Africa, the Next Frontier for Entrepreneurs: Business Opportunities in the Neglected Continent
STANFORD GRADUATE SCHOOL OF BUSINESS —Africa has an unfortunate PR problem. While new coverage of the area is often focused on political unrest, conflicts, poverty, drought — Africa is in fact doing just as well as, if not better than, other developing regions of the world. This was the message from more than a dozen entrepreneurs, executives, and venture capitalists speaking at the Stanford Africa Forum 2011 conference, held at the Graduate School of Business on Jan. 29.
These natives and ex-patriots alike agreed that the 50-plus nations comprising Africa represent remarkable opportunities for local, regional, and international business enterprises to do well while doing good.
The key, said Babajide Sodipo, former advisor to Rwanda's Ministry of Trade and Industry, is to focus one?s business sights on efforts that truly meet the people's needs. "African governments don't want investment for its own sake," he said. "They want those that will create prosperity and improve people?s lives."
Africa is, in fact, ranked as "easier to do business" in than either China or India, according to Thomas Barry, founder of Zephyr Management investment firm, who delivered the opening keynote address. And it supersedes the other two countries in another factor critical for business success: renewable internal freshwater resources. Moreover, by 2040, the continent will have a larger workforce than China or India, totaling more than 1.1 billion people.
"Africa represents a prime case where the reality and opportunity are much better than the perception," Barry said.
"It's definitely a good time to be investing in this region," agreed Richard Essex, general partner of East Africa Capital Partners, which focuses on technology, media, and telecommunications investments in Africa.
The conference, organized by the student-run Stanford Africa Forum, highlighted issues and industries pertinent to Africa's social and economic development -- including health, energy, education, and technology -- and explored the impact that entrepreneurial ventures in particular have had on development. Sessions also examined the ideological tension between development based on entrepreneurship and development supported by aid, as well as the effect of government policies and geopolitical trends on the continent?s entrepreneurial investment climate. With 90% of people south of the Sahara living without access to electricity, Africa's energy needs clearly trump all others when it comes to generating an environment for business development, said Sameer Hajee, cofounder and CEO of Nuru Energy, and moderator of the "Alternative and Traditional Energy" panel. Ade Dosunmu, MBA '01, senior director of strategic markets at Comverge, Inc., said part of the problem was the overly centralized electricity distribution model throughout much of the continent. He said creating public-private partnerships aimed at breaking down such hierarchy and establishing regional electricity grids present one road for entrepreneurs in the energy sector. One of the best ways to create a sustainable business in Africa is to focus on efforts that allow women to enter the middle class, recommended Mark Neuman, counselor for International Trade and Global Strategies for Limited Brands, the parent company of firms such as Victoria's Secret. Speaking on the "Investing in Africa" panel, Neuman, who is helping West African countries develop their cotton sector, said textiles serves as a particularly rich industry for doing so. With the slow speed of the internet in Africa, mobile phone technology has become tremendously important to most citizens — and thus another key area for business development. One application has been the use of mobile tech to help Africans who lack bank accounts — a common situation throughout the continent — to make payments. Speaking on the "New Ventures Based on Mobile Technology" panel, Menekse Gencer, a former manager at PayPal, described Kenya's success in launching a mobile money system known as m-Pesa. "We're going to see emerging markets going straight to mobile money and bypassing traditional banking services," said Gencer. "These types of applications will be a keystone for catalyzing the GDP in such markets." Attendees, many of whom were Stanford students, came away with practical information on how to take advantage of the many entrepreneurial opportunities in multiple sectors in Africa, as well as new contacts and connections throughout the region. The event was organized by Stanford graduate and undergraduate students, and was chaired by GSB student Brett Calhoun, MBA class of '11.