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Africa-to-Africa
Internationalization
Key Issues and Outcomes

Edited by
Ifedapo Adeleye, Lyal White
and Nathaniel Boso
AIB Sub-Saharan Africa (SSA) Series

Series Editors

Ifedapo Adeleye
Lagos Business School
Lagos, Nigeria

Lyal White
Gordon Institute of Business Science
Johannesburg, South Africa
Aim of the Series
Sub-Saharan Africa has recently been cited as the ‘next frontier for growth,’
and academics across business disciplines are increasingly focusing on
this specific territory of study. The AIB Sub-Saharan Africa (SSA) series
addresses topical issues concerning this emerging market. With contribu-
tions from leading scholars in the field comprising of Africans in the dias-
pora, non-African scholars with a keen interest in the region and African
scholars and consultants who reside in the region, the series is uniquely
multi-disciplinary in nature with contributions from the core business
disciplines including strategy, entrepreneurship, marketing, international
business, human resources management. Other interesting areas include
political economy, economic geography, development economics, and
international economics.

More information about this series at

http://www.springer.com/series/14762
 Ifedapo Adeleye • Lyal White • Nathaniel Boso
Editors

Africa-to-Africa
Internationalization
Key Issues and Outcomes
Editors
Ifedapo Adeleye Nathaniel Boso
Lagos Business School Leeds University Business School
Lagos, Nigeria Leeds, West Yorkshire, United Kingdom

Lyal White
Gordon Institute of Business Science
Johannesburg, South Africa

AIB Sub-Saharan Africa (SSA) Series

ISBN 978-3-319-30691-9 ISBN 978-3-319-30692-6 (eBook)
DOI 10.1007/978-3-319-30692-6

Library of Congress Control Number: 2016949781

© The Editor(s) (if applicable) and the Author(s) 2016

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
transmission or information storage and retrieval, electronic adaptation, computer software, or by similar
or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made.

Cover illustration: © Steve Stock / Alamy

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature

The registered company is Springer International Publishing AG Switzerland
 Preface

The Academy of International Business-Sub Saharan Africa (AIB-SSA)

Book Series features a collection of impactful research papers and teach-
ing cases aligned to the theme of the annual conference of the AIB-SSA
chapter. The 2015 conference of the chapter, which was successfully
hosted by Gordon Institute of Business Science (GIBS), South Africa,
from August 26 to 28, had the theme “Africa Direct Investment: Trends,
Prospects, Challenges and Policy Issues.” The conference attracted over
90 delegates from 20 countries of the Sub-Saharan Africa region and
around the world. Over 25 doctoral candidates and early career faculty
participated in the Journal of International Business Studies (JIBS) Paper
Development Workshop led by Prof. Elizabeth Rose of the University of
Otago, New Zealand, and Prof. Robert Grosse of American University,
Sharjah, UAE.
Building on keynote addresses and presentations at the 2015 confer-
ence, this volume provides research papers and teaching cases that high-
light an emerging trend in Foreign Direct Investment (FDI) to Africa:
the increase in trade and investment between African countries. This is
an area that has received little coverage as attention has focused on FDI
from traditional sources (Western economies) and, of late, the BRIC
economics of Brazil, Russia, India and China economies (especially
China). This volume aims to draw attention to this trend, defining the
agenda and providing guidance on directions for future research.
v
vi Preface

The coverage is extensive sector-, geography-, and discipline-wise.

Contributions cover the key economies in all the sub-regions of Sub-
Saharan Africa—Nigeria, South Africa, Kenya, Ghana, Uganda, and
Mozambique—as well as the key industries—extractive, financial ser-
vices, telecommunications, brewing, and hospitality. The chapters in this
volume cover multiple academic disciplines and managerial functions,
including strategy and entrepreneurship, marketing and brand manage-
ment, economics, and political economy.
The volume contains not only empirical and conceptual research
papers but also a collection of teaching case studies. These cases help
to illustrate the practical issues and challenges organizations face when
they embark on Africa-to-Africa internationalization. Hence, the volume
serves as a “bridge” publication, providing both theoretical and real-life
insights on an important phenomenon in the African context. All the
chapters are written by scholars and executives with practical and exten-
sive professional experience conducting international business in Africa.
The AIB-SSA chapter—in line with its commitment to advancing
International business (IB) research, teaching, and practice in Africa—
will continue to organize annual conferences and capacity-building
activities. We hope that this second volume in the Palgrave Macmillan
AIB-SSA Book Series will help readers better understand the complexi-
ties and challenges of doing international business in Africa. Titles in the
AIB Sub-Saharan Africa Book Series include:

