NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, May 16, 2013

When you are trying to keep a retail outfit afloat amid hyperinflation, it helps to have a sideline. “We had a business selling crocodile skins to Hermès and Gucci for shoes and handbags,” says John Koumides, chief executive of Innscor, a conglomerate based in Zimbabwe’s capital, Harare. The currency earned from this exotic export was a lifeline for the firm’s other arms, including its SPAR stores, when Zimbabwe’s shops were short of stock in 2008 as its currency collapsed.

Innscor survived. It remains an unwieldy mix of businesses even though it has shed the crocodile-skin enterprise. But it is attracting attention from investors seeking to profit from the emergence of a new class of African consumers: its shares have risen by 50% in the past year. The firm’s mainstay, and the bit that excites the most interest, is fast food, with brands including Chicken Inn and Pizza Inn. Its outlets are now in a handful of other African countries, including Nigeria.

Africa’s equity markets are hot, with investors attracted by the sub-Saharan region’s GDP growth rate of more than 5% over the past three years.