African Business is Integrating Africa
African integration dream is slowly becoming a reality thanks to hungry African businesses, which are defying all odds to expand their operations and their capabilities across the continent. In its recent report, BCG identified 75 African companies across 18 countries whose businesses are leading to further integration. The report shows that on average, the top 30 African companies now have operations in 16 African countries, up from an average of only 8 in 2008.
African airlines are making intra-African air connectivity a reality.
Ethiopian Airlines is going on an investment spree in the region and has signed joint venture agreements and business partnerships with at least 14 countries on the continent. It recently signed a shareholding agreement with Zambia to revive its national airline, more than 20 years after it was shut down, at an initial cost of $30 million. Ethiopian Airlines will own 45% of the revamped Zambian airline, and Zambia 55%. From Zambia and Malawi in the South, Chad and soon the Democratic Republic of Congo in Central Africa and Togo, with a likelihood of Nigeria and Ghana in the West, the carrier is seeking to dominate the continent’s aviation space.
African financial institutions are championing trade and expansion, the glue of economic integration
Equity Bank, which operates in 6 East African countries, is championing the consolidation of fintech players through its financial technology unit. Finserve Africa is behind the bank’s innovations such as Equitel and EazzyPay that has seen an increase in digital banking capability by 227 million transactions as at the first quarter to 2018. Finserve just recently detached from Equity to deepen financial and technology solutions to propel the African economy. It has integrated with global fintechs like Ali Pay and Wechat as well as remittance partners across the world such as Wave, PayPal, Equity Direct, Western Union and Money Gram. Finserve Africa, is in discussions with six Ethiopian banks to collaborate on cross-border mobile payments and e-commerce. Finserve is also targeting payments for Chinese trade in the six markets that Equity operates in, such as the Democratic Republic of Congo (DRC) and Uganda.
Manufacturing companies are expanding in the continent as they spur industrialization, which is essential for economic integration and diversification.
Nigeria’s Dangote Cement has invested $3 billion in its Pan-African operations as the cement group continues to invest in expansion of its plants and terminals across the continent. The group’s operations include Cameroon, 1.5 Mta clinker grinding; Congo, 1.5 Mta; Ghana 1.5 Mta import; Ethiopia, 2.5 Mta; Senegal, 1.5 Mta; Sierra Leone, 0.7 Mta import; South Africa, 2.8 Mta; Tanzania, 3.0 Mta and Zambia, which has a 1.5 Mta plant.
African startups are creating innovative solutions in different parts on the continent and in the process advancing the region’s economic integration.
African startups raised $168.6 million halfway through 2018, surpassing last year’s total of $167.7 million. Kenyan and Nigerian startups dominated the startup scene, raising about 63.7% of the total amounted. Most of these startups are raising money to scale and expand into new African markets. Cellulant, a digital payments solutions company with operations in 11 African countries, closed a record $47.5 million investment deal. Branch, a loan app operating in Kenya, Nigeria and Tanzania, raised $20 million while Mkopa Solar, a Kenyan pay-per-use solar power provider operating in 5 countries, raised $10 million. Africa’s Talking, provides communication solutions for a connected Africa and currently operating in 6 countries, raised $8.5 million.
African businesses are integrating Africa faster than policymakers, who are still still struggling to bring all the 54 countries to signed agreements aimed at fostering regional integration.
African Continental Free Trade Agreement (AfCFTA), a brainchild of the African Union (AU) to deepen regional integration, had been in the works since January 2012. Once in force AfCFTA will be the largest trade zone in the world, increase intra-African trade by 52% by the year 2022, remove tariffs on 90% of goods, liberalize services and tackle other barriers to intra-African trade, such as long delays at border posts. The agreement has been signed by 80 percent of African Union member nations. Africa’s most populous nation and biggest economy, Nigeria, Eritrea and Guinea Bissau are the only African nations that are yet to make any commitment to the AfCFTA.
The AU also recently unveiled the Single African Air Transport Market, aimed at improving air connectivity in Africa and use air transportation as an engine for economic growth, job creation, and integration. Currently only 25 countries have signed the agreement: Benin, Botswana, Burkina Faso, Cabo Verde, Chad, Republic of Congo, Côte d’Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea Conakry, Kenya, Liberia, Mali, Mozambique, Namibia, Nigeria, Niger, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.
