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Difficult Times In Business Can Be Exactly When New Opportunities Emerge 

This year, International MonetaryFund Boss Kristalina Georgieva announced that one of three of the world’s economies will be in recession. She said that the year ahead will be a hard one, with areas like the United States and European Union seeing their economies slow. 2023 will be “tougher” than last year as the US, EU and China see their economies slow.

This is despite the world being back open for business, with many sectors experiencing post-pandemic recovery, some at unprecedented levels. Airports Company South Africa reports revenue up 81%, from R2.2 billion to R3.9 billion, and according to Stats SA, the economy now officially exceeds pre-pandemic levels. On the continent, some 5.7 billion visitors had arrived in Africa from overseas by July 2022. This number is significantly higher than the number for the same period in 2020 and 2021.

However, among the industries listed as being the biggest drivers of growth, tourism, transport, finance, agriculture, and manufacturing are some of the sectors worst affected by the regional energy crisis, inflationary pressures and a looming recession. 

“Since the last “reset”, which was the financial crisis of 2008, we have lived through a euphoric period of low inflation, low-interest rates, an abundance of venture capital funding and great economic growth worldwide.” comments entrepreneur and Managing Director of micro-saving and investing start-up, upnup, Tony Mallam. 

“This has changed for the worse, however, despite the world being in a crisis right now with high interest rates and inflation, the stock markets are at their all-time highs. Both the FTSE and JSE reached all-time highs in the past few weeks. So it can’t be all bad, right? So put your head down, do the right things, and it will all come right in time.”

Andrew Bourne, Regional Manager, Africa, at technology companyZoho believes that all organisations should be doing everything they can to make themselves more resilient to the kind of energy shocks the world is facing right now. “Doing so won’t only help make the organisations and their employees more resilient to the current shocks, but it will also help prepare them for the future of business and work. And the better prepared and more adaptable an organisation is, the more likely it is to thrive in the future,” says Bourne

According to Philani Mzila, Investment Manager at Founders Factory Africa, difficult times can be exactly when new opportunities emerge. Talking about the Venture Capital space, he says, “Uncertainty breeds solutions and innovation.” This is true in particular if businesses have strong fundamentals, which is a sentiment endorsed by Zubair Suliman, Investment Director at Norsad Capital. Suliman highlights the characteristics of the leaders of a business as crucial not only to the survival of the business but also to its growth during recessionary, or otherwise difficult times.

Suliman points out that difficult situations provide the chance for identifying business opportunities. As individuals, people may not be able to influence the course of the war in Ukraine, for example, but they can certainly see new opportunities emerging. In this regard, Spear Capital Partner Bryan Turner points out that we did not realise the extent of our reliance on Ukraine for food. But this creates an opportunity for food production and food processing businesses in Africa to expand their operations to fill the gap that the war has created. The potential of Africa’s food production is such that Africa could feed the entire continent without relying on any imports, and so the perceived crisis about food security that the war evoked need not become a reality.  

A focus on doing business in Africa cannot ignore the enormous potential of population growth. In other regions of the world, the birth rate is flatlining or declining but it’s the exact opposite in Africa. So, considering the many needs that the current world crises have generated – such as the push for renewable energy and the pressure on food supplies – businesses in Africa can address these issues in the African context, knowing that there will be an ever-increasing market for their goods and services. This proves the point that pressurised times provide the push to find new opportunities for business expansion.

In a recent interview with CNN, former CEO of First National Bank, Michael Jordaan told journalist Richard Quest that despite these challenges, he remains optimistic about the future of the region, saying “There is reason for optimism, it just requires investment.” And for business leaders, this investment will need to take the form of skin in the game, resilience and shared optimism.