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Christo Wiese
Christo Wiese

Christo Wiese declares himself an Africa optimist

ECONOMIC NEWS - Jul 6th 2016, 10:37

CHRISTO Wiese, SA’s richest man and the chairman of the nation’s biggest retailer Shoprite, has some advice for companies looking to tap the spending power of Africa’s 1.2-billion consumers: stick around and have deep pockets.  

"Over the years, I’ve seen too many companies set up shop, stay around for a while and then disappear again," Wiese said in an address to the Consumer Goods Forum’s global summit in Cape Town. "Make very sure Africa is where you want to be."

Investor sentiment towards the world’s poorest continent has soured as a commodity-price rout and a drought slowed economic expansion. Economic growth in Sub-Saharan Africa is forecast to slow to 3.2% this year from 3.6% in 2015, and an average of 5.6% over the previous five years, according to the International Monetary Fund (IMF).

The MSCI EFM Africa index of shares has dipped 22% this year, four percentage points more than a gauge of stocks across 24 frontier markets.

The slowdown in many African nations and other emerging markets is likely to be temporary, with their economies expected to grow twice as fast as developed markets for the foreseeable future, according to Steve Matthesen, the global head of retailer services at research company Nielsen.

"The populations are growing and they have more money," he told the summit. "There is a lot of room for them to continue to grow. Those companies that do well are those that have been there for a while. The best time to go in is when it’s the roughest time."

Coca-Cola, which has been selling beverages in Africa since the 1920s, is among those taking a long-term view. The Atlanta-based company was in the middle of a $17bn, decade-long investment programme on the continent, CEO Muhtar Kent said.

"We are investing in people, we are investing in opportunities, we are investing in facilities," he told the summit. "Africa is on the move. Africa’s consumers are more affluent and better educated. Market economics is gaining ground. Inflation has been tamed, armed conflict and violence is down."

Africa attracted $71.3bn of foreign direct investment in 2015, down from $88.5bn the year before, accounting firm EY said in its 2016 Africa Attractiveness report in May. SA, Morocco, Egypt and Kenya were ranked the top investment destinations.

Infrastructure constraints

Other speakers who highlighted Africa’s potential at the three-day summit that ends on Friday included Martin Sorrell, the CEO of the world’s largest advertising company WPP, Pick n Pay chairman Gareth Ackerman and Deputy President Cyril Ramaphosa.

The continent’s poor transport links, inadequate power supply and excessive red tape were the biggest constraints to investment and growth, said Wiese of Shoprite, which operates more than 300 stores in 14 African nations outside SA. In some cases, the company had had to build its own roads to enable customers to access its stores, he said.

"Although the rewards can be great, so will be the challenges," said Wiese, who has a net worth of $6.6bn, according to the Bloomberg Billionaires index. "I am an Africa optimist. Whatever the negatives, there are many positives." 

Read more about: south africa | finance | economy | christo wiese

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