While Foreign Policy magazine says a Russian invasion of Eastern Ukraine is increasingly likely and armed motorcycle gangs or “colectivos” continue to terrorize and murder protesters across Venezuela, Africa continues its economic development.
A couple of weeks ago GE’s Jay Ireland was in IESE talking about the potential for Africa and how GE has profoundly modified its approach to international business to fit with the breadth and complexity of the region where it hopes to be present in 25 countries by 2015.
Meanwhile, my IESE colleague Africa Ariño is at the Lagos Business School in Nigeria and is regularly writing about business in Africa!
The Top-3 African Countries to do
Business, According MBA Students
Last month, my colleague Adrian Caldart and I asked our first year MBA students to look at Sub-saharan Africa. The students were asked to recommend countries for investment and also which segments were thought to be most interesting in those countries. I taught two of the four sections and the results were so compelling that I thought I would share it:
- Nigeria: The most popular country with the students was Nigeria, where they recommended looking at roads & construction, telecoms, financial services, pharmaceuticals & health care, education, energy, agriculture, textiles and the steel business.
www.naijainvest.com
- Kenya: In Kenya, the second most popular choice, segments of interest were sanitation & water, tourism, transportation & infrastructure, Information & communication technology (ICT), medical devices & health care, education, agriculture, and aquaculture.
- Ghana: The third country was Ghana and the segments discussed were mining, agriculture (cotton), agricultural chemicals, ICT, processed foods, textiles, oil field services, renewable energy, and business process outsourcing.
Other African countries
Tanzania was thought to be interesting for ICT, timber, mining, energy, infrastructure and commercial aviation and the students were interested in oil services and fast moving consumer goods in Uganda.
Angola was thought to be of interest for agriculture, agricultural chemicals, education and health case and Mozambique for retail, infrastructure, and mining.
In Zambia students looked at aquaculture and pharmaceuticals while others thought that Botswana held promise in textiles and construction. Finally some students were interested in Mauritius and thought that private banking, marine services, ICT, and textiles would be good places to invest.
Adrian and I teach the course with our colleague Pankaj Ghemawat who believes strongly that understanding differences around the world is critical to being able to build successful global firms.
According to the The Economist, while enormous opportunities do exist, such as those identified in Africa by the students, a number of large, apparently well managed companies have lost huge amounts of money in emerging markets over the last 20 years.
The primary challenge for foreign companies in exploiting these opportunities, in my view, is evaluating short and long term risk and thinking through to what degree a firm’s products or services need to be adapted to local conditions. A second challenge which will be explored in further posts is how international firms should approach social and environmental sustainability as they go into such markets.