5 Promising African Cities for Multinationals to Expand to
Finding the right African country to expand in is a huge leap towards your expansion projects.
It usually requires great effort: from considering the strategic location, the political and economic climate, natural resources, the right infrastructure to the market needs and more. But your efforts would be incomplete if you stopped there, giving little consideration to the city your company will expand to.
After all, cities can be as different from each other as countries are in terms of infrastructure, urban development, facilities and market needs, among other things. So, choosing the right one can make quite the difference between a successful expansion and an underwhelming one.
Read on to explore the opportunities that Africa’s capitals and emerging cities have in store for your multinational!
1. Abidjan, Côte d'Ivoire (Ivory Coast)
While the title of capital city goes to Yamoussoukro, Abidjan is the Ivory Coast’s most populous city, gathering over 6 million inhabitants.
Over the years, it has also gained a reputation as the country’s cultural, commercial and economic capital. It’s easy to see why: 51 foreign embassies (among which are the USA, South Africa and Great Britain) have settled there, along with several reputable banking institutions such as Commerzbank and the African Development Bank (AFDP). These institutions have flocked to Abidjan because it is well-connected to neighboring countries and to the world thanks to the Port of Abidjan, one of the most important ports in West Africa and the second largest one in the region. Not only is the port an asset for import and export companies, but it also represents a true opportunity for actors in the fishing industry, as fish is an abundant natural resource in the Ivory Coast.
What’s more, a whopping 90% of Ivory Coast’s industrial sector is found in Abidjan. This includes some of the world’s largest cocoa plants.
Additionally, Organisations in Abidjan benefit from Ivory Coast’s fiscal incentives for investment. This includes a 35% deduction on profits earned regarding Corporate Income liability. Other tax incentives also last for 5 years.
Opportunities for growth in Abidjan
- Industrial Sector
With an already well-established industrial sector, the path to success in the industrial sector has already been laid in Abidjan and businesses will find it easier to set up their facilities.
- Fishing
The port of Abidjan offers ample opportunities with respect to fishing.
- Medical sector
With its population of over 6 million people and rapid urbanization, Abidjan has a need for better healthcare and healthcare equipment.
- Consumer goods (import and export)
The growing and increasingly urban population has created a demand for more consumer goods, an opportunity that import and export companies and franchises can easily seize.
Challenges businesses face in Abidjan
- Ivory Coast is a francophone nation
While opportunities for growth abound in Abidjan, it is imperative for businesses to use French to communicate with local actors and to set up their activities there.
In such cases, bilingualism is key. Africa HR Solutions’ teams are all fully bilingual (English and French). This key quality removes communication barriers and helps your expansion go smoothly. Through our EOR, PEO and payroll solutions, we assist your expansion in Abidjan with a promise of bulletproof compliance with local legislation.
- Real estate prices have gone up
With 90% of the country’s industrial activities concentrated in Abidjan, it’s little wonder that real estate prices have gone up. That being said, the benefits of having a primary location in Abidjan may just outweigh this one setback.
- Less advantageous incentives compared to other regions
Other regions in Ivory Coast typically benefit from better tax and fiscal incentives, since Abidjan is a sought-after location.
2. Dakar, Senegal
Widely viewed as the center of culture and commerce in francophone West Africa, the capital city of Senegal, Dakar, is divided into several districts, some more residential in nature while others cater to the country’s business needs.
Dakar is home to The Central Bank of West African States (BCEAO), which oversees the unified West African CFA franc currency, as well as several international Organisations, NGOs, and global research institutions.
The Autonomous Port of Dakar is a well of opportunity for investors. It is a natural port of entry for shipping firms due to its location at the most western point of Africa and at the intersection of the main sea lanes connecting Europe, Africa and the Americas. Trade is therefore made easier, especially with the many trade agreements that Senegal has with other countries.
Infrastructure has also undergone significant developments, with projects such as the Dakar-Diamniadio Road and the rehabilitation of roads from Dakar to Bamako, Conakry and Tangier. Businesses looking to do business with those countries will find in these projects a great opportunity for business development.
3. Lagos, Nigeria
The city of Lagos in Nigeria has become a true West African gem over the past decades, at times outshining the country’s capital of Abuja. Lagos has developed significantly, becoming a reference for many industries, from manufacturing to fintech, fashion, fishing and even import and export.
Among Lagos’ major manufacturing sectors are the fabrication of electrical equipment, car assembly (for the likes of Honda Automobile Western Africa, Hyundai Nigeria and Mercedes-Benz Nigeria), the processing of food and beverages (for the likes of Nestle Nigeria), metalworking, and the manufacture of paints and soap. Manufacturing for the textile, cosmetic, and pharmaceutical industries is also significant economically.
Lagos is also home to a thriving fintech industry, offering a wealth of opportunities for anyone seeking to create a name for themselves in Africa. According to the StartupBlink Ecosystem Index Report 2021, Lagos is the most developed African city for startups and has been ranked in the top 50 cities for E-commerce & Retail Technologies.
Lagos is also one of the top fashion destinations on the African continent, with its self-titled Lagos Fashion Week garnering an impressive reach of 490 million people and receiving coverage from iconic international publications such as Vogue, Harper’s Bazaar, Grazia and Marie Claire, according to the United Nations’ department of Economic and Social affairs.
