Swedish companies start seeing Africa as a viable possible place to invest

Thursday, 27 June 2013
Swedish large cap companies have started shifting into Africa, a change of stance from a country where most business executives here thought that the Dark Continent was not fit for business purpose.
As China leads others such as Brazil and Russia in opening up the continent as a place to so business, Sweden is now realising how much mistake they might have made in brandishing Africa as the lost continent. However, it is not yet too late as many Europeans are not yet flocking into the continent but are watching from a closer enough distance.

Volvo training next generation Engineers in Ethiopia

One of the countries where Swedish companies are looking into is one of Africa's fastest growing economies, Ethiopia. Here Swedish companies seem to be seeing the strategic importance of the North Eastern African country and it could become the next big country for the global textile and footwear industries.

According to Swedish television, clothing chain H & M has decided to move some of its manufacturing to Ethiopia, where the growth boom also attracts other industries.
H & M has quietly tailored test collections in a factory in the Northern Eastern African country. The clothing giant has today 80 percent of its manufacturing in Asia, but is now investing for the first time in an African country south of the Sahara (not south of the Sahara but close).

More is being done to start building a factory outside Addis Ababa that would houses H&M's new supplier. The strategic importance of this is that if a factory gets up and running it would likely reduce time and transport costs for H&M's market in Europe.

H&M is far from being alone in looking to get closer to a booming market in Ethiopia. Here industrialization has taken off, as it could create the jobs that millions of unemployed young people are in urgent need of.

One of China's largest shoe manufacturers, Huajian, has already established itself in the huge industrial zone east of Addis Ababa. Chinese and Ethiopian flags fly at the main entrance.

Shoe manufacturers that produce shoes for famous brands such as Guess, naturalization and Clark's plan to establish more industrial zones in the country that could eventually employ 100,000 people.

Volvo Trucks has recently won several large orders from the region as Ethiopia's economy boom is fuelling a building boom around the capital Addis Ababa and thus high demand for heavy machinery and trucks.

In February, Volvo Trucks started an automotive technical training at Selam Technical College, where 30 young Ethiopians have been selected and will go for a four-year education training for heavy machinery operation. If it turns out well, it plans to launch more programs in other African countries.

The Chinese are already here - in Ethiopia. They open the way for the like of Sweden to realise the potentials of Africa.

"We know what kind of skills that we require and we believe we can help to improve skills development through these kinds of training," says Jonas Ronne Bratt, one of Volvo's Africa Managers. The program is partly financed within the framework of Swedish international aid development, Sida, via "Business4Development" whose purpose is to create jobs in African countries by helping Swedish companies to establish themselves there.

Foreign direct investment in the African markets grew by 27 percent between 2010 and 2011 and for several years greater than the total aid to the African continent.

According to the World Bank's semi-annual analysis "Africa's Pulse" some 25 percent of African countries are now seeing growth of seven per cent or more, including countries emerging from bloody conflicts like Sierra Leone and Liberia.
What attracts companies is the low wages, proximity to domestic markets and political stability and this explains why the case of Ethiopia, which is a country that is not a democracy, is attractive. The Ethiopian government has managed to raise a record number of from poverty and is investing heavily to get industrialization started in the country.
by Scancomark.com Team

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