Ifedapo Adeleye, Kevin Ibeh, Abel Kinoti and Lyal White (Editors)
The Changing Dynamics of International
Business in Africa

Ifedapo Adeleye, Lyal White and Nathaniel Boso (Editors)

Africa-to-Africa Internationalization: Key Issues,
Challenges and Outcomes

Ifedapo Adeleye, Lagos, Nigeria

Lyal White, Johannesburg, South Africa
Nathaniel Boso, Leeds, UK
 Acknowledgements

We would like to express our sincere thanks and appreciation to all those
who contributed to this volume and to the conference. Many thanks also
to the following institutions for the immense contribution of their fac-
ulty to the 2015 conference and to this book: GIBS (Nicola Kleyn, Lyal
White, Adrian Saville, and Helena Barnard), China Europe International
Business School (CEIBS) (Annette Nijs and Mathew Tsamenyi), and
Lagos Business School (Chris Ogbechie, Olawale Ajai, and Ifedapo
Adeleye).
Many thanks to our conference sponsors—the Tony Elumelu
Africapitalism Institute (Platinum Sponsor), PYXERA Global (Gold
Sponsor), GIBS Centre for Dynamic Markets and Lagos Business School
(Silver Sponsors), and Emerald Group Publishing (Bronze Sponsor)—for
their immense support. We are especially grateful to Mr. David Rice of
the Tony Elumelu Africapitalism Institute and Dr. Jurie van Niekerk of
PYXERA Global for contributing to the insightful scholar-meets-practice
sessions.
Many individuals supported the inaugural conference as PDW and
symposia/special topic session organizers, track chairs, session chairs,
and reviewers; their contribution in raising the quality of the papers and
cases selected for this volume is much appreciated. We especially thank
Professors Elizabeth Rose, Africa Ariño, Robert Grosse, Amon Chizema,
Kenneth Amaeshi, and Nathaniel Boso.
vii
viii Acknowledgements

Special thanks to the Palgrave Macmillan team for extending their spe-
cial partnership with the AIB to the SSA chapter. We are grateful to Liz
Barlow and Maddie Holder for their efficient and professional handling
of the production of this volume.
Finally, we thank the contributors to this second volume of the SSA
book series for their efforts to increase our understanding of Africa-to-
Africa internationalization. Their commitment to this project made the
editors’ work easier, and without them we sure wouldn’t have this insight-
ful book.
 Contents

Part I Exploring the Africa-to-Africa

Internationalization Concept 1

1 Africa-to-Africa Internationalization: Emerging

Trends and Key Issues 3
Nathaniel Boso, Ifedapo Adeleye, and Lyal White

2 Africa-to-Africa Internationalization: Future

Trends and Research Avenues 35
Ifedapo Adeleye and Nathaniel Boso

Part II Research Articles on Africa-to-Africa

Internationalization 67

3 Examining the Factors Influencing the

International Expansion of Nigerian Banks 69
Ebimo Amungo

ix
x Contents

4 Corporate Political Activity and Intra-African

Foreign Direct Investments: Evidence from
Uganda’s Electricity Industry 99
Charles Godfrey Mbalyohere

5 Inward Internationalisation of Hotel Services:

Evidence from Ghana 129
Emmanuel Kofi Adjei

Part III Cases on Africa-to-Africa

Internationalization 149

6 The Nigerian Beer Wars: SABMiller’s Entry into

the Nigerian Brewing Space 151
Nkemdilim Iheanachor and Chris Ogbechie

7 Sasol’s Changing Landscape in and with Mozambique 177

Lyal White and Dianna Games

8 NGN Telecoms’ Re-Entry into Kenya: The Power

of Perseverance 197
Amanda Bowen, Stephanie Townsend, José Barreira,
and Claire Beswick

9 Equity Bank’s Internationalization: Building an

African Multinational 211
Chris Ogbechie and Nkemdilim Iheanachor

Index 269
 Notes on the Editors and Contributors

Ifedapo Adeleye is Senior Lecturer in Strategy and Management and Director

of Custom Executive Education at Lagos Business School, Nigeria. Dr. Adeleye’s
research engagements are largely practice-driven and revolve around three criti-
cal areas of management: strategy practice and execution, performance and
reward management, and international business and comparative management.
Dapo has produced over 50 journal articles, book chapters, conference papers,
and teaching cases, mainly in international outlets. He is currently engaged in
research and case development projects investigating the internationalization of
African firms and the challenges of doing business in Africa. Dr. Adeleye received
his PhD in Business Administration from Manchester Business School, UK.
Adjei Emmanuel Kofi is a doctoral student in Corporate Strategy and a lecturer
in the Department of Marketing and Corporate Strategy, Kwame Nkrumah
University of Science and Technology, Kumasi, Ghana. He has an MBA in
International Business and a postgraduate diploma in Business Administration
from the Kwame Nkrumah University of Science and Technology. He also has a
bachelor’s degree in Management Studies from the University of Cape Coast,
Ghana. He has research interests in marketing, cross-cultural studies, human
resource management, corporate strategy, international business, and entrepre-
neurship. He has rich experience in the area of project management, interna-
tional business, and management of SMEs.
Ebimo Amungo lectures at the at the Nigerian Turkish Nile University, Abuja,
and he is an approved tutor for Edinburgh Business School’s Marketing and

