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Posted on Monday, 16 March 2015 17:12

African lions follow in the footsteps of Asian tigers

By Nicholas Norbrook in Geneva

African companies face stiff international headwinds in the year ahead, a period in which governments are lowering intra-African trade barriers and companies are increasing their reach and sophistication.

On the banks of Lake Geneva in Switzerland this 16-17 March, more than 500 business leaders, bankers and politicians will gather for the annual Africa CEO Forum.

What is the point of taking time and energy expensively assembling a team of top professionals if I am not going to let them get on with their their job?

Some of the themes to be debated – finance, urban growth and the role of state and market – are argued about everywhere on the planet.

Here, The Africa Report talks to several chief executives to understand the concerns of African managers amidst the shifting global economic currents in 2015.

There has been a slow but sure rise in intra-African trade, but it remains hamstrung by politicians' inability to dismantle trade barriers.

Africa trades 12% with itself, where Asia and Latin America have internal trade levels of about 60%. There are now some causes for optimism: three large trade blocs plan to fuse, with an official announce- ment expected in Cairo in May.

The tripartite agreement between the Southern African Development Community, the Common Market for Eastern and Southern Africa and the East African Community should create a free-trade zone across Eastern and Southern Africa that encompasses 625 million people, 26 countries and a gross domestic product of $1.2trn.

Infrastructure concerns are also being addressed in many African countries and regions. There has never been such a solid pipeline of power, port, road and rail projects in Africa.

Importantly, regional infrastructure such as power pools and cross-border transport projects are also being tackled, such as East Africa's rail projects to link Uganda, Kenya, Rwanda, Burundi and South Sudan.

Bonds and bourses

In the year ahead, there are fears that financing acquisitions and expansion – and indeed infra- structure – may become tougher in Africa with a strengthening dollar and rising interest rates in the US.

Nonetheless, at the sovereign level international investors have maintained their appetite for African debt, with 2014 bringing nine African bonds.

They raised $8.5bn, with similar levels of debt issuance expected in 2015.

For companies, stock markets are also proving attractive. There could be 30 African initial public offerings (IPOs) in 2015, up from 24 the previous year, according to law firm Baker & McKenzie.

More than $2bn was raised in 2014.

Real estate, finance and energy companies are expected to be busiest this year, with stock exchanges in Egypt, Kenya, Morocco, Nigeria, South Africa and Tunisia seeing most of the action. As Austin Okere, chief executive of Nigeria's Computer Warehouse Group, explains, listing a company brings more than money.

Corporate governance is more sophisticated today, more rigorous and more widespread, so a new generation of leaders has to play with a new set of rules.

Companies have become larger, more sophisticated and more spread out over larger geographical zones. New skill sets are becoming essential.

Managing teams in several different countries requires the ability to delegate, for example.

For Andrew Alli, chief executive of the Africa Finance Corporation: "What is the point of taking time and energy expensively assembling a team of top professionals if I am not going to let them get on with their their job?" ●



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