June 05 2014 Martin TRONQUIT

Clustering Africa

One of the questions which is often asked to Infomineo is: Is Africa one continent, is it 54 different countries or is it anything in between?

The answer is quite clear today: it is something in between.

In fact the old approach to Africa, grouping countries based on colonial heritage, languages or religions, doesn’t make much sense any more. This is due to the fact that politics have largely been replaced by the economy.

Then the question becomes: What is the best way to cluster Africa ?

Unfortunately there is no unequivocal answer.

In fact as BCG demonstrates in its “Winning in Africa” report (http://goo.gl/se7UCd, page 17) Africa is really different depending on the industry you operate in. For example if you are in the new car business Africa is summarized as five countries, “punto basta”: South Africa, Egypt, Algeria, Morocco and Nigeria. On the contrary if you are in FMCG you can clearly see Northern Africa (from Morocco to Egypt), Eastern Africa (Kenya, Ethiopia), Western Africa (Nigeria, Ghana, Ivory Coast) and South Africa.

​We can go one step further, as M. Laurent Bresson, the head of Maersk Maghreb, ​explained in a recent conference held in Casablanca. He explained that business was pretty much country agnostic. In fact, for example in Western Africa, countries have been defined u​sing ​a North-South divide, whereas peoples and tribes are scattered along an East-West axis. The consequence is that you often have more in common in doing business in Northern Ivory Coast and Northern Ghana than between Northern and Southern Ivory Coast, so if you have an unstable country it doesn’t mean that you can’t do business, as long as you have the right connections in the right tribes.

Still we can see some pattern on how companies organize themselves for Africa.

Let alone the companies which host their Africa or Middle East Africa teams in London, Paris, Dubai or, slightly better, Johannesburg there are four cities which emerge as regional hubs.

Casablanca is often chosen as the hub for the Maghreb and French speaking Western Africa. The destination benefits from the troubles in Tunisia and Egypt and from the set up of the “Casablanca Finance City” status which encourages the set up of regional HQs.

Lagos is the natural hub from English. speaking Western and Central Africa but it is sometimes replaced by Accra which expatriates tend to prefer as the example of Nestlé demonstrates.

Nairobi is clearly the hub for East Africa and has positioned itself as the technology hub for Africa.

Finally Johannesburg is positioned as the entry point for Southern Africa, if not Africa as a whole.

Some countries however remain difficult to cover from these hubs. Angola is often covered from Portugal or South Africa given its language specificity and very high costs. Ethiopia remains an island within Africa, with a very specific culture and a fairly closed economy. Finally Egypt being a large economy with strong ties to the Gulf it is often managed as an independent country or as part of the Middle East, managed out of Dubaï.

As for Infomineo we cover Northern and Western Africa (plus Angola with Portuguese people) from Casablanca, the Gulf from Cairo, and will set up two regional offices in Lagos and Nairobi next year, and two sales hub in Johannesburg and Dubaï.

If you want to investigate how to cluster Africa in your own case do contact us !

Martin TRONQUIT, Managing Partner, Infomineo

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