xi
xii Notes on the Editors and Contributors

Organizational Behavior courses in Nigeria. Amungo has an eclectic background

in private and public sector organizations, having worked as a freelance reporter
for the British Broadcasting Corporation and as a newspaper publisher and gov-
ernment media spokesman. His journey into academia began with his gradua-
tion from Edinburgh Business School, Heriot-Watt University, UK, with a
Doctor of Business Administration degree. Amungo’s research interests include
internationalization of African firms, strategic management in the African con-
text, and the role of context in international business research. Dr. Amungo is
the Managing Partner of Amungo Consulting, a management consultancy.
José Barreira is a practicing entrepreneur, specializing in the areas of invest-
ment and manufacturing, and a part-time lecturer in entrepreneurship at the
Graduate School of Business Administration at the University of the
Witwatersrand, Johannesburg, South Africa. Dr. Barreira has published and co-
authored a number of papers in accredited journals and is an external examiner
of master’s dissertations and doctoral theses for a number of universities. He
completed his PhD in Entrepreneurship at the University of Pretoria, South
Africa.
Claire Beswick heads up the Case Centre at the University of the Witwatersrand
Graduate School of Business Administration, having joined the institution as a
case writer in September 2001. She has more than 20 years’ experience in
research and writing, including as a researcher at the South African Institute of
Race Relations, as a journalist, and now at the WBS Case Centre. In her posi-
tion as head of the Case Centre, Claire has written a wide range of cases herself
and overseen the writing of most of the cases that are currently in the
collection.
Nathaniel Boso is Associate Professor of Marketing at Leeds University
Business School, UK. His research interests include international entrepreneur-
ship and innovation management. His research has won multiple awards,
including Best Empirical Paper Award at the 25th USASBE Annual Conference
and nomination for the 2014 AIB Haynes Prize for the Most Promising Scholar
Award. His works have been published in leading scholarly journals, such as the
Journal of Business Venturing, the Journal of Product Innovation Management, and
the Journal of International Marketing. Dr. Boso sits on the editorial review
boards of International Marketing Review as an Associate Editor and of European
Journal of Marketing as a reviewer. He is also a specialist educator in Structural
Equation Modelling (using LISREL) and has consulted with multiple compa-
nies across Africa. He received his PhD from Loughborough University, UK.
 Notes on the Editors and Contributors xiii

Amanda Bowen is the Case Centre Operations Coordinator at Wits Business

School, South Africa. She has been writing and editing case studies for the WBS
Case Centre since 2009. Dr. Bowen comes from a work background of retail
management and English language teaching. Amanda holds an MA degree with
a specialty in TESOL and a D Litt et Phil degree in English. She has written case
studies on a range of business topics, including education, organizational design
and development, marketing, and sustainability.
Dianna Games is the author of the book Business in Africa: Corporate Insights
(Penguin South Africa, 2012; reprinted 2013) and has contributed to chapters
of a number of other published books, including, recently, The Changing
Dynamics of International Business in Africa (Palgrave Macmillan, 2015) and
Africans Investing in Africa (Palgrave Macmillan, 2015). She has also had aca-
demic research papers on African issues published. Dianna is a regular contribu-
tor to the media and a columnist on Africa for Business Day newspaper in South
Africa. As the honorary CEO of the South Africa-Nigeria Chamber of Commerce
in Johannesburg, formed in 2005, she has played a leading role in facilitating
business and investment between Africa’s two biggest markets. Dianna is also a
Fellow of the Centre for Dynamic Markets and the Gordon Institute of Business
Science (GIBS), one of Africa’s leading business schools.
Nkemdilim Iheanachor is an International Strategy doctoral student at Lagos
Business School, Nigeria. He has a bachelor’s degree in Electrical/Electronic
Engineering and an MBA from the Lagos Business School. He has had prior
experience in banking as a Relationship Manager in the Multilateral,
Conglomerates and Private Banking Group of Zenith Bank; as an Investment
Banker involved in project finance, mergers and acquisitions, and financial advi-
sory; and as a Consultant involved in advisory engagements for state govern-
ments, large multinationals, and local corporates. Nkemdilim has extensively
consulted for companies in the area of corporate strategy development, competi-
tive strategy development, and blue ocean strategy development.
Charles Godfrey Mbalyohere is an academic with The Open University, UK,
where he earned a PhD and a Master of Research degree in Strategic Management
as well as an MBA. His roots, though, are in engineering, having attained an
MSc in Food Technology from the University of Applied Sciences, Berlin.
Following engagements in the food industry, he got into international manage-
ment consulting, working with Deloitte for a few years. He was also an associate
lecturer with The Open University for several years in the MBA program in
continental Europe. Reflecting his diverse interests, he is currently the President
xiv Notes on the Editors and Contributors

