Sub-Saharan Africa is a huge potential market for the security industry. Many of the issues around the region are the result of years of conflict, disease and instability, caused by a lack of real society within modern state boundaries as the traditional social anchors of tribal nations have been almost destroyed by European colonial powers.
Other factors, such as the legacy of conflict in countries like Angola, the rise of extreme terrorist organisations such as Boko Haram in Nigeria and Al Shabaab operating into Kenya from Somalia, political reform such as we have seen with the demise of apartheid in South Africa and the ongoing legacy caused by Robert Mugabe in Zimbabwe, have all added to the challenges to this part of the world.
However, the opportunities on offer are not caused by “problems”. The wealth in Sub-Saharan Africa, primarily through natural resources gives it a unique position in many markets so Philip Ingram looks at its potential.
The business case
Some of the natural resources coming out of the region bring their own unique security problems, like diamond mining, rare earth metal extractions and, of course, oil. Looking at this part of the continent from a business perspective, some interesting facts, initially provided by UKTI DSO for their “Aim for Africa 2012” London conference and still quoted, stand out.
- In 2010 the UK exported more goods to Sub-Saharan Africa than to China and India combined.
- Seven of the world’s 10 fastest growing economies are predicted to be from Sub-Saharan Africa (2011-2015).
- Many African Governments are looking to diversify their economies away from commodity reliance.
- A rapidly growing African middle class with disposable income has created huge demand for consumer goods.
Putting this together with the diversity of potential threats shows that the challenges for the security market are substantial. However, where challenges exist, so do opportunities for progressive, forward-thinking companies expanding into developing regions.
South Africa
Security across Africa is very much in its infancy. South Africa probably has the closest security market to that seen in “western” countries.
However, violence is ever present and widely reported with 17,068 murders committed in South Africa in 2013/14 alone, as reported by the Institute for Security Studies and Africa Check.
Illustrating this is the private security industry in South Africa. It provides much of what we would see anywhere: guarding, monitoring, escorting, investigating and other security-related services to private individuals and companies. In addition, like in the US, you also find armed reaction.
The private security industry in South Africa is the largest in the world, with approximately 9,000 registered companies and in the region of 400,000 registered active private security guards, according to studies quoted in Uinvest.co.ua and by CNN.
This is more than the South African police and army combined.
Nigeria
Nigeria is an area with high-profile opportunity for growth. As Africa’s most populous nation and one of the continent’s largest economies, the country continues to gain a reputation as an emerging market for a range of industries.
Nigeria has similar needs to those in South Africa from a private security company (PSC) perspective. The Department of International Politics at the University of Wales, Aberystwyth, examined the private security sector in Nigeria concluding that “Nigeria suffers from extreme inequality, rising crime, corrupt and abusive state security organisations, and conflict in the oil-rich Niger Delta. It is in this context that Nigeria’s private security industry has experienced rapid growth in recent years, becoming a major part of the Nigerian economy.”
The law in Nigeria (The Private Guard Companies Act [1986]) requires that PSCs in Nigeria be registered, licensed and Nigerian-owned, and prohibits the use of firearms by PSCs. The reality is that many PSCs have an armed police component seconded to their operations. This has resulted in a degree of ‘privatisation’ of the public security forces.
In the oil sector, the privatisation of public security is so extensive that it can be difficult to distinguish public policing from private security. Military forces are increasingly used to protect oil operations, and are maintained by oil companies.
The reality of the law, however, is that there are no required standards of training, which varies widely across the sector as a result. Wages and working conditions are generally low and often exploitative, leading to a low level of commitment and service from guards.
There is little monitoring, regulation or oversight of standards in the sector. A key exception is frequent inspections of international PSCs, but this is serves the purpose of intimidation and control rather than to uphold standards.
The use of public security forces integrated into private security has the potential to undermine the concept of security for the public good. The willingness of public security forces to resort to force raises ethical issues for international companies. This becomes more of an issue with the difficult security situation in the Niger Delta.
The Nigerian state’s reliance on PSCs may involve them in increasingly dangerous and complex political and ethical situations. But one thing is certain, a continued and expanding role for PSCs is likely to remain.
Kenya
Kenya is developing a reputation as an African leader in the emerging technology sector. The video surveillance market has benefited from the Kenyan technological boom with an increasing amount of video surveillance equipment being deployed.
A major driver in Kenya is effort by the government to improve confidence in the country’s security reputation, which has suffered following incidents of terrorism and piracy in and around many of its resorts, especially close to its North East coast.
Additionally, Kenya’s position in East Africa means it is a gateway to the smaller markets of Ethiopia, Tanzania and Mozambique. However, confidence in its security situation is essential before this can be fully exploited.
Surveillance
The video surveillance market in Africa is a prime example of a market where full potential has yet to be realised.
In January, IHS Technology reported “In 2014 the total African market for video surveillance equipment is forecast to be worth over $200 million, a small piece of the estimated $15 billion global market. However, as regulation increases globally the potential in Africa can only grow.”
The South African market was worth approximately $90 million in 2013 and is the largest and most mature market for video surveillance equipment within Africa, but its growth is forecast to slow.
Nigeria has a growing video surveillance market through projects in the utilities industry and public sector city and highway monitoring.
These have proved lucrative for some multinational vendors of video surveillance equipment, yet business in Nigeria is not without its challenges. Concerns over corruption, lack of payment and poor security distribution channels linger.
Despite various ambitious government plans for video surveillance in different countries across the region, there is a common consensus that the market is still hugely underdeveloped.
Cybersecurity
Sub-Saharan Africa has a small but burgeoning cybersecurity market, which is set for dynamic growth over the next 5 years.
In ABI Research’s Cybersecurity Strategies for Critical Infrastructure Market Research it is predicted that regional revenues will hit $100 million in 2015.
The region is experiencing soaring Internet growth, boosted by tremendous mobile connectivity. This has outpaced any models experienced in the past by developed economies.
The uniqueness of the market not only means that thousands of people will connect to the Internet for the first time in their lives, but also that they are extremely vulnerable online.
As fledgling digital economies take off in Kenya, South Africa, and Nigeria, local cybercriminals have emerged and are organising themselves to take advantage of regional financial services including the emerging and highly popular mobile money industry.
National support for cybersecurity across the region is poor and the market is primarily dependent on foreign security vendors to offer basic online protection.
And yet, the potential to provide cybersecurity services is significant. Both public and private organisations in the region are demanding training, servicing, and consulting services in cybersecurity.
Ebola
Of course, the region is also affected by a unique security issue that needs to be resolved – Ebola.
As outlined by President Obama when discussing Ebola, “This is an epidemic that is not just a threat to regional security. It’s a potential threat to global security, if these countries break down, if their economies break down, if people panic. That has profound effects on all of us, even if we are not directly contracting the disease.”
Across all security vertical and horizontal markets, the African market offers lots of untapped potential for manufacturers and distributors of security equipment.
The size of its individual country markets may be small at the moment, and the market itself can be described as being in its infancy, but establishing a presence in these regions early will be strategically important to take advantage of future growth.
