Lessons from the data: Five key business insights into Africa today

Analysis in brief | More than just economic factors can and do affect a business climate. A compilation and in-depth assessment of major data and indexes gauging African nations’ business performances finds commonalities in the most prosperous countries and offers direction to profitable investment.

Businesses only looking at economic data to judge where in Africa to invest are similar to blinkered horses who only see a fraction of the entire picture. IOA’s 2017 Africa Country Benchmark Report (ACBR) presents the most comprehensive view of the intermingling factors that impact one another in the real, complex world of national growth, like balls careening on a snooker table. Social factors influence business growth, while business performance affects a society’s welfare, with political implications.

Five key business “takeaways” from the 2017 ACBR derive from many factors but all provide important signals for understanding conditions that influence business success in Africa. ACBR does more than list data. Analysis of 34 international indexes and 30 key indicators — nearly 20,000 data points in total — separates transitory developments from the permanent conditions that hinder or boost a country’s business climate.

Here are five important lessons for the business community that emerge from the ACBR’s holistic approach to African data:

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South Africa must modernize its manufacturing industry to mutually benefit from its partnership with China

By CHERYL-ANNE SMITH[1]

Analysis in brief | South Africa (SA) has long endured an unequal trade partnership with China that has significantly impacted its manufacturing sector. China on the other hand has initiated plans to elevate its manufacturing industries over the coming decades by means of implementing innovative technologies to create the smart factory. Given China’s move, SA cannot afford to miss out on this opportunity to follow suit. By adopting industry 4.0 technologies, SA stands to even the playing field with China that has long been overdue.

Key points:

Industry 4.0 provides a vision for the digitalisation in future manufacturing creating a new customer-oriented, automated, flexible and faster industry. Image courtesy: Aethon, available at: http://www.aethon.com/industry-4-0-means-manufacturers/

  • SA needs to change its current course of trajectory of exporting its natural resources to China in order to create jobs and see its economic growth thrive.
  • The ‘Made in China 2025’ initiative outlines China’ plan to elevate its manufacturing industry by implementing innovative technologies such as the Internet of Things (IoT), big data, cloud computing, 3D printing and artificial intelligence to create the smart factory.
  • To prepare SA to compete with the likes of advanced countries, SA businesses intend to invest approximately US$ 459 million annually over the next five years to ready themselves for the impact of the fourth industrial revolution.

South Africa’s manufacturing sector is at risk given China’s monopoly of South Africa’s natural resources

For decades, China has purchased South Africa’s natural resources for its own production industry. This has led to an increase in South African exports, resulting in the commodity boom. China imports South Africa’s primary goods, but sells manufactured products to the global market. China can rapidly produce cheaper manufactured goods, given the country’s larger and cheaper labour workforce. This is one of several factors that has contributed to South Africa’s de-industrialisation and shrinking manufacturing sector, negatively impacting upon the country’s economic growth.

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IOA at a glance

Over the past decade, In On Africa (IOA) has positioned itself as one of the top research, intelligence and publishing firms in and focused exclusively on Africa. The company works with a wide array of clients across the African continent through its complementary divisions, service offerings and insight-driven products.

The infographic provides a snapshot of IOA – its core offerings, mission, values, vision and key differentiators.