of a development NGO in Uganda and among the diaspora. His research inter-
ests stretch across pro-market reforms, corporate political strategy, MNC inter-
nationalization, entrepreneurship, emerging institutionalization, and emerging
market multinationals.
Chris Ogbechie is Senior Fellow in Strategic Management and Director of the
FirstBank Sustainability Centre at Lagos Business School, Nigeria. He obtained
a first-class honors degree in Mechanical Engineering and an MBA from the
University of Manchester and a PhD from Brunel University, UK. He has exten-
sive experience in international business, derived from his work as a marketing/
sales executive at Nestlé in Nigeria, Singapore, Malaysia, and Switzerland, and
from his consulting work with Nigerian, Ghanaian, and Kenyan firms. Ogbechie
has published widely in international journals and has developed several teach-
ing cases, some of which have received international awards.
Stephanie Townsend is a research associate and case writer for the Case Centre
of the University of the Witwatersrand Graduate School of Business
Administration (WBS). She has researched and written more than 30 cases in
the last 11 years that cover a broad range of subject areas, including marketing,
information and communications, micro-insurance, and the cellular industry.
She began her career at the Centre for Scientific and Technical Information at
the Council for Scientific Research in Pretoria and joined the Case Centre upon
completion of her master’s degree in journalism at the University of Stellenbosch.
Lyal White is the Director of the Centre for Dynamic Markets (CDM) at the
Gordon Institute of Business Science (GIBS), where he is also an Associate
Professor of Political Economy and International Business in Africa, Asia and
Latin America. Prof. White has held various senior research positions in the past
and was a Visiting Scholar at the Center for Latin American Studies (CLAS) at
the University of California, Berkley. Committed to enhancing cultural under-
standing and building commercial and political ties between Africa and the
world, Prof. White is of the firm belief that a combination of strong institutional
and cultural understanding will harness development and long-term prosperity.
Prof. White completed his PhD in Political Studies at the University of Cape
Town, South Africa. He has published extensively, most recently as co-editor of
The Changing Dynamics of International Business in Africa (Palgrave Macmillan,
2015) and chapter contributor to Africans Investing in Africa (Palgrave
Macmillan, 2015).
 List of Figures

Fig. 1.1 World Merchandize Exports by Region, 2013 (US$ billions) 7

Fig. 3.1 Framework of the research with propositions 75
Fig. 6.1 Global beer market 153
Fig. 6.2 Beer-producing countries in Africa 154
Fig. 6.3 Beer consumption: Africa versus developed markets 168
Fig. 6.4 Global beer production 169
Fig. 6.5 The Nigerian beverage market 169
Fig. 6.6 Per capita beer consumption in Nigeria 169
Fig. 6.7 Per capita beer consumption versus GDP per capita in
selected countries 170
Fig. 6.8 African brewers: Consumption per capita in 2010 170
Fig. 6.9 Location of brewery plants in Nigeria in 2010 171
Fig. 8.1 Flow diagram of Fax2Email 198
Fig. 9.1 Nigeria’s rank in the ease of doing business index 216
Fig. 9.2 Financial sector’s contribution to Nigeria’s GDP 236
Fig. 9.3 Growth in customer numbers, deposits, gross loan
portfolio, total assets and profit before tax 237
Fig. 9.4 Growth in shareholders’ funds and staff numbers 238
Fig. 9.5 Distribution of liabilities and assets 239
Fig. 9.6 Equity Bank purpose, vision and mission 240
Fig. 9.7 2010 Financial Access Survey 241
Fig. 9.8 Chronological evolution of Equity Bank 242
Fig. 9.9 The Equity story 243

