Jonathan Kruger, an Africa Portfolio Manager, recently traveled overland from Nairobi to Cape Town in his native South Africa. The two-month journey took him through East Africa (Kenya, Tanzania, Malawi, Zambia) and Southern Africa (Zimbabwe, Botswana, South Africa). One of his aims was to experience at grass roots what is driving Africa’s economic future. He shared the following observations and impressions with InvestingInAfrica.net.
Landing in Nairobi one is greeted not by local dances, nor the trumpet of elephants, but an increasingly abundant bird, the Common Yellow Crane. Everywhere you turn they stand towering over construction sites, bringing new commercial buildings and apartments to life.
One cannot ignore the Kenya’s busyness. Everyone seems to be getting on with something: digging away at new roads or buildings, selling goods or heading somewhere with a determined look on their faces. Kenyans seem resolved to create a better future for themselves one brick at a time, or one app at a time, as they code away in the new Nairobi Innovation Centres.
Uhuru Highway is jam-packed with trucks heading from Mombasa, through Nairobi, and deeper into the continent to an eagerly waiting , and growing consumer class.
It’s not just the trucks that bring prosperity. The much hailed mobile money service Mpesa sends purchasing power into rural areas via cellphone networks. No longer is Kenya painted by the red of Coca-Cola but the green of Safaricom as cafes and all sorts of small businesses eke out an extra margin by acting as Mpesa agents. Meanwhile, Equity Bank agents sprout from every corner as agency banking takes off, mostly eliminating the need for formal branches or ATMs.
At the time I traveled through Kenya, the national elections were imminent and you couldn’t find a more patriotic people. Kenyans were glued to their seats as they watched or read about the presidential debates between the main contenders, Raila Odinga and Uhuru Kenyatta. Discussing real issues and how they intend to solve them is a far cry from South African politics with its dancing and role-playing. With the wounds of the 2007 election violence still hurting, politicians and voters stated their commitment to peaceful elections.
Rumbling Through Tanzania
The Namanga border into Tanzania is a mess, not in an administrative sense, but rather as construction workers scramble to complete the new buildings. A United Nations sign alerts one to foreign involvement. Boosting inter-regional trade seems to be more than just jaw-wagging by politicians and economists. These developments are set to dramatically shorten border crossing times and reduce the cost of business. Truck drivers told us it previously took six hours to cross the border. Now it takes less than an hour. We got through in 15 minutes.
While Kenya appears to be advancing at a staggering pace, Tanzania appears to be a bit behind the curve. Arusha (gateway to the Serengeti) is a stark reminder of the pressure wide-scale urbanisation is putting on aging infrastructure. Seemingly disorganised markets compete for space with formal businesses (such as Shoprite and Standard Chartered Bank). Driving past the United Nations Criminal Tribunal for Rwanda (ICTR) is a reminder of Africa’s painful past. After 20 years, the work of the court is complete and the institution will close its doors in 2014.
When entering Dar Es Salaam one is greeted by massive billboards advertising beer, electronics, banking and apartments to name a few. Tanzanians are demanding more than cassava (the local staple food) as they attempt to trade up to their new found tastes. The Common Yellow Crane can be seen towering over some rising skyscrapers. Less visible are the sharks ready to offer unsecured loans at ludicrous interest rates to consumers facing the allure of modern appliances.
Malawians proved to be extremely friendly, always willing to return a wave as they rode past on their bicycles, sometimes with cellphone in hand. Lake Malawi was incredibly beautiful. The poverty was not. Traditional African problems were clearly evident: high HIV infection rate, poor education, lack of water and housing, poor infrastructure and a handout culture. Many spoke of hope in South Africa where relatives have sought refuge.
The New Joburg?
Johannesburg appeared to arrive too soon. We were greeted by familiar sights: shopping malls, modern roads, apartments, luxury hotels, Afrikaans accents and South African shops (Shoprite, Mr Price, Spar, Woolworths, FNB to name a few). I had to pinch myself to realise I was in fact in Lusaka, Zambia. Boom. The population has trebled in the immediate post-independence era. Foreign companies are flocking to the area to reap the “demographic dividend” the city has to offer. Chinese letters adorned buildings, and a sign saying “This road was donated by the Republic of Japan” clearly marked the East’s presence.
Zimbabwe is incredibly beautiful, going nowhere slowly and desperately needs a regime change. Enough said. A final tale comes from an interesting chat I had with a Namibian business women (see picture) from the Herero tribe. She uses her solar charged cellphone (on MTC’s network) to run her craft business in an extremely remote area near Uis. The device is key to ordering materials and finding out when tour buses are arriving.
The African road may be bumpy but pockets of progress are spreading across the continent.
If you’d live to hear more of Jonathan’s insights on investing in Africa, follow him on Twitter @InvestorPumba.