Engaging with Africa: The next economic powerhouse?
With a population of more than 1.3 billion people, Africa is home to seven of the top 10 fastest-growing economies in the world, according to IMF data. Effective engagement with this diverse continent is becoming a commercial imperative for businesses around the world, argue Professor David Park and Dr Judy Muthuri, of Nottingham University Business School – which recently updated its Africa Strategy to focus more effectively on identifying and addressing opportunities and challenges on the continent for both its students and external business partners.
The University of Nottingham’s vision is to be a university without borders, where we embrace the opportunities presented by a changing world and where ambitious people, and a creative culture, will enable us to change the world for the better.
High-level goals to help realise this vision include cultivating a global mindset, contributing to the UN’s Sustainable Development Goals, solving problems and improving lives.
The continent of Africa provides plenty of opportunities to make a measurable difference against these goals and our Business School’s Africa Strategy includes the key themes of supporting ethical and responsible business practices, non-degree training and education for executives, and enhancing commercial opportunities for those in our region.
We firmly believe that while development organisations are looking for solutions to alleviate widespread poverty, the private sector absolutely has a role to play in alleviating poverty through market-based solutions, as well as partnering and collaborating with both state and non-state actors to contribute to the sustainable development of local communities in Africa.
Applying the Base of the Pyramid concept
The key business concept that underpins our thinking and activities in this space is the Base of the Pyramid (BOP) concept. It was first referenced by Franklin D Roosevelt in April 1932, a year before he became president, when he spoke about “The forgotten, the unorganised but indispensable units of economic power … the forgotten man at the bottom of the economic pyramid”.
The main thesis of the BOP concept is that poverty can be eradicated through market transactions by an external commercial organisation “that either sells goods to, or sources products from, those at the base of the pyramid in a way that helps to improve the standard of living of the poor”.
Since 2007, the BOP concept has been researched widely with an increasing body of literature from diverse disciplinary fields including marketing, strategy, international business, general management, development studies and information technology.
The concept has also been adopted by for-profit enterprises, government bodies and not-for-profit organisations.
Over the past 15 years, in particular, a variety of organisations have continued to refine the BOP concept and the key question at the moment is how the ideas and principles can support a greater conceptual shift, away from singular solutions of poverty alleviation to understanding how wider innovation ecosystems and engagement through cross-sector partnership networks can be developed.
This creation of an entire ecosystem is, potentially, one key area where the membership of the Chamber could, together, make a real difference through the likes of technology suppliers, financiers, capacity builders, supply chain players, open innovation expertise, distributors to the last mile and cross-sector partnerships.
This is a challenge that we embrace as a business school and we invite every Chamber member organisation to join us on this journey to create a wide, deep value proposition to engage the poor, and to help create the ecosystem to deliver it.
The Financial Times and The Economist have recently defined Africa as “rising”, a far cry from the “hopeless continent” headlines from the turn of the 21st century. Opportunities will abound increasingly in Africa for businesses and organisations of all sizes across our region. However, there are also a number of very real challenges that can directly impact both strategic and day-to-day activities for those looking to increase their engagement with Africa.
Economic activity in Africa is expected to grow remarkably in the coming decade with the successful implementation of the African Continental Free Trade Agreement (AfCFTA), which connects 55 countries with a combined GDP of $3.4tn. The World Bank predicts that AfCFTA will have a number of effects on global trade and supply chains, including an increase in Africa’s exports by $560bn, mostly in manufacturing. African countries are also increasing their presence in international affairs and global markets.
One of Nottingham University Business School’s key Africa-related goals in 2021 is to critically assess both the opportunities and the risks that organisations in the East Midlands face with respect to their potential engagement with African countries. We will also be seeking to learn and make use of lessons from our historical engagement with China, a part of the world that also used to be considered a “sleeping economic giant” and is now anything but.
We are passionate believers in the power to change lives through business. We look forward to strengthening and deepening our relationships with organisations across the East Midlands that not only feel the same but are excited by the potential opportunities yet to be realised by effectively partnering, in the right way, with the people and organisations in Africa, the next economic powerhouse.
Dr Judy Muthuri explores the Base of the Pyramid concept in a recently-published book on the subject, titled Base of the Pyramid Markets in Africa: Innovation and Challenges to Sustainability.
Source: East Midlands chamber