xv
 List of Tables

Table 1.1 Major Sources of FDI Projects to Africa 9

Table A1 Tabulation of observed and expected responses and
distribution parameters and analysis using normal
distribution fitting analysis (NDFA) algorithm 81
Table A2 Summary of values and their interpretation following
analysis of responses to questionnaire 82
Table 3.1 Exports from Nigeria and the number of Nigerian
bank subsidiaries in select SSA countries 84
Table 3.2 GDP growth rates and macroeconomic indices
of select SSA countries as compared to some
Organisation for Economic Co-operation and
Development (OECD) countries 84
Table 3.3 Size, capital, profitability, ranking and number of
foreign market entries of Nigerian banks 86
Table 3.4 Indicators of development in select SSA, South
American, Asian and OECD countries 88
Table 3.5 Number of branches of case study banks in selected
SSA countries at the end of 2012 89
Table 3.6 Foreign market entries made by some Nigerian banks
between 2000 and 2012 90
Table 3.7 Primary and secondary evidence for Proposition 1 (P1) 91
Table 3.8 Primary and secondary findings for Proposition 2 (P2) 92
Table 4.1 Summary profiles of the cases in the study 103

xvii
xviii List of Tables

Table 4.2 Overview of the interview partners and their specialities 104
Table 4.3 Main insights about stakeholder engagement, social
and political capital and local embeddedness 110
Table 4.4 Main insights about understanding Africa 112
Table 5.1 Ranking of online services/products preferred by
hotel customers in Kumasi 139
Table 5.2 Kumasi hotel customers’ preferred sources for
looking for hotels 140
Table 5.3 Online challenges faced by hotel customers in Kumasi 141
Table 5.4 Fears of Kumasi hotel customers when looking
for hotels online 142
Table 6.1 Beer volume statistics (Fig. 2) 171
Table 6.2 Financial performance of Guinness 2006–2010 172
Table 6.3 Financial performance of Nigerian Breweries
(NB) 2007–2009 173
Table 9.1 Economic growth projections for the 32 largest
economies in the world 215
Table 9.2 Human development statistics for Nigeria as at 2013 248
Table 9.3 Macroeconomic indicators for Nigeria 249
Table 9.4 Business growth and performance statistics of Equity
Bank Uganda Limited in Ugandan shillings 252
Table 9.5 Business growth and performance statistics of Equity
Bank South Sudan Limited in South Sudanese pounds 253
Table 9.6 Business growth and performance statistics of Equity
Bank Rwanda Limited in Rwandan francs 253
Table 9.7 Business growth and performance statistics of Equity
Bank Tanzania in Tanzanian shillings 254
Table 9.8 Equity bank operating segments 254
Table 9.9 Equity Bank profit and loss as at 31 December 2012 255
Table 9.10 Equity bank balance sheet as at 31 December 2012 256
Table 9.11 Equity Bank cash flow statement as at 31 December 2012 257
Table 9.12 Loans and advances to customers as at 31 December 2012 259
Table 9.13 Chronological evolution of the Nigerian banking industry 261
Table 9.14 Number of branches and outlets in Equity’s international
subsidiaries as at December 2013 263
Table 9.15 PEST criteria grid 263
Table 9.16 Equity’s total foreign direct investment into
subsidiary companies 264
 Part I
Exploring the Africa-to-Africa
Internationalization Concept
 1
Africa-to-Africa Internationalization:
Emerging Trends and Key Issues
Nathaniel Boso, Ifedapo Adeleye, and Lyal White

The Changing Dynamics of International Business in Africa (Adeleye et al.

2015a, b), the inaugural volume of the Academy of International Business
Sub-Saharan Africa Chapter Book Series, provides multidisciplinary
insights on inward foreign direct investment (FDI) to Africa, outward FDI
from Africa, and intra-regional FDI in Africa. Highlighting the emerging
trends, key issues, complexities and challenges of doing business in the Sub-
Saharan Africa region, the book deliberately covers a wide range of topical
issues. As the editors observe, one phenomenon remains understudied in
the international business literature: the marked increase in intra-African
trade and investment, or Africa-to-Africa internationalization.

N. Boso ( )
University of Leeds, West Yorkshire, UK
e-mail: [email protected]
I. Adeleye
Lagos Business School, Ajah, Lagos, Nigeria
L. White
Centre for Dynamic Markets, Gordon Institute of Business Sciences,
Illovo, Johannesburg, South Africa

© The Author(s) 2016 3

I. Adeleye et al. (eds.), Africa-to-Africa Internationalization, AIB
Sub-Saharan Africa (SSA) Series, DOI 10.1007/978-3-319-30692-6_1
4 N. Boso et al.

