/ 22 April 2008

Hewlett-Packard sees ‘exploding’ Africa IT growth

Computer maker Hewlett-Packard sees Africa as one of its fastest-growing markets, it said on Tuesday, expecting the world’s poorest continent to rival India for IT outsourcing within a decade.

Hewlett-Packard Africa MD Rainer Koch said its sales on the continent — which the International Monetary Fund said this month can expect 6,5% economic growth in 2008 — are rising by 25% year-on-year.

He said he expects that pace to continue regardless of any economic downturn in developed economies, with growth in the sector likely outpacing that in India albeit from a lower base.

”In some places the market is exploding,” he said. ”Because of outsourcing, salaries in India are skyrocketing so I think you will see people recruiting in Africa accordingly. Africa has a large English-speaking population and a large French-speaking population. I think it will really compete with India in 10 years.”

Hewlett-Packard did not give figures breaking its business down and would not say how much of its business was in Africa.

”But for us it is one of our fastest-growing emerging markets,” he said. ”I was in Eastern Europe 15 years ago and in some ways it is a similar picture. People thought things would never take off in Romania or Bulgaria, but they did. But the bad news for Africa is that the rest of the world does not always realise its potential.”

Key to new growth in Africa is the colossal growth in cellphone usage since 2000, he said, revolutionising access to communication and ease of business at the same time as a commodity price boom benefited a string of countries.

”It helps because it is a market on its own which leverages IT,” he said. ”It also simply makes it much easier to operate. Nowadays when I am travelling there I don’t have a problem with phone access or internet connection.”

Tapping, helping growth

Koch said the firm currently employed about 1 000 people across Africa, including outsourcing centres in North Africa serving French-speaking clients, with local partner firms employing several thousand more — but that could increase by 20% to 30% in the next few years.

Africa’s largest economy, South Africa, already has a developed market, he said, but more exciting are emerging opportunities in a range of countries including oil-rich Nigeria, Libya and Angola, as well as Ghana.

”Angola is one of our more spectacular markets,” he said. ”So is Libya, where the economy has only opened in the last two or three years. But so is Ghana, which is not just about natural resources but is broader-based with agriculture and manufacture. That is a good example of good governance in Africa.”

Zimbabwe also has the potential to be one of Africa’s fastest-growing markets, he said.

Overall, he said political risk in Africa is much reduced with a continent-wide general fall in the number of wars and rise in the number of democracies. Even recent post-election trouble in Kenya appears largely resolved, he said.

The firm is concerned over the risk of rising political instability from soaring food prices, which the United Nations says threatens the continent’s poorest with starvation.

”I believe no one can escape if there is a real crisis in that respect,” he said. — Reuters