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RETAIL REFORM COMES SLOWLY TO AFRICA — BUT IT COMES

Even as other developing regions of the world have gained economic traction, most African nations have struggled with slow growth, political instability and a lack of modern amenities, including retail.

But in such countries as Ghana, Mozambique and Nigeria, malls are popping up as consumer demand for convenience and quality grows. Uganda, still recovering from the brutality of dictator Idi Amin in the 1970s and the incompetence of his predecessor and successor, Milton Obote, is now home to a growing number of hypermarkets. And South Africa’s retail sector has been developed so intensely that it now rivals that of Western Europe.

“In many sub-Saharan countries, the norm has always been the open-air market with stalls and shops,” said Randy Sey, managing director of Tradeworks Co., an Accra, Ghana-based trading and development company that is planning a mall in Ghana’s capital city. “We are now at a stage where shopping malls are becoming the norm.”

That is certainly evident in Ghana, a West African country whose gross domestic product grew by 4.3 percent last year. In the past three years, two malls have gone up in Accra: the A&C Shopping Mall and the Accra Mall, which is scheduled to open sometime next year. Tradeworks says it plans to build a third, which will contain as much as 215,000 square feet of retail space.

“There is a trend toward formalized shopping centers with anchor tenants and many national retailers,” said Sey, who previously worked with Turkey’s Koç Group developing business in West Africa, central Asia and Eastern Europe.

A.T. Kearney’s global index of developing retail markets has dropped South Africa, says Fadi Farra, the Kearney principal who oversees the yearly index, because that country’s retail has matured too much for inclusion in a tool designed to gauge raw potential. Thus, there are now no African countries in the index, though Mozambique is a likely candidate, Farra says, given its proximity to South Africa.

In fact, Mozambique developer Momad Bachir Suleman is building a $30 million mall in Maputo, the capital, that will contain 150 stores, two movie theaters, a food court and some office space. Suleman’s goal is to grab the affluent consumers who now cross into South Africa to shop.

“Sometimes I ask myself, ‘Am I crazy?’ “ he told Toronto’s Globe and Mail newspaper in December. “I’m trying to be an example — if a local business can build something so big, maybe foreigners will see that Mozambique is stable and will want to come here.”

With two malls already open and a third about to come on line, the Nigerian capital of Lagos has become a West African retail hot spot. Now a regional mall called The Palms Shopping Centre is being planned, a 200,000-square-foot center with three anchors. Conceived by local developer Tayo Amusan, the $34 million project is being financed by Actis Private Equity, a London-based private equity investor in emerging markets.

Despite the progress, much of Africa remains mired in misery. Mozambique’s neighbor Zimbabwe is a case in point. The regime of Robert Mugabe has crippled the economy and provoked sanctions from both the United States and the European Union. Inflation there is running at more than 700 percent a year, fuel supplies are so short that gasoline is smuggled across the border in jugs, and armed robbery is commonplace. Understandably, Zimbabwe has no retail development to speak of.

Still, there are signs of hope elsewhere, at least. Sey says prosperity is coming slowly and that many educated Africans are increasingly able to enjoy the goods and services freely available elsewhere in the world.

“Individuals want to shop in a better atmosphere,” said Sey. “It brings a lot of benefits in terms of variety, and it develops new skills. Retail is becoming more professional. Managers are becoming more aware of trends. I see a lot of benefits for developers, tenants and the consumer.”

— CH