Seeds of Opportunity: The African Growth Series

In this week's issue, you will learn more about:

[EXPERT INSIGHT] Catalysts for Prosperity: Unveiling the Synergies between BRICS and AfCFTA in South Africa

South Africa enjoys an advantageous geographical location along one of the world's most critical international trade routes, boasting seven strategically positioned ports. These ports facilitate seamless connectivity, linking the East (comprising East Africa, the Middle East, and the Far East) to the Durban and Richards Bay ports and the West (encompassing West Africa, North and South America, and Europe) to the Cape Town and Port Elizabeth/Ngqura ports.

With a vast coastline extending over 3,000 kilometres, South Africa affords cargo vessels and cruise liners the unique advantage of three-way access to its shores. Notably, approximately 30,000 vessels navigate the country's coast each year, with an estimated 13,000 of them making calls at South African ports.

With its extensive coastline, robust logistics and port infrastructure, and status as the largest foreign direct investment (FDI) hub on the continent, South Africa is widely recognised as the gateway to Africa. Moreover, given South Africa's pivotal role in the establishment of the African Continental Free Trade Area (AfCFTA), the nation is strategically positioned to leverage the advantages presented by AfCFTA as well as its membership in the BRICS group.

The AfCFTA, which was officially launched in January 2022, aims to remove import tariffs while progressively promoting regional integration, developing new regional value chains and stimulating industrial and infrastructure development across Africa. This groundbreaking trade agreement is poised to boost intra-African trade by 52.3%, fostering deeper continental integration, enhanced productivity, and a surge in job creation. Furthermore, projections indicate that by 2035, Africa's total exports could reach a substantial US$ 952 billion. However, the true potential of the AfCFTA, once fully realised, promises a remarkable 29% increase in this figure, equating to an annual growth rate of 3% through 2035.

For South Africa, the successful implementation of the AfCFTA is poised to yield a wide array of benefits. These include diversification of exports, increased productive capacity, accelerated economic growth, heightened investment levels, expanded employment opportunities, and enhanced income prospects, all contributing to a more inclusive and robust economy. The AfCFTA also presents an opportunity to create a stable and conducive environment for investments, particularly in infrastructure development, while fostering synergies for cooperation, trade, and development with partners across the African continent.

Beyond the heightened trade opportunities created by the AfCFTA, South Africa is poised to enjoy supplementary advantages, encompassing an improved investment climate, enhanced tourism prospects, skills enrichment, technological advancements, augmented influence in pan-African matters, and amplified negotiating strength as a member of the BRICS group. Although South Africa entered the BRICS alliance in 2010 as one of the smallest members in terms of demographics, economics, and GDP, it represented a significant gateway to sub-Saharan Africa's economy, accounting for one-third of the region's economic activity. The country, therefore, constituted an entry point for the BRICS countries to tap into Africa's one billion-strong consumer market.

As the membership grows, the BRICS countries are expected to become pivotal sources of foreign direct investment, with various companies investing in South Africa aiming to access the African market. As a result, some of the key sectors set to benefit include mining, automotive, transportation, clean energy, financial services, and information technology. As these countries leverage South Africa as their gateway into the African market, we anticipate increased infrastructure development in South Africa's trade ports to facilitate the seamless flow of goods throughout the continent.

Through the cooperation of these agreements and memberships, South Africa has the opportunity to transition away from its historic role as a commodity exporter towards higher productivity value addition. Together, South Africa's membership in BRICS and the AfCFTA presents several benefits that include improved investment, trade, tourism, skills acquisition, and technological capabilities, increased trade flow, influence in pan-African affairs, increased bargaining power, infrastructure development, and greater economic integration.

Kiana Steyn

Author, Frost & Sullivan Africa

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BUSINESS DAY TV: The Synergies between BRICS and AfCFTA in South Africa

South Africa has long been punted as the gateway to Africa. Business Day TV explored this in detail with Frost & Sullivan Africa Consultant, Yaa (Agyare - Dwomoh) Ngonyama and looked specifically at how the country's inclusion in the BRICS grouping as well as the advent of the African Continental Free Trade Act (AfCFTA) can help support this position.

Kiana Steyn

Author, Frost & Sullivan Africa

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AFRICA OPPORTUNITY: Growing Demand for Digital Skills Education

Most cybersecurity jobs now require a university degree. In 2022, 71% of respondents in Africa stated that a university degree was required to obtain a job in the cybersecurity sector. By contrast, in the same year, only around one-third of respondents in Oceania mentioned that a degree was needed.

Equipping both children and adults with overall ICT and cyber security skills in particular is gaining momentum across Africa, presenting a compelling case for investment by development finance banks. Startups are at the forefront, harnessing the innovative capacity of African communities to develop digital solutions for local challenges. By supporting these startups, banks can bolster the growth of the digital economy and provide opportunities for youth to hone their skills. Schools are pivotal in this endeavor, with a growing emphasis on teaching digital skills throughout the education system. For instance, in Ghana, digital skills are integrated as foundational competencies. However, investments in teacher training programs are equally crucial to ensure educators are proficient in imparting these skills effectively.

