Investors looking to Africa often ask if Africa is one continent, 54 different countries or something in between.
The answer is clear: Africa is something in between.
In fact, the old approach of grouping African countries based on colonial heritage, language or religion no longer makes sense. This is due to the fact that economics rather than politics now shapes activity on the continent.
The question then becomes: what is the best way to cluster Africa?
Unfortunately, there is no unequivocal answer.
In fact, as Boston Consulting Group demonstrates in its Winning in Africa report, different industries operate in different locations across the continent. For example, if you are in the new car business, Africa boils down to five countries: South Africa, Egypt, Algeria, Morocco and Nigeria. However, if you are in fast moving consumer goods you can clearly see North (from Morocco to Egypt), East (Kenya and Ethiopia), West (Nigeria, Ghana and Côte d’Ivoire) and South Africa.
We can go one step further, as an executive of a shipping company explained at a recent conference in Casablanca. He said business is country agnostic. For example, in West Africa, countries have been defined along a north-south divide, whereas peoples and tribes are scattered along an east-west axis. The result is that doing business in northern Côte d’Ivoire and northern Ghana is often more similar than doing business between north and south Côte d’Ivoire.
Still, we can see patterns in how companies organise themselves to oversee trade in Africa.
Apart from the firms which host their Africa or Middle East Africa teams in London, Paris or Dubai, there are four cities which emerge as regional hubs.
Casablanca is often chosen as the hub for northwest and French-speaking West Africa. The location benefits from instability in Tunisia and Egypt. Additionally, the Casablanca Finance City encourages regional headquarters to be set up in the city.
Lagos is a base for businesses operating in English-speaking West and Central Africa, but is sometimes replaced by Accra which expatriates tend to prefer.
Nairobi is the hub for East Africa and has positioned itself as the technology centre for the continent.
Finally, Johannesburg is positioned as the entry point for southern Africa, if not Africa as a whole.
However, some countries remain difficult to cover from these hubs.
Business in Angola is often overseen from Portugal or South Africa given the high costs of doing business there, as well as the predominance of Portuguese. Ethiopia remains an island, with its specific culture and a fairly closed economy. Finally, with its large economy and strong ties to the Gulf, Egypt is often managed as an independent country or as part of the Middle East, administered out of Dubai.
Martin Tronquit is a managing partner at Infomineo.
Infomineo is a business research company, focusing on Africa and the Middle East. The company provides its clients, including the majority of the leading global management consulting firms and several Fortune Global 500 companies, with ad hoc data on countries, markets, companies and people gathered through primary and secondary research.