Africa, growing focus of new markets to take into account

African GDP growth is expected to be 3,9% between 2020 and 2023

To delve deeper into the reality of the African continent and the business opportunities it offers, we have had María José Hernando, Head of the Country Risk Unit at CESCE.

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Welcome to a new live from Foreign Company, the digital of foreign business Spain. Today we focus on Africa, a continent with more than 1.200 million inhabitants about which there is still great ignorance, but in which increasingly Spanish companies are set as the destination of their Capabilities.

 

According to the report "African Development Dynamics 2019: achieving productive transformation”, prepared by the African Union Commission and the OECD Development Center, African GDP growth is expected to be 3,9% between 2020 and 2023.

 

To delve deeper into the reality of the African continent and the business opportunities it offers, we have had María José Hernando, Head of the Country Risk Unit of CESCE. With it we review the aspects that make the African continent attractive for companies, the most dynamic economies in Africa, the main risks and the products that companies have to cover these risks.

 

We summarize the highlights that he told us:

 

– In the last 15 years, per capita income has tripled, and Africa is the fastest growing region in the world, with a very large and expanding population and many needs of all kinds.

 

– Two structural changes in Africa: there is greater political stability, and the debt relief program.

 

– More dynamic economies? Right now, oil-producing countries are having a harder time, and commodity producers are experiencing varying degrees of difficulty depending on prices, but there are other countries with smaller but more diversified economies that are growing quite a bit, such as Senegal, Ghana, Benin, Rwanda, or Uganda.

 

– In recent years we have seen an increasing interest in the countries of Sub-Saharan Africa, then another thing is how many businesses come together. We have a lot of experience with Angola or Kenya, and in the last 2/3 years we have reviewed our coverage policy and will have opened coverage capacity in 10/15 countries, such as Ghana, Cameroon, Rwanda, Benin, Uganda, and East African countries such as Madagascar or Tanzania.

– Cesce doesn't provide financing; what it does is support companies to try to minimize risks when they expand internationally. Depending on the needs, the coverage will vary: a company that is going to export might cover the possibility of non-payment, the risk of contract termination, or provide guarantees…

 

– Any advice for companies wanting to do business in Africa? Before doing anything, they need to assess both the opportunities and the risks. Some markets are very complex. Many countries still have problems with instability and conflict: war, terrorism… Some countries have infrastructure deficiencies, others have labor shortages, and some have become indebted again.