While much attention in the international business literature has focused on the
rise of FDI from BRIC countries into Africa, the literature on intra-African and
outward FDI from the region is scant. This is surprising, given the marked increase
in the internationalization activities of African firms in the last decade or so:
South African multinationals such as MTN, SABMiller, Standard Bank, Telkom,
Dimension Data, Massmart, Nampak and ShopRite now have a presence in at
least a dozen African countries, as do Nigerian firms such as Dangote and UBA
… Togo-based Ecobank has established a significant footprint across the region,
with operations in 33 countries. This phenomenal increase in the international-
ization activities of African enterprises provides an interesting opportunity to
explore the patterns, strategies, barriers and outcomes of the ‘Africa-to-Africa
Internationalization’. Adeleye et al. (2015a, b): 5–6

This volume therefore seeks to address this major gap in the literature.
Africa-to-Africa Internationalization: Key Issues and Outcomes examines
the key issues, challenges and prospects of intra-African FDI and pro-
vides guidance on avenues for future research. The goal is to increase our
understanding of Africa-to-Africa internationalization and, ultimately, to
stimulate research about this important but under-researched topic. This
introductory chapter provides an extensive overview of Africa-to-Africa
internationalization and is organized into three main sections. In the first
section, we provide contextual information on Africa’s position in the
global economy. The second section focuses on the internationalization
of African firms, examining current trends, key issues and challenges. In
the third section, we highlight the five thematic areas and issues covered
in this volume: the rise of pan-African banks, corporate political activity
in the context of business regionalization, internationalizing in the digi-
tal era, internationalizing in a VUCA region (a region characterized by
volatility, uncertainty, complexity and ambiguity), and building proudly
African businesses and brands.

Background: Africa in the Global Economy

The global economy is witnessing rapid growth in the economies of devel-
oping nations, to the extent that the conventional wisdom that major
international business and investment activities are undertaken primarily
 1 Emerging Trends and Key Issues 5

by multinational enterprises originating from developed economies has

come under scrutiny (Sun and Lee 2013). In particular, the global econ-
omy has witnessed an increasing number of excellent business models and
innovations from the developing world, such that multinationals originat-
ing from the developing world are now able to compete with rivals from
developed economies (Luo et al. 2011). Meanwhile, as the developing
economies of Africa, Asia, Eastern Europe and Latin America continue
to outgrow developed economies, as economic prosperity spreads across
multiple developing economies, and as these countries continue to be
viewed as attractive locations for global investments (UNCTAD 2012),
developed economy multinationals, such as Microsoft, General Electric
and Cisco, have begun to look to such markets to strengthen their growth
trajectories (Khanna and Palepu 2010). While success stories continue to
be told about the big emerging markets of Asia (e.g. China and India)
and Latin America (e.g. Brazil and Chile) and the transition economies of
the former Soviet Union and Eastern Europe, success stories of emerging
markets in Africa (e.g. Kenya, Nigeria and South Africa) are seldom the
topic of discussion in international business research and policy debates.
Indeed, Africa is often in the news for negative reasons: stories of extreme
and challenging conditions, including civil wars, revolts, famines, dis-
eases and corruption, often attract headlines in the global press.
At international business and trade forums, discussions tend to coalesce
around the idea that Africa is isolated and disconnected from global busi-
ness and trade activities. Arguments have been put forward that while
other continents, particularly Europe, have removed most barriers to
international trade, resulting in free movement of goods, services and
people, the African continent is still burdened with heavily militarized
national borders that hamper free movement of goods, services and people
from within and outside the continent. It is also argued that free trade is
impossible in Africa because Africa does not have much to offer the world
by way of trade links: shipping routes, air networks and internet connec-
tions (for both communication and for commerce) to the global economy
are underdeveloped. For example, businesses in Africa are required to deal
with multiple and incoherent sets of national contract laws, adding bil-
lions a year to transaction costs for businesses. Less than 1 % of African
consumers shop online within an African border, and most African country
6 N. Boso et al.

markets are barred from online business transactions by severe internet

security problems. Inbound financial transactions to Africa are saddled
with multifaceted transfer problems, making it increasingly unsafe for
multinational enterprises to do business with Africa cost effectively. Land
and property ownership is a massive problem: traditional chiefs and king-
ships claim informal hereditary rights to landownership, making legal
land acquisition in Africa by investors a big risk. While Africa also suffers
from the notion of rich-country protectionism by the West, Africa’s own
domestic policies on customs, tariffs and foreign investment lack trans-
parency and consistency, and poor port and road infrastructure limits
timely flow of merchandize goods. Africa’s high land transportation costs
limit cross-border transactions. Barriers to crossing borders within Africa
also restrict intra-African business, thus limiting Africa’s participation in
the global economy. As can be seen in Fig. 1.1, Africa’s contribution to the
global economy seems to be negligible compared to other regions.

