Business

Business Schools Come To Africa

Just another sign of Africa’s growing potential and financial power, business schools from the United State and Europe, are building campuses and actively seeking-recruiting African students. With low growth in their home markets due to over saturation and fierce competition in Asia, the only growth market is in Africa.

Universitá Cattolica del Sacro Cuore launched MBA program in Nairobi, Kenya in 2011, expanding to Accra, Ghana last year. They will be opening new program in Sierra Leone in the coming few months. U.S. based Webster University recently opened location this March in Accra, Ghana, after investing more than $3 million. “The business opportunity is huge” says president and chief executive officer of Germany’s Frankfurt School of Finance & Management. The school started masters degree in micro finance and MBA program with the Université Protestante au Congo. Duke University opened branch in South Africa in 2007.

China Europe International Business School created program for women entrepreneurs in Ghana in 2012, which it expanded to Nigeria in 2013 and began in Kenya this year. In July, Ivory Coast signed agreement with Paris based HEC to lead programs for hundreds of public and private sector executives.

As Africa grows, especially in the business sector, the need for experienced, qualified middle managers and corporate strategists will increase. These schools are looking to fill a coming growing need.

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U.S. to support small businesses in Ghana through EXIM Bank

The U.S. will invest more in Ghana through the EXIM Bank.  The investments will be focused on small businesses and medium scale enterprises.

The Vice Chairman of the bank, Wanda Felton, at a discussion with Ghana’s President John Evans Atta Mills at the Castle, Osu in Accra on Tuesday, said the extension of the bank’s operation was as a result of the West African nation’s freindly business environment. It was also part of the bank’s long term plan for more economic co-operation with Africa announced by US President Barack Obama in 2009, she added. Felton pledged to woo US investors to support the Ghanaian economy by letting them know the enormous potentials that exist in the country. The vice chairperson of the Export and Import Bank further said the bank would support American business interests in the country through which it sought to expand its business co-operation with Ghana. Ghana’s President John Atta-Mills welcomed the move, saying Ghana was ready to partner genuine investors for mutual benefit. Mills stressed the need to take advantage of positive opportunities and cooperation to address the challenges of doing business among the nations The bank supported the construction of the country’s hydro electric power, the Akosombo Dam and had was supporting the energy sector for the last decade, through rural electrification and the Self Help Electrification Programme. About US$575 million has been invested into the energy sector, small and medium enterprises in the last decade. Other areas of target interest are agribusiness, trade and commerce.

U.S.-Ghana relations have really taken off since Barack Obama became President of the U.S. From his first visit to Ghana in 2009, using it as an example of African democracy, good governance and competency, relations continue on an upward positive track.  This has paid off as both nations come closer economically through trade and business as this is shown through this new agreement.

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Nestlé Expands in Africa

Nestlé is making plans to expands in Africa.

Big food companies know they need to reach more African shoppers. But on a continent where many consumers live far from urban areas and roads often are sketchy—at best—the typical multinational corporation’s supply network often falls short.

That’s where Desmond Mugwambane comes in.

NESTLE

Desmond Mugwambane arranges products at a Johannesburg store.

Armed with just taxi money, two cellphones and a briefcase stuffed with order forms, the Nestlé SA sales agent ventures where most salesmen won’t, like Johannesburg’s high-crime Snake Park neighborhood.

“This is where I dig my gold,” he says on a recent sales trip, passing a cow’s head on display at a street butcher.

While Nestlé’s usual sales staff focus on filling shelves of big supermarkets, Mr. Mugwambane and 80 other salespeople like him hunt for tiny shops across South Africa that will buy such Nestlé products as baby food and nondairy creamers, often in single-serving packages that appeal to Africa’s price-sensitive customers.

It’s easy to see why the Swiss food and beverage maker makes the effort.

The African Development Bank estimates that Africa’s middle class, those earning between $4 and $20 a day, will increase to 1.1 billion people by 2060 and account for 42% of the continent’s population. And the International Monetary Fund has forecast economic growth in sub-Saharan Africa at 5.25% this year and 5.75% next year, beating the global average of 4% each year.

Nestlé says it expects 45% of its sales to come from emerging markets by 2020, up from roughly 30% now. Africa is an important part of that growth. Nestlé’s sales on the continent rose 6.4% to 3.3 billion Swiss francs ($3.6 billion) last year, while global sales rose 2% to 109.7 billion francs.

