Africa’s growing potential as a business destination for Israeli companies was on display this week as Foreign Minister Avigdor Liberman 10-day visit to Africa, which includes stops in Rwanda, Cote D'Ivoire, Ghana, Ethiopia and Kenya.
"The relationship with African countries is of prime strategic importance for the State of Israel, from the security, diplomatic and economic standpoints," Liberman said last Tuesday before embarking on the journey, which included a significant delegation of business people.
In the past decade, Africa’s image has shifted from economic basket case to growth destination. In 2014, for the first time, the continent’s economic growth is expected to equal that of Asia--about 5.3%.
“The sun is starting to shine there,” said Shauli Katznelson, deputy director general for Economics at the the Israel Export & International Cooperation Institute. “Until a few years ago, there was a very pessimistic feeling about it, that nothing would happen there, that it was doomed. In the last decade, though, it started growing, and it took a few years to see that it was an ongoing trend.”
While many African countries still have their fair share off problems, he says, there are marked improvements. According to Mo Ibrahim Foundation’s governance quality index, between 2000 and 2012, 20 of Africa’s 54 countries have showed improvements in safety and rule of law, 45 in sustainable economic opportunity, and 46 have showed overall improvement.
“It’s not easy to do business there, the countries are still dangerous in many respects, but the danger level is on the decline,” said Katznelson. Specifically, African markets are growing demand in fields such as agriculture, water management, energy and telecommunications, in which Israeli expertise is strong.
On Monday, Israel's Athlone Investments finalized a deal announced in March to acquire 75% of Vaninga, a Mozambique-based telecoms company.
“The growth potential in the field of data centers and Cloud services in Mozambique and Southern Africa is huge," said Athlone Chariman Stan Bharti. "Communications infrastructures have improved significantly and provide fertile ground for the provision of essential and advanced new Cloud services in Mozambique and surrounding countries.”
In much of Africa, cellular phones “leap-frogged” land-based telephone infrastructure. As the economic situation improves, demand for cellular Internet and advanced mobile technology is growing with it. Getting in early in the growing markets creates a great business opportunity.
In Mozambique, for example there about 26% of the population has a mobile phone subscription, but less than 1% of the population has land lines. Athlone cites industry estimates that mobile phone penetration will reach 99% by 2020, about ⅔ of which will be broadband.
“The growth potential in the data center market in the southern part of the African continent is huge,” said Vaninga Chairman Gordon Edwards. “In the future we will see the broadband and cloud services market developing at a rate similar to that experienced in the African cellular market.”