Africa presents opportunities for Minnesota companies

About 15 miles northeast of downtown Nairobi, along the Thika Superhighway, is the main campus of Kenyatta University.

Enrollment at the institution has grown from 8,000 to 45,000 in less than 20 years, as more Kenyans elect to go to college in their home country. Needing a master plan for the campus, formerly an army barracks in the British Empire, the university sought out architectural expertise.

They hired DLR Group of Minneapolis, a firm that specializes in higher education and now has big hopes for growth in Kenya.

"In the '80s and '90s, the trend in Kenya was to send high school students to another country to get a degree. Now they're coming back to Kenya," said Jeff Fenimore, DLR Group's Minneapolis-based head of higher education projects. "There's this resurrection of the country and the culture, and people just want to see Kenya be great."

As a giant middle class gradually rises across Africa, more Minnesota firms are starting to do business there. The continent is home to several of the fastest-expanding economies in the world, and Minnesota exports of goods to the continent grew 29 percent in 2013.

"I see a lot more interest in the last 18 months in Minnesota companies looking into Africa," said Ryan Kanne, director of the Minnesota office of the U.S. Commercial Service, which helps U.S. businesses find international partners and start exporting.

U.S. companies have lagged behind the Chinese in building business in Africa in the past decade, but Western aircraft manufacturers have opened factories in North Africa, retailers are sourcing clothing from Ethiopia, and GE's business on the continent, based in South Africa, has doubled in the past four years.

In Kenya, DLR Group's Fenimore and his colleague Christopher Osore, in Des Moines, will meet with the University of Nairobi and other colleges next month to talk about other projects. The firm is designing a stadium for Kenyatta University and trying to position itself to design more soccer stadiums in Kenya, which hopes one day to host the World Cup.

"That's a little bit of a long shot, but we feel we're in the running," Fenimore said. "We're going to focus primarily on higher education right now, make sure we get a pretty good flag in the ground."

Prospects for growth in Kenya, Nigeria, Uganda, Ghana and Morocco are drawing more attention from Western companies, including Minnesota firms, but Africa and its population of 1.1 billion remain a tiny market for U.S. goods and services.

Minnesota companies, for instance, sell 25 times as much in Canada as in the entire African continent.

"America has already fallen behind in those markets," said Adesegun Oyedele, a marketing professor at St. Cloud State University.

Over the past 10 years, China has become the No. 1 importer in Africa's top three economies — Nigeria, South Africa and Egypt.

But President Obama has made improving trade with Africa a priority with the Doing Business in Africa Initiative, a now two-year-old campaign. The Commercial Service is opening offices in Angola, Tanzania, Ethiopia and Mozambique, and expanding offices in Kenya, Ghana, Morocco and Libya.

Even though the numbers are still small — about $244.6 million in 2013 — momentum is building for Minnesota exports to Africa.

"Deals are getting done," Kanne said. "As deals get done, more people start talking about it, and more people start looking at it."

Ikonics International, a firm with 75 employees, exports all over the world from Duluth, and is expanding in Africa. The firm distributes films, emulsions and liquids used to screen-print clothing, circuitry on solar panels, auto windows and the backs of touch screens. Its main market in Africa is textiles.

"Those channels are opening up all the time," Banks said. "We will definitely be looking into those markets more seriously."

Africa is not always easy to export to, Banks said. Electricity is unreliable — even in Nigeria, the continent's largest economy — and corruption is a constant worry.

But trade barriers are falling and more established businesses are moving into new African markets, paving the way for sales by firms like Ikonics.

While political instability in North Africa caused foreign investment to decline in 2013, according to Ernst & Young, investment in sub-Saharan Africa rose 4.7 percent.

"I think that there are more and more financial resources that are shifting to develop that private sector," Banks said.

Holmes Corp., an Eagan firm, is in that business, selling training programs for professional certifications.

As educated Africans seek specific job skills and international companies try to create a workforce that uses uniform processes and vocabulary, Holmes' business on the continent has grown, said Vicky VanderWoude, director of international business development for the company.

"Kenya has a super highly educated population, and then in Nigeria, because of the oil, that's where we see a lot of corporate business," she said.

VanderWoude's division sells directly to professional societies, training companies or consultants in industries like oil, pharmaceuticals and manufacturing. BASF, DuPont and Caterpillar are among its clients in Africa.

"Especially for the program that I lead, which is global supply chain, our fastest growth segment is the Middle East and Africa," VanderWoude said.

And food drives home how relatively small Africa still is as a market for American products, said Su Ye, economist for the Minnesota Department of Agriculture.

U.S. agricultural exports, which aren't necessarily accurately reflected in the export statistics, were about $5 billion in 2012, Ye said, compared with $29 billion in exports to China.

"The entire continent is a very small market," she said.

The biggest buyers on the continent are Egypt, Nigeria, Morocco and South Africa.

But with a population of 1.1 billion, a fast-growing Africa will be come a more important market.

Adam Belz • 612-673-4405 Twitter: @adambelz