That’s sparked the need for foot soldiers of sales like Mr. Mugwambane—and not just at Nestlé. Kraft Foods Inc. is forming a network of vans to deliver directly to street vendors in South African townships. Samsung Electronics Co. has introduced solar-powered phones in such markets as Kenya and Nigeria, where electricity supply is patchy. AndCoca-Cola Co. says it uses 3,200 distribution points to deliver to small shops in 15 African countries.

Nestlé’s journey into emerging markets hasn’t always been easy.

The company’s milk business in Zimbabwe is grappling with a law requiring that 51% of a foreign company be held by local, black-owned entities. Competition in India prompted Nestlé to pull out of the bottled-water market there. And in the 1970s and ’80s, the company faced a boycott over how it sold infant formula in developing countries. The company says that after that controversy, in 1981 it became the first company to adopt a World Health Organization code for marketing breast-milk substitutes.

Africa still presents challenges. About 61% of the continent’s population of roughly one billion people still lives on less than $2 a day, according to the African Development Bank.

Nevertheless, Nestlé in the past five years has invested $850 million in Africa, building up local manufacturing, expanding distribution networks and developing flavors catering to local tastes.

Some of Nestlé’s experiments, such as using sales agents like Mr. Mugwambane, have shown results. Sales at the type of small stores he sells to rose 20% in August from June. And the number of small stores carrying Nestlé products in South Africa doubled for the first eight months of the year to just under 4,500.

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Desmond Mugwambane confirms an order with a convenience store owner in inner-city Johannesburg, South Africa, last month.

“We are halfway where we want to be,” says Dharnesh Gordhon, Nestlé’s sales chief for the country.

Selling some items has been an uphill slog in competition with local products because of the relatively high price of Nestlé’s items. “They are better quality but more price,” says Palash Munna Barua, who runs a shop in Hillbrow, a densely populated Johannesburg neighborhood with a large African immigrant community. Mr. Barua says that when he cuts prices for Nestlé items, like chicory-based Ricoffy, they sell fast.

Around the corner, Hilary Nnaji, the Nigerian owner of Hilvegas Trading, says hehas shelves full of Cerelac baby food, Klim powdered milk and other Nestlé items. After haggling with Mr. Mugwambane, the shopkeeper will receive a $30 discount from his $450 order.

Such negotiations are common. “Here, people argue with me,” says Mr. Mugwambane, who gets a 1% commission from Nestlé. He says that by agreeing to a discount, he hopes to get regular, and bigger, orders.

Small-scale delivery, often on bicycle, accounts for between 30% and 40% of Nestlé’s distribution in Africa, according to Frits van Dijk, the company’s former executive vice president for Asia, Oceania, Africa and the Middle East.

Back in Snake Park, Mr. Mugwambane sells Nestlé baby food to Njomane Drinks Distributors. Four years ago, the shop was essentially a shack. But as spending has increased, Njomane has expanded into a two-room concrete building. Today, the store orders nearly $400 a month in such products as Lactogen infant formula and Maggi bouillon cubes from Mr. Mugwambane.

“Nestlé is becoming popular because of us,” he says.

With about 27 factories strategically located around the continent, Nestle has been able to provide direct employment to around 15,500 people and also offer indirect employment to more than 50,000 people as more farmers were linked with its activities.  The business opportunites for growth are great throughout Africa for Nestle.  With an expanding consumer class, more disposable income will be spent and companies such as Nestle will be in prime position to benefit.

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British companies looking to do business in new free Libya

With the fighting coming to an end, there is no shortage of businesses eager to find out whether they have a place in the new Libya. Many organisations in Britain are hoping their company might be in line for work because Britain had helped in the war, however, they have been told not to make any assumptions.

But companies which have existing contracts will be honored. However, they hope with the new government they will not have to pay the bribes which came with doing business with the old order.

