South African Businesses Look Outside For Higher Returns

South African Businesses Look Outside For Higher Returns

With Africa’s largest economy expected to have the continent’s lowest economic growth this year, some of South Africa’s largest businesses are betting on Nigeria and other countries for higher returns.

Fast-food chain owner Famous Brands plans to buy a 49 percent share in Nigeria’s UAC Restaurants Ltd. for an undisclosed amount. UAC has 165 restaurant franchises across Africa’s most populous nation, according to a report in InternationalBusinessTimes.

Famous Brands is far from being the only big company to look across the border for revenues.

Other economic explorers include the giant food retailer Shoprite, which set aside more then $200 million to build stores in Nigeria; Atterbury Group, a Pretoria-based property holding group that is investing heavily in malls in Ghana; and the wholesaler Massmart, which plans to open 90 stores across the continent by the end of 2016.

Famous Brands already has a presence in 15 other African countries. Its franchises include Debonairs Pizza, Coffee Couture and Steers, a burger chain. This year, the corporation is testing the waters outside the continent with Steers outlets in the U.K. and a Debonairs eatery in India. But the company remains focused on Africa, home to some of the fastest-growing economies in the world.

Nigeria’s economy, although facing problems such as income inequality, corruption and a slowdown in oil production due to theft and security issues, is expected to grow by 6.6 percent this year. West Africa is considered one of the most economically dynamic regions on the continent, the report said.

“Prudent expansion in a select range of key markets in the region has always been part of our program,” said Famous Brands CEO Kevin Hedderwick. “Famous Brands has operated in African countries north of South Africa’s borders for 15 years and we have a good grasp of doing business in those territories.”

If South Africa’s economic slowdown continues, fast-growing markets elsewhere on the continent could become even more attractive for these companies.

The UAC purchase opens the door to even more investments for Famous Brands outside South Africa, Hedderwick said.“Our immediate goal is to bed down this joint venture and optimize on the evident success of the existing operation and its enormous potential within the Nigerian market.”