclassified by the IMF from a floating regime to a managed regime. When markets, investors and trading partners perceive your currency to be artificially propped, the situation introduces uncertainty in our foreign exchange regime.
Still, me thinks that the recent massive influx of diaspora remittances, mainly driven by immigration policies of the Trump administration have also been a major factor in artificially propping our currency.
If our currency is over-valued by 17.5 per cent as the IMF says, it means what the signal the fund is sending is that it believes that the foreign currency component of our debt is much higher.
The fund believes that the shilling’s value of revenues that National Treasury secretary Henry Rotich needs to pay his dollar loans will also be higher. The implication of what the fund is saying is that we could sooner or later find ourselves tipping into an even worse debt distress situation. What are the broader implications in terms of direction for macroeconomic policy? We urgently need to control our appetite for commercial external loans.
It will require a ruthless pruning of projects that expose us more to commercial debts. And, resorting to the Public Private Partnership (PPP) model will not be an easy alternative as the administration of President Uhuru Kenyatta.
The truth of the matter is that PPP projects directly add contingent liabilities on the public’s balance sheet. We must now rethink the PPP route if we are to avoid tipping into a worse external debt situation.
We must go slow on Chinese loans. If you think I am exaggerating the China factor in our growing indebtedness, take a look at what the government disclosed in the prospectus that it put out for the recent Eurobond, It disclosed that during 2017, various ministries such as the Ministry of Energy and Kenya Power entered into a series of loans with Exim Bank China amounting to a total of $1.2 billion and 3.4 billion Chinese Yuan.”
This means that, in just one year, ministries signed shady commercial contracts worth billions of dollars.
If you are in doubt that we are gradually sinking into the Chinese debt trap, just grab a copy of the of the recent documents that Mr Rotich tabled in Parliament.
We have taken too many Chinese loans. While the huge loans to finance the standard gauge railway are what hits the headlines, we have also borrowed heavily for projects of little economic impact — such as loans to procure equipment for the National Youth Service (NYS) and to purchase drilling materials — from China.
Going through the external debt register, you will be surprised at the sheer number and size of loans we have taken for all manner of projects — such as for buying MRI equipment, procuring of power materials, rehabilitation of technical institutes, modernisation of Kenya Power distribution systems and building Kenyatta University.
It is a reflection of the power and influence that Chinese companies wield. Indeed, Chinese contractors are more adept at putting such deals together and in having financing approved by the Treasury.
SOURCE – Business Daily
By DOREEN WAINAINAH
Soft drinks Company Coca-Cola Beverages Africa (CCBA) is expanding its sugar free range of beverages targeting increasingly health-conscious consumers.
The company says it will next month introduce Fanta Zero adding to the existing Sprite Zero, Stoney Zero and Coke Zero being sold in Kenya.
“We will be bringing Fanta Zero in two weeks completing the range of Zero sugar soft drinks already available in Kenya,” said CCBA managing director Daryl Wilson.
Coca-Cola has been aggressively diversifying its soft drinks in Kenya including the introduction of its milk-juice blend under the Minute
The water range has also been diversified to include flavoured sparkling water, which according to Mr Wilson, will be expanded in the near future to include flavoured still water.
In July, the soda maker introduced a lemon-flavoured carbonated drink dubbed Schweppes +C geared at reaching the adult consumer not served by its existing soda range.
The company has been forced to look for alternatives for its core business mode to cater for depressed global sales for soda as more and more consumers push for healthier drinks given the changing lifestyles.
Coca-Cola is banking on innovation and diversification of its soft drinks products in the country to grow sales.
In 2016 and 2017, the company invested Sh9.3 billion in its production and packaging lines to cater for the new brands alongside its mainstay soda, juice and water products.
According to the firm, its investments in Kenya have included Sh8.5 billion ($85 million) in infrastructure and Sh4.4 billion ($44 million) in distribution over the past five years.
The milk infused juice was part of the line-up from the new Sh2.7 billion production line that allows for hot fill drinks, hence removing the need for preservatives.
“We are evolving our recipes to offer drinks that provide benefits like nutrition and hydration; and reduction of sugar by reformulating the sugar content in some of our products,” said Coca-Cola.
Source – Daily Nation