Retail Possibilities in South Africa

By Christo Wiese

SA Retailers have one huge factor in their favour which UK retailers lack –namely the opportunities that Africa offers for growth.

This potential is best illustrated by Africa’s steady growth in real GDP – averaging 5% per year over the past decade; growth made possible by strong underlying fundamentals in terms of inflation, fiscal deficits and financial stability.

It is now widely accepted that Africa is home to some of the world’s fastest growing economies. In fact, more than half of the world’s 10 fastest growing economies currently are in Africa. The World Bank’s latest projections are for these high growth rates to continue over the next decade and for sub-Saharan Africa to remain the fastest growing region in the world – outside Asia.

Of course, it is true that these growth figures, impressive as they are, come from a low base, illustrated by the fact that sub-Saharan Africa as a whole accounts for only 2.5% of world GDP. This figure reduces to 1.3% if one excludes the region’s two powerhouses, South Africa and Nigeria.

Secondly, one should be aware, that the business climate in every country in the region is different, as is the level of infrastructure development as well as the availability of skills. In the Pepkor-Shoprite group, we have been in the fortunate position to follow the transformation of the African landscape closely.

Those of us who have a positive vision of the Africa of the 21st century are often accused of being bright-eyed optimists. I, for one, have never been able to see the point in being anything by positive. But, that aside, it seems clear that even the pessimistic investor will have to agree that the case for continued high growth rates in our region is a compelling one, as articulated in an ironic comment recently made by The Economist: “If potential were edible, Africa would have the best-fed people on earth”.

Therefore, many of us remain very optimistic about Africa’s future and its continued growth in this century. As is often the case, this growth will not necessarily be linear and there are certain to be occasional setbacks. But despite all the challenges still faced by the continent, there is today a new level of stability and willingness to engage with business in most jurisdictions. This, combined with better access to information, easier communication, higher levels of education, transparency and the spread of democracy, has worked to substantially change our continent’s traditional image of a dark and dangerous place to do business …