by Lekan Olanrewaju
In an article published by the Financial Times, Ibadan is listed as one of the “next 5” cities in Africa. According to the article, the city possesses a “rapidly growing economy but serious business climate deficiencies – that offer some of the biggest potential rewards – provided multinationals can stomach the risks.”
Other African cities on the come up include Addis Ababa in Ethiopia, Dar es Salaam in Tanzania, Kinshasa in Congo and Mombasa in Kenya.
Some of the world’s largest companies have already made inroads into these economies. Diaego, one of the world’s largest brewing companies, paid $225m for Ethiopia’s state-owned brewer Meta Abo last year, to tap into Addis Ababa’s growing consumer market. What’s more, the African Union is headquartered in the city, making it the political capital of Africa, Frontier says. That’s a bit of a stretch, but the business buzz in Addis is undeniable.
Fellow beer group Heineken is spending $325m in Kinshasa, Congo’s capital. Frontier says: “while poverty and an underdeveloped infrastructure reduce market size in Kinshasa, staggering population growth and consistently higheconomic growth means the city of 10 million cannot remain ignored by many MNCs.”
Dar es Salaam, Tanzania’s largest city, arguably offers the best investment prospects of all. Taking into account its size, short-term stability and growth, Frontier ranks it as the third best risk-weighted business opportunity in all of Africa by 2015.
An emerging trade hub in east Africa, it is increasingly handling more cargo than Mombasa, the region’s other sea trade centre. And Japanese carmaker Honda Motor has recently shown an interest, teaming up with a Tanzanian company and preparing to build an assembly plant to expand sales in the city.
There are risks to expanding in all of these markets, of course – Frontier highlights the usual concerns about infrastructure, corruption, and regulation. But Africa is the fastest growing and most rapidly urbanising region in the world. The risks of staying out could be greater still.
The article also forecasts that the economy of Lagos, which is listed as one of the “Big 5”, will by 2015, outweigh that of it’s nearest competitor, Johannesburg, which has the biggest economy in Africa. Johannesburg has a nominal GDP output of $51billion, while Lagos has a GDP of $40billion but that of Lagos is predicted to jump when Nigeria rebases its economic statistics next year.
The Big 5′ – cities are said to be broadly politically and economically-stable, and already major FDI destinations. They are: Accra, Ghana; Johannesburg, South Africa; Lagos, Nigeria; Luanda, Angola; and Nairobi, Kenya.
It would seem fate has quite the sense of humour, with this article declaring Lagos as “economically-stable” just as the state has been declared insolvent by the Revenue Commision.