8 African Countries In The Forefront For Formal Retail Investment In 2017

By Kurt Davis Jr. AFKI Original Published: June 8, 2017, 6:44 am
African supermarket chain Nakumatt have struggled to grow of late. Photo: QuartzAfrican supermarket chain Nakumatt is struggling with significant debt. Photo - Quartz

The year began quietly or, at least, that is the sentiment in African investment circles, but the African consumer goods and retail investment space is looking up for the second half of 2017.

The space remains relatively underdeveloped at the moment, with most shopping done at informal shops. The formalizing of the space will be vital to growth and expansion.

With private equity firms sitting on cash (and their investors pushing them to spend) and strategic investors seeing the region starting to turn the corner, activity in this space should pick up the pace as 2018 approaches with the following countries at the forefront of the discussion.

Kurt Davis Jr. is an investment banker focusing on the natural resources and energy sectors, with private equity experience in emerging economies. He earned a law degree in tax and commercial law at the University of Virginia’s School of Law and a master’s of business administration in finance, entrepreneurship and operations from the University of Chicago. He can be reached at kurt.davis.jr@gmail.com.

Salvatore Ferragamo store, Katameya Mall, Cairo, Egypt. Photo: cpp-luxury.com


Egypt endured a tough 2016. Cross-border M&A activity, as a barometer of retail investment interest, was down around 50 percent in 2016. Ever since the Airbus A321, operated by the Russian airline Kogalymavia, was brought down by a bomb in Egypt’s Sinai Peninsula on October 31, 2015, the storyline on Egypt has trended south with concerns around security and political stability.

But midway into 2017, the Egyptian economy will grow north of 4 percent during 2017 and average north of 5 percent in 2018 and 2019. Cross border M&A activity is expected to triple (in value) in 2017, with investors seeing four positives in the current market.

First, asset prices dropped significantly at the end of 2015 and through 2016 as many investors angled to exit the country. Secondly, accessing both a generally rebounding North Africa and Middle East can best be achieved through retail and consumer goods companies in Egypt. Third, Egyptian companies possess strong networks in sub-Saharan Africa and provide exposure to such markets for international investors. Lastly, diversification is a growing interest for Egyptian CEOs with concerns over currency issues, foreign reserves, and long-term instability in the local market.

Ermenegildo Zegna opening in Lagos, Nigeria. Photo: Brandessencenigeria.com


The Nigerian retail and consumer goods space is already the focus of international strategic and private equity investors. Cross border M&A activity, similar to Egypt, endured an approximately 50 percent drop in M&A activity (in total value) in 2016, but will see a complete reversal in 2017 (possibly an uptick north of 60 percent in value).

Asset prices in the Nigerian market remain low. As one private equity investor described it, Nigerian companies did not generally degenerate in 2015 and 2016. They rather stomached a recession, a weak currency, and limited foreign reserves. One can add in the political uncertainty with President Muhammadu Buhari continuously returning to London for health reasons and extra check-ups.

Better translated, the Nigerian high performers are still relatively high performers and the private investors at the Nigerian borders are anxious to tap into nearly one-fourth of the sub-Saharan African GDP through the Nigerian market. The formal retail and consumer goods market also has a distance to go in Nigeria, and only present a greater topline revenue opportunity for investors with an eye and patience for future growth.

Lastly, the regional growth story for West Africa—regional expansion being the growth strategy of many East African retail and customer good companies—will likely include a few strong Nigerian companies in the narrative as they grow locally before expanding beyond the national border.

Leading Kenyan retailers like Nakumatt are attractive acquisition targets. Photo - Quartz

Leading Kenyan retailers like Nakumatt are attractive retail investment targets. Photo – Quartz


The general election in August this year is dominating the airwaves in Kenya. Such discussion can generally hurt business as usual in the short term. But Kenya is more resilient these days and, as the investment storyline goes, accessing East African retail and consumer goods markets generally begins with Kenya.

For that reason, strategic and private equity investors are well-integrated into the Kenyan market. The country possess a well-developed retail and consumer goods space with two obvious growth opportunities.

First, local expansion of the consumer base remains a focus as the market is dominated by informal business, especially as it relates to retail. Some estimates put the informal market around 60 – 70 percent. Secondly, acquisitive growth in the region is the major growth strategy for many Kenya companies, especially those backed by private equity companies. Buying companies or joint ventures with companies in Ethiopia, Tanzania, and Uganda, for example, are an increasing norm in the region.


Woolworths wants to forget their failure in Nigeria. Courtesy of Jeff Attaway/Flickr.com

South Africa

South Africa is not the hottest country up for discussion when talking about investment in 2017. But opportunity may be found in the second half of this year for the country with a dismal GDP growth projection.

Research analysts from Nomura have growth in the country around 0.2 percent for 2017 since the government reshuffle (and firing of finance minister Pravin Gordhan) in March. South African retail and consumer goods companies are looking for opportunities to add to their topline revenue and diversify away from the South African Rand. They are exploring acquisition opportunities (and joint ventures) outside of South Africa, including with an open mind, in part, to companies in other regions of Africa.

Woolworth’s abrupt exit from Nigeria was the horror story within the South African business community. But this story (and a few others) must be put to bed if local South African companies are to push through in 2017 and 2018, as economic growth looks to remain relatively slow within South Africa in the near term. Tapping into markets that can add consumers and buttress cash/forex concerns is likely the best path forward.

Gemalto expands in Africa with regional office in Cote d’Ivoire . Photo: naija247news.com

Cote D’Ivoire

The last couple of weeks remind investors that Cote d’Ivoire is at a delicate inflection point. Soldiers protesting in the street does not necessarily speak to an emerging ‘star’ economy. President Alassane Ouattara is doing his best to keep the peace but the promising of payments, totaling approximately 7m CFA francs by the end of June, has some outsiders questioning if this will be the end of protests (especially if they are theoretically and financially paying off).

Still, ask any strategic or private investor today what country is on the rise and they will readily point to Cote d’Ivoire. The middle class, with increasing wealth and low inflation, are spending more. And Ivorian companies are pitching investors on a two-part offering—access to the fast-growing Ivorian economy and access to French West Africa.

The latter offering puts the country in competition, in part, with Nigeria as both countries want their native companies to tap into regional networks. At the moment, speaking the same language in the region as several other hot markets does provide some runway for investors to test the theory of local superstars, especially in the retail and consumer space.

Shopping in Accra

Shopping at Global Mamas in Ghana. Photo: EasyTrackGhana.com

Ghana – Wildcard

A new president and high hopes for business is still finding its way to fruition. But the second half of 2017 for this country could be interesting in the retail and consumer goods space, as it is an economy consistently on the minds of West African investors.

Both Nigerian and Ivorian companies are already exploring potential acquisitions and joint ventures in the country, however, with a focus toward 2018 and 2019. A late (surprising) uptick in the economy in late 2017 could spur more action before the next year.

Tunisia's Société d’Articles Hygiéniques continues to attract investors. Photo - Econostrum

Tunisia’s Société d’Articles Hygiéniques continues to attract retail investment. Photo – Econostrum

Tunisia and Morocco – Wildcards

Accessing any North African revival will begin by tapping into Egyptian companies. Which country will be the biggest benefactor after Egypt will be between Tunisia and Morocco. Retail and consumer goods companies have performed well in both countries.

Société d’Articles Hygiéniques or SAH, a producer of disposable household and personal care products in Tunisia, is a perfect example of a company that suffered during the Arab Spring but has outperformed to such a level that it continually attracts private equity investors (Emerging Capital Partners invested in 2008 and exited in 2013 and the Abraaj Gorup invested in 2016).

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