The Lagos Fashion Week supports initiatives taken in the larger fashion industry in Nigeria, where revenue is projected to reach US$1.70bn in 2023.
Opportunities for growth in Lagos
- Manufacturing industry
With a thriving and varied manufacturing industry (from car assembly to metalworking and paint manufacturing, among others), Lagos offers many opportunities for growth to investors.
- Fashion industry
With a rapidly-growing and already well-developed fashion industry, Lagos is the Nigerian fashion hub, and houses many textile and apparel factories.
- Fintech industry
With its increasingly urban population and rapidly growing financial services, Lagos is currently the place to be for Fintechs to grow.
Challenges businesses face in Lagos
Even as the city undergoes more and more infrastructural changes, businesses may find the current infrastructure to be somewhat lacking.
4. Johannesburg, South Africa
Johannesburg, or Joburg, is South Africa’s economic hub, contributing 17% to the GDP of the nation, primarily through the manufacturing, retail, and service industries. Johannesburg also receives over 50% of the cargo that enters the world through the ports of Durban and Cape Town, making the shipping port at City Deep the largest “dry port” in the planet.
The city is also home to the South African headquarters of many well-known multinational corporations, including McDonald’s, Toyota, Coca-Cola and Nokia. The district of Sandton in Johannesburg is further regarded as the center of South Africa’s financial industry, being home to many of the country’s financial institutions and Africa’s major stock exchange, the Johannesburg Stock Exchange (JSE).
Additionally, with a $418.02 billion GDP, South Africa is one of the more developed African markets, making it a secure place with a strong banking and financial infrastructure for FinTech investment. But one defense used frequently against foreign investment in South Africa is that it may be overdeveloped, leaving fewer opportunity for new players. With 330 million people, the USA has more than 8,775 fintech companies, which is noteworthy. With 68 million people, the UK has more than 2,500 fintech companies. There is obvious space for expansion and disruption within the industry when one realises that there are 150 fintechs in South Africa for a population of 59.31 million people. And Johannesburg is the perfect location for multinationals looking to expand in the fintech sector, thanks to its nature as a thriving economic capital.
Other successful ventures in Johannesburg include international call centers and BPO solutions.
Opportunities for growth in Johannesburg
- Manufacturing
Major international manufacturers such as Unilever, Procter & Gamble, Pepsico, Nestle, BMW group and Ford Motor Company have set up their manufacturing plants in Johannesburg, opening the city up to the creation of other similar facilities.
- BPO Solutions & Call centers
Johannesburg houses many global call centers and BPO solution providers such as TDS Global, once again opening the way for other Organisations to seize the opportunity.
- Fintech
With a well-developed banking sector and the presence of many important financial institutions, Johannesburg is an ideal location for businesses looking to expand in fintech. InsurTech (fintech centered around insurance) actors will also find opportunities in Johannesburg. Case in point: the 2022 Financial Sector Forecast Report by the FSCA reports that over 60% of South Africans say they use some sort of insurance product.
Challenges businesses face in Johannesburg
- Competitive environment
While the presence of large numbers of companies (among which are world-renowned ones) bodes well for infrastructure and ease of doing business, the downside is that Organisations that set up in Johannesburg will likely deal with fierce competition.
5. Port Louis, Mauritius
The capital city of Port Louis in the island-nation of Mauritius is a thriving, modern hub for business in Africa. The city is the island’s main economic center and its port – The Port Louis harbor — provides a bridge between Asia and Africa, facilitating trade and creating opportunities for actors in the import and export industry. The development of a free trade zone provides further incentive for those looking to invest in Mauritius.
Port Louis and Mauritius by extension are also well-known for their well-developed textile-apparel industries, with factories spread across Port Louis’ industrial zones.
As the capital city, Port Louis is also the country’s economic hub, gathering the island’s main banks and financial institutions (the Bank of Mauritius, AfrAsia bank, the Mauritius Commercial Bank…). Many government agencies such as the Mauritius Ports Authority, Mauritius Tourism Promotion Authority and the all-important Economic Development Board are also located in the city, alongside several foreign embassies (U.S. embassy, British High Commission, Consulate of Belgium, French embassy…). Having your business Head Quarters in the capital is therefore advantageous.
Opportunities for growth in Port Louis
- Bilingual workforce
With most Mauritians being at least bilingual (English and French), businesses expanding in Mauritius get the best of
Challenges businesses face in Port Louis
- Limited space/real estate opportunities
Aside from being the capital city, Port Louis is also the smallest district in Mauritius, itself only expanding over 2,040 sq km. This means that while it would be advantageous to set up your company’s headquarters in Port Louis, you may not be able to run all your activities from the city.
Grow your business in Africa with Africa HR Solutions
While necessary to your business’ growth, expanding to new markets is never an easy task. In fact, it is fraught with risks and complications and even the best-prepared Organisations may find themselves at a loss as they navigate complex registration procedures, local legislation and tax rulings in the country – and city – they are expanding to. Even after expansion, companies will have their hands full managing both their core activities and the day-to-day running of the company: administering payroll, ensuring compliance with the law and tax calculation and remittance, among others.
Africa HR Solutions is here to help Organisations focus on developing their business activities. We take over your HR functions and take care of your employees through our EOR, PEO and payroll solutions. Over the years, we have worked with over 700 international clients, helping them thrive in 46+ African countries.
Get in touch with us now to fast-track your expansion projects in Africa.