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Burger King looking to expand presence in Africa

Following the lead of it’s competitors Like McDonalds, KFC, Burger King will try to set up shop in throughout Africa.
South Africans could soon be snacking on a Big Whopper. Burger King said yesterday it was assessing opportunities in SA as sluggish economic growth in its US home market continues to hamper sales, making emerging markets look more attractive.Yum Brands, which owns Taco Bell and Pizza Hut, have also been enthusiastic about SA, New York- based Sanford C Bernstein analyst Sara Senatore said yesterday. “We are currently assessing the opportunity in SA for the Burger King brand,” the Florida- based company said. Burger King said it continuously reviews its “worldwide restaurant portfolio in the course of business. We make strategic decisions based on many factors, including development opportunities, market conditions and restaurant profitability.” Ms Senatore said growth in emerging markets had outpaced growth in developed markets. “There are difficulties when entering developing markets such as infrastructure and regulatory differences, but what any company is looking for is market depth and market growth and SA has that. They are looking for markets which will provide fast growth and are rapidly developing. Any company that can partake in these types of economies will want to, despite these challenges.” Founded in 1954, Burger King is the second-largest fast-food hamburger chain in the world, after McDonald’s, with about 12000 outlets in 73 countries. About 90% of Burger King restaurants are owned and operated by independent franchisees with 665 of these outlets based in the US. How the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licences on the company’s behalf. Absa Securities analyst Chris Gilmour said the burger market in SA was saturated. “I am very surprised they would consider this, unless they are using SA as a springboard into Africa.” But Vestact fund manager Sasha Naryshkine said there was room for a new competitor in SA. “The fast-food sector has done astonishingly well over the past few years, and there is still potential for growth. Burger King is a well- known international brand and could compete with Famous Brands ’ Steers division. “But its fame would not guarantee its success. Subway is a well- recognised brand and it has not managed to capture the imagination of South Africans.” Famous Brands would be a formidable competitor with its 520 Steers outlets across the country. Steers grew sales 6,5% in the year to February, and said it planned to open a further 20 stores this year. McDonald’s opened its first restaurant in SA in November 1995 and operates 132 restaurants around the country. Justin Divaris, CEO of the Daytona Group that brought the Aston Martin brand to SA, is rumoured to be involved in the deal. He declined to comment.
Investing in Africa and opening up franchises will help drive growth for Burger King. When one looks at the demographics and growing middle class, the opportunity to invest ,establish a customer base would be a worthwhile investment. Pepsi, and KFC have clearly seen the great opportunity of doing business in Africa, it would be wise for Burger King to follow suit.
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Malaysia seeks to tap African market

Malaysia following the foot steps of other Asian nations, seeks to increase its economic presence in Africa.

Malaysia is the latest nation seeking to tap into the African continent’s massive economic potential – following the success of countries such as China and India. Speaking prior to the launch of the Langkawi International Dialogue (LID) on 19th June 2011, Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, described Malaysia and Africa as “natural partners” due to their abundance of natural resources and their relatively young population. “It is thus only natural that we work together to build on the opportunities and potential available,” he said. In 2010, trade between Malaysia and Africa stood at US$8.2 billion, a 39 percent increase from the previous year. However, trade and investment levels between the two regions remain relatively “untapped” with further partnerships and bilateral cooperation required. “There are tremendous opportunities for Malaysia. We need to explore the various opportunities” said Malaysia’s Deputy Foreign Minister Kohilan Pillay. Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin also expressed his disappointment at the present lack of economic activity between Malaysia and Africa while emphasising the enormous potential that Malaysia could potentially tap into with the African market, “Contrast this with the US$12 billion trade Malaysia had with Germany last year, a country one per cent the size of Africa. These figures speak for themselves. As such I urge you (Malaysian investors) to be proactive.” Former Malaysian Prime Minister Dr. Mahatir Mohamad believes that the LID will open up new avenues for Malaysia in Africa. “After the dialogue, Malaysia would have a higher visibility in the African market and Malaysian businesses could expect to do better there.” The LID was the brainchild of Dr. Mahatir and aims to bring together leaders of developing economies from Africa and the Caribbean in order to discuss and promote economic collaboration. More than 500 delegates from 15 African and Caribbean countries are attending the event that is seen as an important outreach program for Malaysia to Africa. According to Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin, the move would help build sustainable economic prosperity by synergising Malaysia-Africa business partnerships. However, the event has also met up with criticism over the attendance of Zimbabwean President Robert Mugabe as well as Malaysia’s invitations to other controversial African leaders such as Sudan’s Omar al-Bashir. Malaysia’s Prime Minister Datuk Seri Najib Tun Razak has deflected the criticism by citing that Malaysia was not yet a member of the Rome Statute of the International Criminal Court (ICC) and therefore did not break any international laws by inviting Omar Al-Bashir.

Africa is prime opportunity for Malaysia to look for growth. South Korea, India, Japan and of course China have made moves to tap the growing and expanding African market.

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