Learning from Emerging Markets


It’s been a long while since I’ve been stuck unable to decide on what to write about like this, it took some effort for me to find or better still decide on what to write about. I should keep a list of interesting topics to explore for seasons like this.

Thank you for all the suggestions from last week, they came in handy.  Once again, I’m always looking for interesting/important topics (within the scope of African Business Ecosystem) to write about, so please reply/DM with suggestions.

Have you seen any movie where the Americans are the bad guys while the Russians are the good guys?

Have you seen one? A random thought I had in February, I tweeted this question, even sent it to many people and never got Yes as a response. I’m sure there’s a movie like that but because I don’t know anyone from Russia or haven’t seen any Russian movies, I might never know.

Most people who grew up in Africa watched movies from the West and this informed our world view, it also created an aspirational image of the West- the standard. We aspire to match up to the happenings in the West or better still, move there.

While inspiration can come anywhere, where we learn from is important. Up until last week, I’d admit that most of my learning about businesses have been from Western countries. It’s easy to see why as I grew up watching Western movies and the media covers the West more. But now I’m changing that approach to include emerging markets because they share similar attributes.

Most people have heard of the term emerging markets and kinda just got it but what does it really mean?

In 1981, Antoine Van Agtmael, a world bank economist coined the term “Emerging Markets” to give third world countries a lift. The finance arm of the world bank wanted to get more funds into third world countries but didn’t think the term “third world” inspired investors. So to make it sound more attractive Antoine came up with Emerging Markets.

If you want a list of emerging countries, the list varies depending on whose list you’re looking at. 

For instance, the IMF has in its list of emerging economies 96 countries which is determined by a number of factors such as how much citizens earn, how much exports is generated and how robust financial systems are, while investment research group MSCI has 26 countries under its list of emerging countries, it defines them based on how their public listed companies perform over time in the stock market. 

Now, despite the disparity in categorisation, there are similarities:  Citizens of these countries mostly earn low-income, their economies grow fast and their markets experience high volatility. 

A recent post by Afridigest expands on the conditions of emerging markets with the opposite being the case of frontier (western) markets: Public infrastructure tends to be unreliable, distribution channels for good and services are inefficient, in terms of consumer mindset, low cost of goods and services is more important than value and finally, low labour costs provide cheaper labour for companies but it also poses the challenge of low consumer spending power.

I agree with The Flip that:

We should be learning more from other emerging markets - China, South Asia and Latin America - and less from Silicon Valley. The conditions in the aforementioned markets are more similar to and relevant for African markets. With that being said and for the same reason, we also believe that we will see more South Asian and Latin American startups looking to Africa for expansion in the next few years, as we've increasingly seen with Paga and Migo expanding to Mexico and Brazil, respectively.

There’s so much to learn from countries like India, Russia, Mexico, Turkey, Thailand, Peru, Columbia, Bangladesh.  Companies in Southeast Asia, India, China & other emerging markets have developed successful business models that are extremely relevant to African markets

Success resides in many places, not one.