Action needed to spur African economies

 

Power lines in Jinja. Construction of the Karuma hydro power project should have started in May 2012. PHOTO BY ABUBAKER LUBOWA 

 

By Othman Semakula
 

 

In Summary

The good growth on the continent seen in the last ten years positions Africa as a the “Next big thing”.

Data from the Uganda Bureau of Statistics indicates that by 1990, only 20,000 Ugandan households had access to a television set and none had used a mobile phone within the country’s borders. This means that only 0.07 per cent out of 28 million Ugandans [then] could afford to watch Tv on a daily basis, that was then limited to a single channel [UTV]. Similarly, only 7 per cent of Ugandans had access to a radio set.

However, with about a decade gone by, data from the Uganda Communications Commission indicates a remarkable turn around with an enhanced growth in the lifestyle of most Ugandans realised through increased access to electronic equipment including Tv sets, radio sets, and mobile phones among others.

The growth has been propped by a change in attitude in much of Africa that now views such gadgets as life necessities and an important ingredient in the technological transformation chain. It has further been assisted by the rapid growth in the continent’s middle class characterised by an increase in spending capacity especially on luxuries.

Currently Uganda has about five million television sets, 11 million radio sets and about 17 million mobile phone handsets, according to UCC. The growth, as indicated is not only alien to mobile phones or television sets but spreads across the wider technological divide that has transformed Uganda’s communication, lifestyle and the entertainment scope.


But what is the magic behind this growth especially at a time when much of Africa had viewed technology as a luxury and a reserve for the upscale world.

In the last half of the last decade, much of the world has been hit by a tough economic environment. The effect has been slowed growth which has negatively impacted consumption in of Europe and the America especially for luxuries.

Thus, global companies have had to refocus growth strategies as they seek to revitallise their sales as well as exploring new markets.

According to the World Bank, Sub Saharan Africa grew by about 5.7 per cent in the first quarter of 2013 compared to 3.7 per cent and 4.3 per cent for Europe and the Americas respectively. The good growth is likely to continue with an ambitious 7 per cent by 2015.

This brings us to one conclusion that Africa has become the new global focus for manufacturers seeking to energise their sales as well as exploring new markets. While addressing journalists at the Sony Africa conference in Cape Town, South Africa, Mr Hiroyasu Sugiyama, the Sony Middle East and Africa managing director, emphasised the need for global companies to refocus their energies on the continent, arguing that Africa, was undoubtedly one of Sony’s most important markets for which the electronic manufacturer targets to achieve a $1.4 billion share in the consumer electronics space and mobile phone business by 2015.

Currently Africa has a combined consumption potential of about $2 billion for electronics and mobile phone equipment. To emphasise its focus on Africa, Sony recently unveiled a blueprint that will increase its presence across the African continent.


This, the company says will be achieved through a multifaceted approach constituting a four-pillared strategy with emphasis on product, customer, community and operation.

The emphasis on Africa is also forcing global device, equipment and goods manufacturers to directly engage Africa through enhanced product research in order to produce goods that are relevant to the market.

However, whereas the growth in Africa has been a key ingredient in the shift of global consumption trends, infrastructure challenges, unreliable energy and corruption among others continue to stand in the way of achieving sustainable growth in the consumption curve.

While addressing participants at the World Economic Forum in Cape Town recently, Mr Uhuru Kenyatta, the Kenya President, said it was time for Africa to cease the opportunity and concretize the concept of the ‘Next big thing’. He said Africa should work hard to fulfill its ‘Next Big Thing’ tagline that has been chorused across the global. According to Mr Kenyatta, Africa must get off its laurels and take advantage of the current void through working on infrastructure development and boosting energy supply among others.

METHODS

New destination. Africa continues to register good growth amid economic challenges, which have relegated some of the world’s largest economies to second fiddle.
Growing market potential. A number of global companies are putting in place strategies that can enable them have a share of Africa’s growing market potential.