The Power of Collaboration- 5 steps for closing the “expectation gap” around Africa’s resources

European SMEs interested in Africa

With Europe’s economy in distress and Africa’s in a growth phase, many of Europe’s small and medium enterprises (SMEs) are reconnoitring Africa and its business opportunities. The continent is still thought to be a risk, but for the first time in a long while it’s considered less of a risk than Europe. Point in fact, the African Development Bank has forecast Africa’s 2014 growth rate as 5.3 percent (up from 4.8 percent in 2013), while the European Commission has predicted GDP growth for the EU of just 1.1 percent in 2014. European investors therefore feel that African markets offer better prospects.

Marc-Peter Zander, the managing partner of Germany-based consulting firm XCOM Africa, says there is very real interest on the part of many European SMEs and families in investing in Africa. “I am aware that several family-owned businesses in Germany met recently to discuss investment opportunities in Africa. With low returns on European stock markets and the decline of returns in real estate and properties, these families are searching for long term investments in growth markets. These investments may range from €1m-€20m and could perfectly meet the needs in Africa.”

Zander adds: “This year alone we advised over 50 organisations and individuals on their Africa strategy and we foresee a strong increase on investment in Africa in 2014.” He does however caution that this trend – or the extent and success of it – will depend in large part on Africa’s ability to deal swiftly with issues of corruption, infrastructure paucity, and political instability. Certainly the interest is there on the part of European SMEs, but only time will tell if their interest blooms into ventures of enough occurrence and scale to positively impact the economy.

David Okwara

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