The Prepaid Economy: African Edition

Nicky Oppenheimer was on our programme I asked him what he’d be doing with all that money and he was very clear that it would be invested in this continent, into Africa. He was suggesting Africa north of the Limpopo. Now this is interesting because one would have thought we’ve seen other people make a lot of money in the past and take their money to Europe and other perceived safer havens. What might it be about Africa that is getting someone like Nicky so excited?

: Well, Alec, I think that’s exactly right and that picks up very nicely on what Johann was saying. Basically he said, hang on, these big investors and businesses from India and China are looking at investing in Africa, what’s it that we’re missing?

The way we see it really is that the BRICS are important and they’re big and you’ve got to be there but they’re the story of yesterday.

That’s where the growth is but that’s also where the competition is tough but if you’re looking for tomorrow’s story it’s Africa and other similar small emerging markets and frontier markets across the world.

That’s what exciting people that are saying, well, what’s the next story? Where do we go from here? What are people going to be writing about in all of the magazines and newspapers in ten years’ time? Let’s go there first.

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What is that opportunity? Well, Africa is actually growing quite quickly, the real economic growth in Africa, outside of South Africa, is between 5% and 6% in most of the countries.

So, they’re not struggling with the growth headache that we have in South Africa where we’re trying to get to 3%.

So, the African middle class is growing, the diaspora are returning, remittances that are around USD40bn now per annum is growing every year. So, African consumer spending is growing quickly.

So, you spoke about Shoprite and their success in Africa outside of South Africa, I’ve been in their stores in Luanda and Lagos and I’ll tell you their main advantage is that they have no competition there. They provide the only modern supermarket shopping experience in those two cities with millions and millions of people.

They’ve got a great head start but the other South African retailers are going to follow. Woolworths already has 46 stores in eleven countries outside of South Africa. Pick n Pay has announced their intention to follow. MTN earns more in Nigeria than in South Africa. Don’t forget South African Breweries has been there for years and years and some of their fastest growing markets are in Africa. Tigers has bought into Nigeria and Nampak is now in Angola. Stanbic has announced that they’re basically exiting their other emerging market businesses to invest more in Africa. So, it’s widespread.