Raw materials: The firts 5 african hubs

Just as New York and London are the financial capitals of the world, so Africa has urban centres that control the value chains related to natural resources (hydrocarbons, mining, agriculture). As an editorial partner of Ressources, the CEO Africa website unveils here the 5 main hubs that structure the trade of the continent’s raw materials.
Stake: Determine the 5 most attractive and dynamic African urban centres in terms of trade in raw materials.

Abidjan (5 million inhabitants), the largest French-speaking city in West Africa, is the economic heart of Côte d’Ivoire, with a myriad of activities related to raw materials. The textile industry is notably present there with the packaging of cotton from the north of the country, as well as petrochemicals – which processes the production from offshore oil wells located off the coast – and the timber industry, which arrives by river from the forests of the hinterland. But it is above all the food industry that dominates the city’s economic fabric: palm oil, processing of rubber from western plantations, roasting of robusta coffee and, above all, processing of cocoa, of which Côte d’Ivoire is the world’s leading producer. Abidjan is also the leading West African tuna port. These are all assets for a country that is now one of the most reformist countries in the world, according to the World Bank’s Doing Business report. As a result, the improved business climate has made it possible to increase investment since the end of the Ivorian crisis in 2010-2011, particularly in the above-mentioned sectors.

A sprawling mega-city of nearly 20 million inhabitants, the city of Cairo is at the crossroads of the worlds, straddling East and West, the Mediterranean world and Africa. A position conducive to the establishment of major poles of activity related to raw materials – iron and steel, textiles, food processing, petrochemicals – and further strengthened by its role as the capital of the most populous country in the Arab world, Egypt (100 million inhabitants). In fact, the country of the Pharaohs buys, via its Cairo hub, nearly 8 million tonnes of wheat every year, making Egypt the world’s leading importer of this cereal. As for the hydrocarbons sector, the discovery in 2015 of the Zohr natural gas mega-discovery by Italy’s ENI has given the Egyptian government and private operators in Cairo new energy ambitions. All these players will be able to count on the city’s large pool of talent and a dense network of support structures. Cairo’s geographical proximity to the Gulf States also provides almost unlimited financing potential for operators wishing to launch or develop their activity.

As the continent’s largest urban centre, Lagos (21 million inhabitants) is the city of superlatives. With 4 billionaires and 6,800 millionaires in dollars according to Forbes and Africa Wealth Report, the megalopolis has seen the blossoming of real business empires, several of which are directly associated with the world of commodities: cement and food (Aliko Dangote), oil (Mike Adenuga, Folorunsho Alakija…), agriculture (Abdul Samad Rabiu). With a crude oil production of 1.7 million barrels per day and a market of 200 million potential consumers, Nigeria is both the continent’s leading producer of black gold and its leading economic power. This « weight » is fully exploited in Lagos, as the city concentrates a large part of the country’s economic activity, particularly that relating to oil trading (20% of Nigeria’s GDP and 90% of its foreign exchange earnings) passing through its port, the country’s leading logistics hub. The only downside is the chronic power shortages and the very fragile security situation, which are daily hindrances to economic activity.

Nicknamed « Mother City », Cape Town is the southernmost city on the African continent and the economic centre of the Western Cape Province, a region known worldwide for its vineyards, which are Africa’s leading producers. In fact, agro-industry is very well established there, while its position as the crossroads of Cape Town, a point of passage between the Atlantic and Indian Oceans, makes it a favourable area for industrial fishing as well as for all the associated transport and port logistics services. The municipality is moreover one of the most advanced on the continent in terms of the emergence of start-ups, the quality and dynamism of the local ecosystem based as much on a solid offer of prestigious training courses (University of Cape Town) as on an impressive number of incubators and accelerators (88mph, Techstars, Injini, MEST Incubator Cape Town …). Among these « success stories », several young companies are working in sectors related to natural resources, such as Aerobotics (analysis of agricultural crops by drones and satellite images) and GreenFingers Mobile (farm management platform).

Founded in 1886, at the time of the Transvaal gold rush, the Johannesburg metropolitan area (population 12 million) is the continent’s leading economic and financial centre. This pre-eminence owes much to the raw materials – the mining industry in the lead – and by extension to the development of a very prosperous financial sector, the most powerful in Africa. Although mining now accounts for only a fraction of the GDP of the Johannesburg area, the city continues to have one of the strongest and most diverse entrepreneurial ecosystems on the continent, hosting the largest concentration of Africa’s large fortunes with nearly 20,000 High Net Worth Individuals (HNWIs)1 , those individuals who head up assets equivalent to at least US$1 million, not including their principal residence and consumer goods. Operators can in fact rely on a very extensive network of economic development agencies, entrepreneurs, business angels and investment funds, which offer a wide range of services and resources that entrepreneurs can call upon. These are all good reasons for Johannesburg’s unparalleled dynamism and its status as Africa’s leading raw materials hub.

1 Or a high net worth person. Term used by some segments of the financial services industry to refer to individuals whose investable wealth exceeds a given amount.

This article is partly taken from CEO Africa’s « 25 Best African Cities to Start a Start-Up in » ranking, which focuses on the theme of entrepreneurship. Read here the original article on CEO Africa.