Booming West African cities such as Lagos, Abuja and Accra have received a great deal of attention and FDI over the past decade in response to their population growth, economic growth, dynamism and promise. While we expect to see these cities continue as primary investment destinations, domestic and foreign investors alike are always looking for the next big thing – those up-and-coming cities that will rise to prominence ten years from now.
We have accordingly identified three cities that have started their ascendancy and we think investors should keep a particularly keen eye on.
Ouagadougou, Burkina Faso
Ouagadougou, or Ouaga for short, in landlocked Burkina Faso, is a city to watch. The country’s largest city, with a population of more than 1,086,000, it is the nation’s economic, administrative, cultural and communications centre. While it has many hurdles to overcome – such as unemployment and an infrastructure deficit in telecoms, transport and utilities – the feeling is that its promise is weightier than all of this.
Burkina currently has the fastest growing gold economy in Africa, and operating costs in the country are low. The flat savannah landscape makes exploration easy. The country is underexplored and its gold deposits as yet largely untapped. The political environment is considered reasonably stable, and the legislative framework enacted in the early 2000s has established a relatively transparent business environment conducive to increased investments.
Dakar is on many investors’ radar, and rightly so. It is a true gateway city, strategically located in terms of sea, road and rail links. It has one of the largest deep-water seaports along the West African coast. The port’s location at the extreme western point of Africa, at the crossroad of the major sea-lanes linking Europe to South America, makes it a natural port of call for shipping companies. Dakar is also linked to numerous African cities by air, and daily flights go to Europe.
The system of roads in Senegal is extensive by West African standards, with paved roads reaching each corner of the country and all major towns. Dakar is the endpoint of three routes in the Trans-African Highway network: the Cairo-Dakar Highway, the Dakar-Ndjamena Highway, and the Dakar-Lagos Highway.
Dakar, the country’s capital, offers investors a relatively stable political environment, democratic institutions, two-day business registration, a relatively robust telecommunications infrastructure, a stable regional currency (the CFA), easy repatriation of capital and income, and abundant semi-skilled and unskilled labour. The city’s population is in excess of 1m.
The country’s key export industries at present are phosphate mining, fertiliser production, and commercial fishing. It is also working on iron ore and oil exploration projects.
Abidjan, Côte d’Ivoire
Abidjan is modern, pretty, has a high concentration of wealthy individuals, and is the economic heartbeat of Côte d’Ivoire. Located in the southeast of the country on the Ébrié Lagoon, with bridges connecting the various peninsulas and islands, it is the second most populous West African city after Lagos. It also has the third-largest French-speaking population in the world, and the largest in Africa. It is considered a cultural hub, having a wide range of hotels, restaurants, places of interest, and nightlife spots.
The civil conflict that erupted earlier this century and lasted a decade naturally hurt the city’s prospects, but Abidjanais are working hard to re-establish the city’s former good reputation and it is finally re-emerging as francophone Africa’s top investment hub.
Côte d’Ivoire in general has much going for it, and Abidjan, being the economic hub and lying on the coast, is the obvious investment destination to serve as the base for many operations. The country is the largest producer of cocoa in the world, supplying about 41% of global output; rubber production is showing strong growth; there is relatively low and stable consumer price inflation; its port infrastructure is amongst the best in Africa; the government, with help from multilateral organisations, is increasing thermal and hydroelectric production capacity; and the country has relatively high stock of foreign exchange reserves. France continues to be overwhelmingly the most prominent foreign investor in Abidjan and the rest of the country.
The National Development Plan (2012-15) aims to reduce poverty significantly and to transform Côte d’Ivoire into an emerging economy by 2020. The government plans to increase public investment from 3% of GDP in recent years to 9.7% of GDP by 2015. Furthermore, the World Bank approved the First Poverty Reduction Support Credit (PRSC-1), which will support reforms aimed at strengthening public-sector governance and administration and facilitating private-sector led growth.
This article was produced by KPMG, and was first published on the firm’s blog.