Franchising: A way to leverage economic development in Central & West Africa

I. INTRODUCTION

As population growth decelerates or stagnates around the world, Africa will double its population in the next 30 years.

Indeed, according to a study did by INED in partnership with the French Development Agency entitled “All countries of the world”, the continent’s population will grow from 1.2 billion inhabitants in 2017 to 2.5 billion inhabitants in 2030.
Better still, this population is expected to quadruple to 4.4 billion inhabitants in 2100, or nearly 40% of the world’s population.

This demographic change will be accompanied by exponential economic growth. According to the American think-tank Brooking Institution, the consumption of African households will more than double in the next 15 years, from $ 1,100 billion in 2015 to $ 2,500 billion in 2030, and business-to-business (B2B) spending should almost triple over the same period, from $ 1600 billion in 2015 to more than $ 4200 billion in 2030.

In addition, several international organizations including the United Nations Population Fund (UNFPA), the sub-Saharan Africa, will achieve a “demographic dividend” of about $ 500 billion a year over a period of at least 30 years.

NB: The demographic dividend is economic growth derived from the change in the age structure of a population, with the decline in dependents (children and seniors) and the increase in working-age adults.

2. BACKGROUND

The demographic boom of Africa which favors in a virtuous circle: the emergence of an educated middle class, the take-off of household consumption, the intensification of the exchanges between companies, place the continent in the radars of the international investors who see it as a territory full of opportunities.

FRANCHISING AND LICENSING is viewed as a major leverage of economic development.

CHARACTERISTICS IN CENTRAL AFRICA AND WEST

1) Legal framework

In order to harmonize business laws in Central and West Africa, the OHADA (Organization for the Harmonization of African Business Rights) was created.
This organization has harmonized the rules by adopting uniform acts on others, commercial law.
On the other hand, the OHADA did not specifically refer to franchise or license cases. There is no uniform act on franchising or Licensing.

Therefore Franchising and Licensing laws in Central and West Africa will therefore be subject to the common law of business.

2) Regulatory Framework

When developing of a network of Franchises or Licenses in Central and West Africa, it will be necessary to be vigilant regarding:
– The specific rules for cross-border relations, in particular customs regulations,
– Rules relating to competition law, particularly those put in place by the Economic Community of Central African States (ECCAS) and the West African Economic and Monetary Union (UEMOA)

I- OUR TARGETS OF INVESTORS

The investor’s profiles relevant for the development of Master Franchise or Master Licenses in Africa are the following:

1) Entrepreneurs already present in a sector of activity/ industry connected directly or indirectly with the Franchisor and the Licensor and wishing to increase their turnover
They will benefit from the notoriety brought by the Franchisor or the Licensor to capture new customers and new markets.

2) Large investor families wishing to create other sources of income:

3) Senior managers who want to start their own business
Through Franchising or Licensing they will invest in a profitable business in the medium term and generate immediate income.

4) Investors looking to diversify their business to cope with business downturns.

Given the development of franchising in Europe, the international opening of the African economy, the historical link between France and French-speaking Africa, and especially the novelty of this economic model on the continent, we believe that Africa is an excellent opportunity for franchisor.

CENTRAL AFRICA : CAMEROON

CAMEROON
Location: Gulf of Guinea. Borded by Atlantic Ocean. His neighbor is Nigeria
Population: 25 million
Languages: French & English
Currency: XAF. $1= 500 XAF
GDP: 81 billion dollars- GDP/cap: $ 3400 ( World Bank 2017)
GDP by sector: Agriculture (22%); Industry (30%); Services (48%)
Average annual growth: 5% – 9%
Main industries: Oil, Aluminium, Wood, Foof industry, Shipyard, etc

CENTRAL AFRICA : DEMOCRATIC REPUBLIC OF CONGO

DEMOCRATIC REPUBLIC OF CONGO ( Former ZAIRE)
Location: Congo Basin. His neighbors are Angola, Rwanda
Population: 81 million
Area: 2,345 KM2; 11th of the world
Currency: Congolese Franc ( CDF); $1= 1652 CDF
GDP: 68 billion dollars – GDP/ cap: 800 dollars
GDP by sector: Agriculture (32%); Industry (26%); Services ( 34%)
Average annual groth: 5%-8%
Well exported: Diamant, Gold, Copper, Uranium, Oil, Manganese, Coal

WEST AFRICA : IVORY COAST

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IVORY COAST
Location: African West Coast. Borded by Atlantic Ocean.
Population: 24 million
Languages: French
Currency: XOF; $1= 500 XOF
GDP: 96 billion dollars – GDP/cap: $ 3900 ( World Bank 2017)
GDP by sector: Agriculture (27%); Industry (18%); Services (55%)
Average annual growth: 7% – 10%
Main industries: Cocoa, Oil, Wood, Cocoa, Foodstuffs,Fertilizer, etc

WEST AFRICA : SENEGAL

SENEGAL
Location: African West Coast. Borded by Atlantic Ocean.
Population: 15 million
Languages: French
Currency: XOF; $1= 500 XOF
GDP: 45 billion dollars – GDP/cap: $ 2800 ( World Bank 2017)
GDP by sector: Agriculture (17%); Industry (23%); Services (59%)
Average annual growth: 5% – 8%
Main industries: Phosphate, Oil, Foodstuffs, Fertilizer, Food industry, etc