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RETAIL KEY TO AFRICA’S WELL-BEING, SUMMIT TOLD

By Brannon Boswell

The shopping center industry can play a key role in improving the lives of millions across Africa.

That was the message for delegates at last month’s ICSC World Summit, in Cape Town, South Africa.

Underscoring the good that malls can do, former South African President Nelson Mandela attended the opening of a mall in Johannesburg’s Soweto township, just days before the Summit opened. Malls in this city have until recently been mainly the province of Johannesburg’s wealthy northern suburbs. Soweto, home to about 1 million, is the most populous black urban area in the country and accounts for nearly a third of Johannesburg’s total population. Johannesburg Mayor Amos Masondo cited a 2004 report that said Soweto citizens spent $611 million on retail goods a year, but only 25 percent of that was spent in the township itself, because of a lack of retail locations.

Further afield, the least-developed central African countries, dubbed “darkest Africa” by locals, remain an exciting frontier for developers willing to take big risks for possibly huge rewards, investors said. “Many developers have retreated from darkest Africa nursing their wounds, but with countries like Angola posting 20 percent GDP growth in the past year, some investors are getting paybacks in three years,” said Mike Flax, executive director of Roggebaai, South Africa-based Madison Property Fund Managers. Little economic information is available about the region, which includes Botswana and Rwanda, obliging investors to rely on unconventional research methods to determine where to place their funds. Some countries are unable even to count their populations accurately, said Flax. “We look at who’s producing oil and where the multinationals are going,” he said. “For now we’re following the expats, and especially the Chinese.”

Several investors noted that Chinese firms are the trailblazers in Africa. “We’re relying on the Chinese to create the infrastructure for us to build shopping centers in Africa,” Flax said. He stressed the importance of infrastructure development, explaining that issues as trivial as being unable to find hotel rooms have stalled deals for his firm in some parts of the continent.

More African countries need to put their own money into deals and spend more on marketing to make foreign investors aware of opportunities, said George Jautze, chairman and CEO of Netherlands-based ING Real Estate, which has yet to invest in the least-developed parts of the continent.

Delegates from Botswana, Ghana and other relatively progressive countries complained that foreign investors often lump their countries, which have seen huge GDP growth, with the more troubled parts of Africa and decline to invest there.