The Global Flow of Foreign Direct Investment

As the world continues to struggle to recover from the impact of the 2008
financial crisis, and as many nations and regions continue to experience
low economic growth, the flow of FDI globally has struggled to return to
the growth rates experienced prior to 2008. From 2001 to 2007, global
foreign direct investment inflows grew by a compounded annual growth
rate (CAGR) of 18.3 %. However, from a post-2008 high of $1.58 tril-
lion in 2011, global FDI inflows have declined by 21 % to $1.23 trillion
in 2014. The fall in global FDI inflows has been influenced by a num-
ber of economic and political factors. These include the recent economic
contraction in the major emerging markets of Brazil and Russia, lacklus-
tre economic growth in the European Union, slowing economic growth
in China, and ongoing geopolitical tension in various parts of the world
compounded by a crash in oil prices that blew open a hole in the budgets
of many oil-producing nations.
One key trend that has emerged from an examination of global FDI
flows from 2008 to 2014 is the fact that developing countries, led by Asia
and Africa, are now the major recipients of FDI. From 2011 to 2014,
 1

Fig. 1.1 World Merchandize Exports by Region, 2013 (US$ billions). Source: WTO International Trade Statistics, 2014
Emerging Trends and Key Issues
7
8 N. Boso et al.

developing countries have seen their share of FDI increase from $639
billion to $681 billion, a 6.6 % increase. Over the same period, global
FDI to developed countries fell drastically by 39 %, from $828 billion
in 2011 to $498 billion in 2014. Faster economic growth coupled with
improved macroeconomic management practices, high domestic demand,
a relatively more stable political environment in developing economies,
and increased government liberalization policies have improved investing
prospects in many parts of the developing world, a trend that many inves-
tors seeking higher returns have sought to explore. While Asia continues
to attract the largest share of global FDI, accounting for over 40 % of
global FDI inflows, Africa’s share of this global FDI flow is increasing, a
trend that has contributed to post-crisis average growth that is 2 percent-
age points above that of the world economy.

Foreign Direct Investment to Africa: Overview

and the Growth of Intra-African FDI

Since 2005, Africa has experienced significant growth in FDI, from $14
billion in 2005 to $54 billion in 2014. This represents an 18.4 % increase
on a CAGR basis, making Africa one of the world’s fastest-growing
regions for foreign investment. Key factors that have contributed to the
growth of FDI into Africa are the rise in commodity prices, increased
government liberalization in certain sectors of the economy, including
finance and telecommunications, and slow global economic growth in
other regions of the world. These factors have made the faster-growing
economies of Africa more attractive to investors, particularly emerg-
ing market investors. In recent times, however, following the dramatic
decline in global commodity prices, FDI into Africa has declined slightly,
from $56 billion to $54 billion in 2014. Egypt, Ghana, Nigeria, South
Africa, and central African countries like Ethiopia have emerged as the
major destination for FDI.
FDI inflows into Africa have traditionally been dominated by developed
countries, with Western Europe and the United States providing substan-
tial FDI in terms of capital invested and the number of projects engaged in.
However, while Europe and North America have been the major sources of
FDI funds, their share of the number of FDI-related products has stagnated.
 1 Emerging Trends and Key Issues 9

Table 1.1 Major Sources of FDI Projects to Africa

Region Share of projects in 2005 (%) Share of projects in 2014 (%)
Western Europe 39.0 36.8
Africa 7.9 19.2
Asia-Pacific 17.5 15.7
North America 24.6 14.7
Middle East 8.0 9.1
Rest of Europe 1.3 3.7
Source: Ernst & Young Africa Attractiveness Survey, 2015

Intra-African investors are increasingly becoming a major source of FDI

(as measured by the number of projects, see Table 1.1). In 2005, Africa’s
share of total FDI projects announced on the continent amounted to
approximately 7.9 %. By 2014, FDI projects originating from Africa had
increased to about 19 %, led by transnational corporations from Nigeria,
Kenya and South Africa. For many countries, particularly land-locked or
non-oil-exporting countries, intra-African FDI remains a significant source
of foreign capital. The increasing trend in intra-African FDI is in line with
many African governments’ effort at improving regional ties by encourag-
ing trade within Africa. Intra-African projects have been concentrated in
manufacturing and services, particularly financial and telecommunications
services. In contrast to external FDI flows, only 3 % of intra-African FDI
projects were in the extractive industries during the period from 2009 to
2013. Intra-African trade, while small, is growing and is seen as a major
source of expansion for many African corporations seeking to increase
their presence outside of their home countries.
Intra-African FDI flows have taken an interesting and promising course
in recent years. According to World Investment Report (2014), the observed
increase in FDI to Africa is being sustained by growth in intra-African
flows. Importantly, FDI inflows to Africa have risen by 4 % to $57 billion,
an increase driven by international and regional market-seeking and infra-
structure investments. In the period leading up to 2014, expectations for
sustained growth of an emerging middle class attracted FDI in consumer-
oriented industries, including food, information technology, tourism,
finance and retail. The overall increase has been driven by the eastern and
southern African sub-regions, while others have been experiencing falling
investments. In southern Africa, flows have almost doubled to $13 bil-
lion, mainly due to record-high flows to South Africa and Mozambique.
10 N. Boso et al.

