Interview: How to harness benefits of investing in Africa — Dennis Elverir, AIC

Producing in Africa is not only lucrative for the investors but also means reducing poverty and dependence on foreign suppliers. Yet Africa is still not seen in Europe as a favourable destination for investors. Dennis Elverir, head of the Africa office of African Investment Consultancy, explains how and where to invest in Africa and the hurdles to to watch out for, in an exclusive interview with Oliver Gaebe*

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Oliver Gaebe: Mr Elverir, you are the head of the Africa office of African Investment Consultancy (AIC), You grew up in Finland, have lived in London and are now successfully active in Africa with your consulting company. What has been your experience on the continent?

Dennis Elverir: What was for me the really crucial aspect why I went to Africa with a large network of experts from all sectors were some trips to different countries on the continent and in all countries there were comparable situations.

Dennis Elverir, head of the Africa office of African Investment Consultancy, in his office in The Gambia/Photo: Oliver Gaebe

A growing population wants to have the prosperity from America or Europe, which is conveyed through the media, at home as well. Thus, the demand for brands and products of short-term, medium-term and long-term needs has been increasing for years and is growing more or less depending on the country.

Producers of most goods hardly exist in Africa, or if they do, they do not produce competitively or are in the hands of the large consumer goods industries.

Whether energy supply and infrastructure projects, tourism development or the production of goods, not only a huge consumer market exists or is emerging on the African continent, but also an exciting opportunity for investors of from all sectors. This is where we come in and aim to contribute to Africa’s progress, while also advising and protecting potential entrepreneurs from bad investments.

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In your opinion, which country on the African continent presents the greatest market opportunity for investors and in which countries is the potential for immediate return on investment the highest?

The potential is very large in every country on the African continent and there are already well-developed economies with a growing middle class.

With a GDP per capita of almost US$15,000, the Seychelles is one of Africa’s tiger economies and also one of the most expensive countries on the continent, followed by Gabon with US$9,400 GDP/capita and Mauritius with 8,800 US$ GDP/capita. The relatively rich South Africa has “only” a GDP of US$6,900. In all these countries, there is already a middle class that demands goods and commodities from international brands.

Countries like Botswana, Namibia or Swaziland (now Eswatini) are also in the top 10, and the dream of most Africans is to own a car and modern means of communication, and even vacation travel is becoming more and more interesting for Africans with astonishingly high purchasing power.

Already, many Africans, for example from Senegal, travel to neighbouring countries like The Gambia, but wealthy Africans from Sierra Leone also come to The Gambia by plane. These are then vacation trips for three to five days, but … there is a huge mountain of demand growing for local vacation packages.

In a few words, a conclusion can be drawn: More and more Africans want to live like Europeans, Canadians or Americans. In all countries, smart investors can make a lot of money and expect a fast ROI. On the other hand … there is a trap if you think about having the law on your side. Not in all countries you find support in case of trouble.

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Let’s talk about the gaps in energy supply on the continent, how could investors plan for a high return immediately and quickly, and what is the general state of legal certainty for investments in Africa?

In fact, every country on the African continent is affected by energy shortages, and it is also an ideal investment area. Even in South Africa, which is rich by international standards, there are constant power outages. In Cape Town, residents are harassed with electricity schedules. One of our consultants lived in South Africa for a few years and never had that 20 years ago, that there is no electricity for hours in Cape Town.

Even here in The Gambia, there are always temporary power outages.

Every country on the continent is an optimal field of activity for investors in (green!) energy production. According to international experts, environmentally friendly energy production will become much more important. Here we can act as a mediator between governments, local utilities and investors to negotiate an optimal deal for all parties. In this way, we can improve Africa’s energy supply and create a lucrative environment for investors with a high return in the long term.

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There are still many countries on the African continent where there is little or no investment in tourism and which also have a correspondingly underdeveloped infrastructure. What advice do you have for interested investors regarding these countries?

Indeed! While many African countries have been able to generate a significant portion of their GDP from tourism for decades, other countries have yet to discover international tourism as a source of revenue or have never seriously looked at it. Here, as Africa Investment Consultants, we see immense potential for broader prosperity for often very poor populations.

While countries like South Africa, Kenya or even Tanzania are on top for years and the most famous islands Mauritius, the Seychelles or the Comoros can score with the most beautiful white beaches, the often beautiful nature in countries like Guinea Bissau or the Congo is not used to bring tourists into these countries and thus contribute to a better employment rate of the population and above all directly attract investments into the country. Tourism can even protect the environment from deforestation and tree cutting.

This also applies to Eritrea, which is considered a beacon of hope in the vacation industry because it is relatively clean and safe, and with 1,100 km of coastline on the Red Sea and its 350 islands, it has an insanely large potential in the tourism industry. There could be 100,000 jobs created here and we as a consulting firm see Eritrea as the newcomer of the decade in economic development.

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Let’s talk about my favourite sector, the tourism industry. In which countries in Africa do you see the greatest market potential for investors from the hotel or travel industry?

In many countries on the African continent, Europeans require expensive and cumbersome visas. Sierra Leone can be cited as an example. While the country experienced a heyday of tourism until the civil war about 30 years ago, some of the atlantic coastline in Sierra Leone is breathtakingly beautiful. The country also has real rainforests inland, so not only the British but also the European market could be opened up to Sierra Leone.

However, various restrictions stand in the way, including an expensive visa and proof of a yellow fever vaccination. Morocco or Tunisia, for example, are quite easy to enter; a passport is sufficient and Europeans are granted a three-month residence status. The tiny Gambia is kind of in between; Europeans get a one-month residency status upon entry, but there is an entry and exit fee, currently about $20, probably $25 starting in May. This is not necessarily conducive to the development of tourism here.

As a consulting firm, we recommend that governments and tourism ministries make the entry process as easy and inexpensive as possible for Europeans. Currently, the country with the most favourable entry conditions in the world is the small country of Georgia, where Europeans are granted a residence status for one year from the moment of entry without a visa. Thus, the small country of Georgia attracts immense amounts of money and also investors to the Black Sea coast, quite clever!

I currently see the greatest potential in the East African country of Eritrea and – probably also Algeria. If the framework conditions for opening up the country are created there and tour operators and airlines also do justice to the new number one tourist growth country, millions of international vacationers could be vacationing on the Red Sea every year by 2030. We are already in talks with some investors from the tourism industry who are just waiting to get started. We are very excited to see how this small country will position itself in the international competition.

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How do you assess the situation of Africa in 2030 and what will be top destinations on the continent in seven years in the tourism industry and also in other industries?

At the moment, island countries like Mauritius, Seychelles or even the small Cape Verde Islands are very well positioned in tourism and if we look at mainland destinations in Africa, not that much will change by 2030.

South Africa will probably be on top at the end of the decade as well, followed by old vacation destinations like Kenya and Tanzania. The big question for me now is, which countries will suddenly become shooting stars in the tourism industry? Should the political conditions improve, countries like Guinea Bissau or Eritrea could suddenly become a surprise in Africa’s tourism world.

In any case, we as a consulting company are in contact with essential decision makers of most countries and are available to interested investors, buyers of rare earths or agricultural products from Africa or even international hotel operators for further information.

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*The interviewer Oliver Gaebe is a German journalist and film maker who frequently travels to Africa. He conducted the interview with Dennis Elverir in The Gambia. Oliver is a producer at the BellaCoola Film Production, Cologne