Franchise opportunities – Africa’s economy will grow faster than any other continent’s over the next five years and flexible working is a huge part of that future.
The African workforce is mushrooming, and by 2035, its numbers will have increased by more than the rest of the world’s regions combined.1 According to World Bank analysts, this expanded working-age population could lead to a growth in GDP of up to 15 per cent – equivalent to doubling the current rate of growth in the region.2
The World Economic Forum is bullish on the economic possibilities. “This could dramatically raise labour productivity and per capita incomes, diversify [the] economy, and become an engine for stable economic growth, high-skilled talent and job creation for decades to come,” says Richard Samans and Saadia Zahidi, authors of The Future of Jobs and Skills in Africa.3
But of course, it’s not quite that simple. Only recently the International Labour Organisation warned that both sub-Saharan Africa and Northern Africa are facing challenges in terms of job creation, quality and sustainability. Despite the creation of 37 million new and stable wage-paying jobs over the past decade, only 28 per cent of Africa’s labour force hold such positions, according to a McKinsey Global Institute report. Instead, some 63 per cent engage in some form of self-employment or ‘vulnerable employment’, such as subsistence farming or urban street hawking.4
Add to this the logistical difficulties for the stable wage-paying workers in actually getting to Africa’s urban centres. Millions in the continent’s congested cities endure long, difficult commutes. Kenya, Algeria and Central African Republic are notorious for their long commute times, while tech start-up WhereIsMytransport estimates that poor transport could cost South Africa’s economy a huge $104bn a year.5
The result is stagnation and emigration. Sub-Saharan Africa has the highest emigration rate globally (1.5 per cent, against a global average of around 1 per cent, according to UN population statistics), due to a lack of decent work opportunities.
On the cusp of change
Yet change is coming. According to the World Economic Forum, Africa stands to benefit in a big way from the Fourth Industrial Revolution. While the First Industrial Revolution used water and steam power to mechanise production, the Second used electric power to create mass production, and the Third used electronics and IT to automate production – the Fourth fuses technologies such as AI, robotics, the Internet of Things, biotechnology and quantum computing.
Africa has already seen significant technological investment in its major cities, including increased access to mobile broadband, fibre-optic cable connections to households, and power-supply expansion. This, combined with the rapid spread of low-cost smartphones and tablets, has enabled millions of Africans to connect for the first time.6
And as the Fourth Industrial Revolution unfolds, Africa is poised to develop new patterns of working. In the same way that mobile phones have allowed some regions to bypass landline development and personal computers altogether, Africa may be uniquely positioned to jump straight past the adopted working model in other countries to a more liberated future of remote and flexible working.
The trend towards flexible working is capturing the attention of the global market. International flexible workspace provider, IWG plc (formerly Regus), recently announced its rollout of franchising opportunities into 14 further countries on the continent. This is the first time that a proven national serviced office proposition has ever entered the African franchise market.
The IWG franchise model offers landlords, private equity firms, multi-brand franchise operators and high-net-worth individuals with the opportunity to buy into the flexible working market at attractive returns. Flexible workspace is also proving to be a solution to filling the many inner-city buildings that remain empty in current markets and prospective investors are afforded the opportunity to build a property portfolio while buying into the flexible working market.
Their reason? “The flexible workspace market is cleaner, simpler and less volatile than other, traditional franchise opportunities. Coupled with the opportunities we see for growth in the African market, we see it as a lucrative opportunity for early adopters,” says Mo Nanabhay, Franchise Director (Africa) for IWG plc.
A new way of working
In many ways, flexible working is the perfect fit for a continent with a geographically diverse, work-ready population and a strong mobile communications network, which lacks the infrastructure to support urban working patterns. Why insist on big hub offices and long commutes when there’s a way to harness talent from across the continent? Instead, the solution could be a distributed, virtual workforce, with companies that integrate virtual freelance workers.
A report on trending professions in Africa in the last five years shows that the number of entrepreneurs has grown by 20 per cent. And online platform work is on the rise, allowing many of these entrepreneurs to launch innovative start-ups that solve real-world problems and create jobs. One example is Gawana, a Rwanda-based ride-sharing company co-founded by African entrepreneur Agnes Nyambura.
The new company solves a problem – long-distance transport that gets people from A to B affordably – and provides job opportunities for East Africans. Travellers making their usual journeys are able to advertise any spare seats in their car using the Gawana app and earn money for the trip by ‘working remotely’ from their car – in other words, simply driving to their destination.
Another example is Lynk, a Kenya-based start-up app that connects users to their desired service providers – be it an accountant, a graphic designer or a personal assistant. With one in six people unemployed in Kenya, previously these skilled individuals might have struggled to find formal employment. Now they’re able to open the app, accept a job, and often work remotely to complete their assigned tasks. This system is also better for the worker, who’s able to track his or her hours and obtain references that help to secure further work.
A growing demand for African coders
Big global businesses are already starting to recognise the untapped potential of Africa for their tech needs, in the same way that companies did with India 25 years ago. In the new world of work, remote employees don’t even have to be on the same continent – let alone the same office as their employers.
For example, Moringa, a Nairobi based coding school that develops African tech talent, trains more than 250 new students a year. Its graduates go on to work remotely for the likes of global bank Barclays, which has offices in countries including Kenya, Ghana, Botswana, South Africa and Zambia, and Safaricom, an East African telecommunications company.
As African cities such as Nairobi, Lagos and Kigali become major tech hubs with a wealth of well-trained tech experts at hand, global job opportunities abound. And, because of technology, individuals can work from their home countries rather than move to the countries where big multinationals reside, thus contributing to local economic growth.
An office away from the office
Flexible workspaces are becoming an essential part of a modern country’s business infrastructure. “For us, a high degree of interest has come from local and international businesses willing to establish a footprint in Angola, as well as from companies that need to rationalise and downsize unused resources, namely office space,” says Rui Duque, Regus Country Manager for Angola.
Two major brands that have used Regus to grow in Africa are Google and P&G. Google has 50 employees with Regus in Kenya, and P&G has 100 employees in the country. Though they have the finances and resources to build their own offices, start-up costs can be expensive in developing countries, and getting an office up to spec with high-speed broadband, useable meeting rooms and desk space can take up valuable time. Plus, using flexible office space reduces the commitment for these big organisations, many of whom are still testing the water in new African cities.
African businesses are using flexible working as a way to attract talent. In a recent survey by Regus, senior executives and business owners confirmed that flexible working could be used to avoid employee churn (and the consequent expense of recruitment agencies), with 71 per cent of respondents pointing to flexible working as a perk that attracts top talent.Flexible workspace is also a preferred option for workers. Seventy-seven per cent of African workers said they’d choose one job over another similar one if it offered flexible working, while 56 per cent would actually turn down a job that ruled out flexible working.
An exciting future
According to the World Economic Forum’s Global Competitiveness Report, the most competitive countries in the world are those that nurture innovation and talent in ways that align with the changing nature of work. If the trends of the past decade continue, Africa will have created 54 million new, stable wage-paying jobs by 2022. It seems clear that remote and flexible working will be a huge part of this growth and the next step for the franchise market.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”