Into Africa

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George Godsal
Managing Director, – Hill & Knowlton East Africa

The global perspective of the African continent is tinged with the negative publicity this region has spawned through sadly iconic events. In the last generation alone, there has been a horrific famine in Ethiopia, civil wars in Darfur and the Congo, and the spread of HIV and Aids to name just a few. Together these tragic events have resulted in the loss of millions of lives and suffering on an extraordinary scale. Economic challenges persist too. Average inflation across the continent leapt from 7.5% in 2007 to 11.6% in 2008, with hikes in food and oil prices leading to almost half of African countries recording two-digit inflation rates . Despite all of this, the reality on the ground is that African nations are looking forward not back.

Through looking purely at the immense difficulties that Africa has experienced and continues to face, the well-grounded and true sense of optimism that exists in many African nations has gone largely unnoticed. Notwithstanding the immense challenges that lie ahead, now is the start of a defining decade for Africa.

There are many indicators of definite progress on the continent. The economy has grown consistently by over 5% since 2002, registering 5.7% in 2008 despite the surge in food and oil prices and the global financial turmoil. According to the African Statistical Yearbook, the first pan-African assessment of its kind, this picture of growth is relatively uniform across the continent with East Africa experiencing the highest growth at 7.3%, and Central Africa the lowest at 5%. Another indicator of development is an increase in the contribution of women to the economy – the female active population across Africa increased by 36% between 1998 and 2008, significantly contributing to economic growth and the reduction of poverty.

While the economies of Africa are relatively non-diversified, they have benefited through being largely de-coupled from the global downturn. Having not replicated the borrow-and-spend high risk culture of much of the rest of the world, African nations have advanced their position in the global economy simply through growing modestly.

The four main economic engines of the continent all registered GDP growth in 2008 – Kenya 7%; Nigeria 6.2%; South Africa 5.1% and Egypt 2.6%. But it is the markets that had been virtually written-off by the international community, and even by fellow African nations, that recorded the most significant economic expansion. Ethiopia’s GDP jumped 11.3% in ‘08, and has grown at rates consistently over 10% for the last five years. Rwanda and Sudan grew at 7.9% and 9.5% respectively. Even Zimbabwe, derided and shunned by the international community for many years, is showing definite signs of progress through curbing inflation and beginning to re-open links with the outside world through engaging foreign businesses and governments.

Stock exchanges in Africa are gaining in credibility and also liquidity. At the Nairobi Stock Exchange major listings are generating significant institutional and retail investor interest. Safaricom, the 40% Vodafone-owned telco, first listed in 2008, was over-subscribed by 532% raising a total of 226 billion Kenyan Shillings (just under US$3 billion) against an anticipated 51.7 billion Kenyan Shillings (US$700 million). Scangroup, the marketing services business in which WPP took a 27.5% stake in late 2008 was also oversubscribed by 500% when it floated in 2006 and raised 3.6 billion Kenyan Shillings (US$47 million). With more active stock exchanges, there is a distinct uptake in the requirement for financial communications and investor relations expertise.

Africa is going through the classic patterns experienced by the ‘recent’ emerging markets of China, the Middle East, and India in particular. There is noticeable corporate activity amongst infrastructure and telecoms players, which is increasing foreign direct investment to the region.

Huge strides in global technology will give African nations the ability to catch-up with developed economies at digital, not analog speeds. Kenya has already demonstrated the enabling power of leapfrog technologies, and together with the Philippines, has the highest penetration of mobile payment usage anywhere in the world today. So technologies which have been tried, tested, and evolved in the ‘test markets’ of developed nations, are benefiting Africa immediately. Just like the rest of the world, African nations will benefit from tomorrow’s technology tomorrow.

Alongside economic and technological advancement, the communications environment is evolving rapidly too. Whilst word of mouth and radio remain the predominant communication channels today, the media mix is changing indelibly with the rapid growth of internet penetration (albeit from a low base), substantial mobile usage, and the migration to multiple-channel digital TV.

Given this backdrop, it is essential for corporations and brands operating in Africa, whether home-grown or multi-national, to understand their constituents perspective before they can hope to communicate anything of relevance or importance – let alone persuade or change behavior or belief. Smart organizations are changing the way they communicate, adopting a far more strategic approach to ensure that communications reflect the reality of today’s multi-channel landscape.

Africa may be the world’s last truly emerging market, but to succeed from a reputational perspective, organizations need to adopt developed-world approaches to communications.

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