2. Introduction
Sourcing products and services from Africa is an option that makes sense to more and
more firms,both local and international each year.
Though the spikes inward direct investment during the global financial crisis was
temporary ,the longer term of increasing flows into Africa is set to persist.
Inward investment (Sub Saharan Africa) is expected to grow by more than a third from
2015 to 2019.
Investment into North Africa is set to rise by nearly 70% in the same period.
4. Pull Factors
Cheap Labour wages in East Africa.
Abundant Raw Materials.
Global trend towards shorter simpler supply chains.
Role of governments.
Infrastructure improvements.
Difficulties with exporting from African ports slowly diminishing.
Access to broadband internet in large cities.
Better communication.
Rise of the middle class.
8. Sub-Saharan Africa’s GDP per head is expected to grow by an average yealy rate
of 2.1% over the 2015 to 2019 period(inclusive).
Wealth creation will progress much faster in the most vibrant and diversifies African
economies,such as those in East Africa aiming to develop a manufacturing and
services base.
Yet Africa,long exploited for its raw materials and flooded with cheap consumer
goods from Asia,It remains a largely overlooked destination for manufacturing and
services comapanies deeming the demography as risky.
Domestic and multinational firms have addressed the challenges of managing and
developing their supply chains in African countries.
9. CASE STUDIES;
Pittards & Cafedirect
Pittards,based in South west England,produces specialist leather products for well known sports
brands such as Nike and Merrell,high end fashion brands including Dents,as well as military clients
in the UK and US.
In the recent years it has rapidly scaled up its presence in Ethiopia and introduced more value
added activities into the Addis Ababa Operations.The part of the reason for the expansion was
necessity as looking forward to the next five ten years despite of the China effect(attracting
interantional investments) Africa does represent a serious alternative opportunity.
Cafedirect is a fair trade hot drinks brand based in the UK.It reinvests over half of its profits into
producer coperatives and communities,funding initiatives to imporve product quality mitigate
climate change and help the producers climb the value chain.
In Africa it sources tea,coffee and cocoa from small scale farmers through cooperatives in
Kenya,Uganda,Sao Tome and Rwanda.
The vast majority of producers own shares in the business and two out of the eight seats on the
company’s board are held by producers
10. China’s Trade and FDI in Africa
China’s growth and its capacity to move in thirty years from under-development and extreme
poverty to an emerging global power and one of the largest exporter of manufactured goods
has attracted attention of many developing countires.
China has served as a development model for Africa and an alternative source of trade and
finance from Africa’s traditional development partners.
China’s impact has been diverse depending in part on the sectoral composition of each
country’s production.
China’s FDI in Africa is closely linked to the trade and development asssistance.Increasing 46%
per year over the last decade.
Overall China’s increased engagement with Africa could generate important gains for African
economies
11. Key Findings
The tendency of the international business community to underestimate Africa as a manufacturing and
services location has been a competitive advantage for the early movers.
Investors with existing international client and suppler networks have an advantage over local
competitiors,in that they are able to take on more risk when launching operations in Africa where the
client and supplier bases are still emerging.
Misunderstanding Africa as a manufacturing and services environment are still rife. Many people
underestimate the range of activities that can be carried out, yet those who do decide to invest in Africa
are prone to underestimate the effort required to ensure a reliable supply of good quality products