In both countries, infrastructure has been the main attraction, with

investments in the gas sector in Mozambique also playing a role. In East
Africa, FDI has increased by 15 % to $6.2 billion as a result of rising flows
to Ethiopia and Kenya. Kenya is becoming a favoured business hub, not
only for oil and gas exploration but also for manufacturing and transport.
Ethiopian industrial strategy may have attracted Asian capital to develop
its manufacturing base. FDI flows to North Africa decreased by 7 % in
2014 to $15 billion. Central and West Africa saw inflows decline to $8
billion and $14 billion, respectively, partly due to political and security
uncertainties brought about by the Boko Haram insurgency.
Intra-African investments are also increasing, led by South African,
Kenyan and Nigerian transnational corporations (TNCs). Between 2009
and 2013, for example, the share of announced cross-border greenfield
investment projects originating from within
Africa increased to 18 % from less than 10 % in the preceding period.
For many smaller African countries that are often land-locked or non-
oil-exporting, intra-regional FDI is a significant source of foreign capital.
Increasing intra-African FDI is in line with leaders’ efforts towards deeper
regional integration. However, for most sub-regional groupings, intra-
group FDI represents only a small share of intra-African flows. Only in
two regional economic communities (REC) initiatives has intra-group
FDI constituted a significant part of intra-African investments. In par-
ticular, East African Community (EAC) and South African Development
Community (SADC) have respectively recorded 50 % and 90 % jumps
in sub-regional FDI flow, largely due to investments in neighbouring
countries by the dominant outward-investing economies in these RECs,
Kenya and South Africa. RECs have thus so far been less effective for the
promotion of intra-regional investment than a wider African economic
cooperation initiative could be.
Intra-African projects are concentrated in manufacturing and services.
Only 3 % of the value of announced intra-regional greenfield projects is
in the extractive industries, compared with 24 % for extra-regional green-
field projects (2009–2013). Intra-regional investment could contribute
to the build-up of regional value chains. However, African global value
chain (GVC) participation is still mostly limited to downstream incorpo-
ration of raw materials for export to developed countries.
 1 Emerging Trends and Key Issues 11

Internationalization of African Firms: Current

Trends, Key Issues and Challenges
Although Africa’s participation in international business and trade seems
to be discouraging and still largely concentrated in the extractive sector,
evidence is emerging to show that many parts of Africa are progressively
overcoming the institutional and infrastructural conditions that under-
mine the ability of African firms to contribute meaningfully to the global
economy. The outcome of these transformations has been the rapid emer-
gence of African multinationals. Indeed, evidence suggests that the speed,
scope and scale at which African firms have been investing in Africa and
the global economy in the last decade have been phenomenal (Ngwu et al.
2015; Rolfe et al. 2015; McNamee et al. 2015; Krüger and Strauss 2015).
In the financial services industry alone, over 70 pan-African banks have
emerged, with eight of them having operations in at least ten countries.
Many of these regional banks have not only increased their geographic
footprint in Africa and neighbouring continents, but they have also
become dominant international players (Beck et al. 2014). For instance,
Ecobank, Standard Bank and First National Bank (FNB) individually hold
over 30 % of banking assets in nine countries across Africa. Beyond bank-
ing, African multinationals have emerged in several sectors, from retail
to telecommunications, manufacturing, energy, agribusiness, aviation and
technology, with firms like MTN, SABMiller, Telkom, Dimension Data,
Massmart, Nampak, ShopRite and Dangote now having a presence in at
least a dozen African countries (Adeleye et al. 2015a, b; Ibeh 2015). Others,
like Oando, Glo, Interswitch, Computer Warehouse Group, Nakumatt,
Smile and Sasol, have expanded to several African countries, positioning
themselves as serious market challengers in their host economies.
Given the impressive performance of African multinationals on the
global stage in recent times, the Boston Consulting Group has identified
40 African global challengers: 18 from southern Africa, 17 from north-
ern Africa, 3 from western Africa and 2 from southeastern Africa. These
African challengers fall into five categories. First, Big Local Players are
African multinationals with 90 % of assets and sales derived from their
domestic market but who continue to record an impressive and gradually
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