Is An African Country Your Next LCCS Destination?

Now that India and China are leaving the low cost country collective, moving up on the global economic stage, chances are that you’re going to have to identify a new low cost country to start investing in to keep manufacturing and call center costs low. And unless you’re in the US or the UK, where you only have to look in your own backyard, you may have to rule out home-country sourcing as your low cost country sourcing destination. So where should you go?

Egypt and the Middle East were rising, but with the recent political unrest, it’s probably going to be a while before that’s a good choice. Poland is solid, but at only 38 Million people, only so many countries will be able to set up shop. Argentina, Columbia, and Chile are going strong, but are being greatly overshadowed by Brazil. What’s left? Africa. Even though some countries are in turmoil, and there are piracy problems off the coast, there are 1 Million people in the 54 countries that comprise the continent who are ready and willing to join the global labour force. Plus, India and China are starting to invest there heavily. With the two economies projected to be the dominant economies by the latter half of the century already pouring money and effort into making Africa the next emerging marketplace, you know it’s just a matter of time. Plus, with big multinational companies like GE also investing in the region, it’s very likely that at least a few African companies will be part of the next BRIC.

Plus, as in India and China, urbanization is off to a rapid start and, as per this article on the hottest emerging markets in World Trade, it is expected that over half of the population will live in cities within 20 years and that the top 18 cities will have a combined spending power of 1.3 Trillion. That alone puts Africa’s projected GDP in the top 10 within 20 years.

As in India, infrastructure and energy production is a problem, but a number of countries have a plan to improve and are working on it. Plus, the fact that these countries are resource-rich in a time of rising commodity costs means that there is money to invest in improving infrastructure and energy investments. It might take a while, but Africa is going to get there. The question is, who’s going to win when they do?