Standard Chartered has become the latest company to move its Africa headquarters from the Middle East to South Africa.
In an interview with the news agency Bloomberg BusinessWeek, the bank said that it will move the top brass in its Africa unit from Dubai to Johannesburg.
In so doing, the bank will be following the migratory path pursued by other multinationals. Barclays made the move from Dubai to Africa in 2010. Visa and Nokia have also used South Africa as a launchpad into the continent.
According to analysts, the trend speaks of a need for these companies to move decision-making closer to their customer-base in Africa as they look to make huge earnings from the continent’s economic rising.
“It makes sense to operate from the ground. Africa is becoming an important hub and these companies cannot afford to be making decisions remotely,” said Standard Investment Bank (SIB) research analyst Francis Mwangi.
While economic growth in Europe fell 2.5 points to 3 per cent in 2012, sub-Saharan African growth expanded to 4.6 per cent in 2012 while a third of the countries in the region posted rates higher than six per cent.
Companies that have spent decades moulding themselves to the business environments and cultures of Europe, the Americas, and Asia are finding it necessary to adapt to Africa’s way of operating.
Standard Chartered has vowed to make extensive investments in expanding its Africa business. In 2011, Visa said it planned to make at least 50 per cent of its revenue outside the developed world and on a recent visit to Nairobi, IBM chief executive Ginni Rometty earmarked the continent as the tech giant’s next big frontier.
“This century looks like Africa’s century. In terms of growing dynamically, companies will need to react very quickly to situations on the continent. The model adopted in Europe or the Middle East cannot be copy-pasted to Africa,” said Mavuno capital analyst Robert Bunyi.
Mr Mwangi said Africa has now developed adequate human resource capacity to support these offices. Perhaps as a reflection of this, both Microsoft and Standard Chartered have promoted Kenyans to senior positions within the African businesses instead of importing managers from Europe or the Middle East.
In this mass migration, it is curious to note that financial services and technology companies have been pioneering the journey to Africa. This is both a cause and a consequence of the nature of the continent’s economic development.