Over the past few years, we have worked extensively as consultants to global companies interested in the Greater Lake Victoria region to identify, quantify, and capture market opportunities. Here is a travelogue with our experiences and photos.
OUTSIDE THE METROPOLIS
The Greater Lake Victoria region within East Africa is a prime example of the fast growth outside major cities like Nairobi and Dar es Salaam. It covers parts of Kenya, Tanzania, Uganda, and the Democratic Republic of the Congo (DRC); and all of Rwanda. The population is 87 million, slightly larger than the DRC and 1.7 times larger than Tanzania or South Africa. Nairobi, while not part of the region, is the main gateway into it.
The region is a particularly interesting because of the burgeoning economic integration. The cities that anchor this development are Kampala in Uganda, Mwanza in Tanzania, Kigali in Rwanda, and increasingly Goma in the DRC.
Kampala, the capital of Uganda, is one of the fastest growing cities in Africa. It has not yet experienced urban sprawl the way other capitals in East Africa have. Given its comparable level of development, Kampala is much more liveable than Nairobi or Dar es Salaam.
Mwanza is the second largest city in Tanzania after Dar es Salaam. It is a highly functional and well-developed city. Its economy is based on fishing and processing, mining, and agriculture, as well as trade with other Lake Victoria cities.
Kigali’s character feels out of place among its peer cities. It is a beautifully constructed city and is well-maintained, with a modern feel. The government of Rwanda is doing its utmost to make the city attractive and it shows.
Goma is still a bit unstable. However, it is an important hub in the region with a population of more than a million. It is the thoroughfare for trade between the DRC and Rwanda and Uganda.
MOVING TRADE FORWARD
Significant infrastructural development characterizes much of the region. On the northern side of the lake, along the trade route from Kampala to the Rwandan border, roadwork is encountered every few miles. The work is funded either by China or the EU. Further, China is the largest source of foreign direct investment in Uganda, and is responsible for building the new Entebbe international airport and its feeder highway.
The improving infrastructure is facilitating cross-border trade. Driving across borders is reasonably easy, although the rise in traffic can make for a chaotic experience. While our first crossing from Uganda to Rwanda took about 10 minutes, a second crossing took 2 hours on a late Saturday night simply because of hundreds of gridlocked trucks. On the road, one will find vehicles from any country in Eastern or Southern Africa, including trucks bringing goods all the way from South Africa.
MODERN BUT MODEST
In Uganda, about halfway between Kampala and the Rwandan border is the city of Mbarara. A small town ten years ago, it is today on the cusp of becoming a full-fledged small city, with a population of 240,000 and a GDP of PPP$ 1.2 billion. Mbarara is noticeably dustier than the capital city and lacks the skyscrapers and business people, but otherwise it does not feel so different. Many of the same modern conveniences are available including modern supermarkets, banking, and gas stations.
Even in more rural areas, the constant presence of global and regional brand names is surprising. Coca-Cola is everywhere, and you will find familiar brand names for everything from snacks to household cleaners to diapers. Driving through the rural areas, almost every building is branded: painted with advertisements for local beer or even Doublemint gum.
When it comes to technology, the Lake Victoria region is in many ways ahead of the curve. Uptake of new technologies is shockingly high. For example, most people have a cellphone, and often a smartphone. Almost every shop, even outside of the cities, sells airtime.
M-Pesa, the mobile money transfer service, is popular in Kenya and Tanzania, and replaces the need for cash to buy most goods and services. Satellite TV is also visibly popular, driven largely by the football craze. Lower-end, rural mom and pop restaurants and local bars use satellite TV to attract customers who may not have access at home.
FINDING FURTHER GROWTH
The next phase of growth in these cities and towns is two-fold. First, the region must continue to formalize the economy. Retail is a good example of this. While formal retail is available, its share of total retail is still low. Chains like Game, Spar, Shoprite, and Nakumatt are starting to expand in the region. Their successful further penetration requires finding suitable real estate, which is at a premium.
The second step is to move beyond agriculture toward a manufacturing or services focus. The region is already a tourist destination, and tourism makes a significant contribution to GDP, but the presence of other services is low. Financial and professional services are generally limited to the large cities. Attracting this type of activity will be essential to drawing in higher income and further economic investment into the region.
In sum, a regional view is often a better lens to understand opportunities than a national lens. The Greater Lake Victoria region represents 8% of the population in sub-Saharan Africa and its rapid development should be of interest to any global company interested in investing at the cutting edge of market development.