by Ed Yourdon
Texas Firm Responds to Power Crisis in Booming Markets of Africa
The Gold and Iron Ore Mining Industries are exploding across the emerging markets of Africa. However, so are the telecom, healthcare, manufacturing and service industries. The World Bank statistics are now in and the results are loud and clear. Now is the time to enter the Africa markets. Just look at firms such as Arkansas-based Walmart and others, and there is no doubt that a gold rush is on.
The World Bank reported just last week that there is a growing and immediate need for more power production in Africa. With over $ 1.6 trillion (USD) in GDP for 2008, Africa is similar to Brazil in total output. But with over 1 billion people on the continent, the number of telecom subscribers exceeded 450 million in 2009 and there are now 20 African companies with at least $ 3 billion in revenues in 2010. In fact, with over $ 72 billion in foreign direct investment in 2008 alone, and a more advanced and educated middle class than ever, many believe that Africa is poised to become a substantial consumer continent the likes of which will soon rival India and even China in months, not years.
COO for a Celina-based full-service energy solutions provider, Jason Biermeier said that “while the perception of risk continues to exert a strong hold on many entrepreneurs, the successful exective is beginning to recognize that real risk is actually quite limited when due diligence and rational thought are employed.”
Peter Schmid, Director of the Africa Team for Actis Capital, a $ 7 billion London-based private equity hedge fund that focuses on investing only in emerging markets, stated that their investment management professionals are “there on the ground, meeting with the management every week” adding value “at every stage of the operations.” This seems to be a common denominator for companies successfully entering these markets.
CEO of the most trusted supplier of power station EPC and O&M, Will Gruver advises that the only way to outpace risk is to “cultivate strong and extensive networks which enable deployment of all your contacts and market wisdom – this is what my company does for our expat clients needing energy infrastructure in Africa and South America.”
As the gold and ore mining industries expand in emerging markets rife with opportunity, companies such as Gruver’s and Actis are positioned to enter these markets with strong business plans, quality equipment and shorter deliveries – because they are setting up their infrastructure and personnel on the front end of development.
There are over a billion potential customers in Africa and a strong and growing middle class of consumers. Mr. Schmid believes that “the businesses that tap into the spending habits of those consumers have a tremendous growth story on their hands.” These firms also talk a lot about the social benefits of a growing economy with more jobs and better healthcare and infrastructure. “Don’t let perception of risk blind you to the potential of Sub-Saharan Africa,” stated Mr. Schmid.