The digital divide remains a challenge in many parts of Africa, where universalising access to digital technologies is paramount. Bridging this gap will democratize opportunities for skill development and economic participation. Furthermore, the continent witnesses a burgeoning trend of young entrepreneurs launching digital businesses. Supporting initiatives that nurture digital entrepreneurship can create jobs and spur economic growth. With Africa's youthful demographic, rapid urbanisation and widespread mobile phone adoption, investing in ICT, digital skills and cyber security holds the potential to bridge divides, foster economic growth and empower individuals to thrive in an increasingly digital world.

AFRICA OPPORTUNITY: Brewing Success in the Coffee Market

Coffee has evolved from being just a morning drink to a global industry, making its significant presence felt in Africa. The continent's coffee industry is booming, experiencing remarkable growth and transformation. In 2018, coffee sales in Africa generated a total revenue of US$3.6 billion. It is projected that by 2028, the market will reach a robust US$6.9 billion in revenue, with a Compound Annual Growth Rate (CAGR) of 13.8% expected from 2022 to 2028.

Although Africa is recognised as the origin of coffee and is known to produce some of the finest coffee globally, Africans don't consume as much coffee as the rest of the world. Nevertheless, the coffee market in Africa is expanding. The African coffee market has two main segments: instant coffee and roast coffee. Instant coffee generated a revenue of US$1.2 billion in 2022 and is expected to reach US$2.2 billion by 2028. This segment's popularity can be attributed to its convenience, which is especially appreciated in urban areas where the pace of life is fast. On the other hand, Roast coffee brought in US$2.6 billion in revenue in 2022 and remains the frontrunner. By 2028, this segment is projected to grow to US$4.7 billion. Many still prefer freshly brewed roast coffee, often associated with cultural traditions and artisanal craftsmanship. However, roast coffee is forecast to remain significantly cheaper per kilogram than its instant alternative. In total, 336.1 million kilograms of roast coffee was sold across the continent in 2022, compared to 110.6 million kilograms of instant coffee.

While the coffee market in Africa is flourishing, it is not without challenges. These include climate change affecting coffee production, the need for sustainable practices, and the potential for market saturation. However, these challenges also present opportunities. Sustainability initiatives, fair trade practices, and a focus on quality and uniqueness can enhance the reputation of African coffee on the global stage. Furthermore, technology and e-commerce can open new distribution channels and expand the reach of African coffee producers. It's worth noting that online sales and Fairtrade have room to grow, with only 1.1% of sales occurring online during 2022, and only 0.02% of the revenue from consumed coffee coming from Fairtrade beans.

UPCOMING EVENT: Consulting in the Age of AI: Paving the way for future success

Join us at the Stellenbosch Business School Consulting Club on Thursday 30 November 2023 from 18h00 - 20h00 as business consulting industry expert discuss the impact of AI technology on the Consulting industry both today and in the years to come.

Panellists will include:

There will be a networking opportunity after the event for those attending on campus.

Don’t miss out – register now!

Register to attend in person: https://lnkd.in/ghsWgVh2

Register to attend online: https://lnkd.in/geqKme3C

UPCOMING EVENT: Africa’s Green Economy Summit 2024

I am excited to announce that Frost & Sullivan Africa once again comes onboard as a Knowledge Partner for Africa's Green Economy Summit happening from 21-23 February 2024. 

VUKA Group will host the summit at the Century City Convention Centre in Cape Town, South Africa. The conference will connect the global capital market with green economy projects from across the continent. The theme in 2024 is “Mobilising investments for green growth”. The Summit forms part of the E-Fest Cape Town - a week of special events and entertainment to showcase sustainability, e-mobility and renewable energy solutions, with the clear message to GO GREEN AFRICA! 

As a key partner, Frost & Sullivan Africa would like to give the opportunity to its network of project owners to list their projects and potentially participate in the investor pitching event at no cost. The companies who get selected will get the opportunity to participate in the project pitch – whereby they will be given the opportunity to present their green project to qualified investors in order to acquire funding and gain feedback. 

Projects will be categorised by green economy sector and size – companies in Renewable Energy, Electric Mobility, Waste Management and Water services are encouraged to apply. The 10-minute presentations (5-minute pitch and 5-minute Q&A) will take place during the extended coffee breaks and lunch. 

 You can list your project here: https://lnkd.in/dDtqYUEA

To find out more about opportunities in Africa, please get in touch with Lynne Martin.

Lynne Martin

Sales Contact, Frost & Sullivan Africa

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lynne.martin@frost.com+27 21 680 3260