SAP, the biggest maker of business-management software, is pushing further into oil-and-gas-rich African countries as growth in Europe remains subdued and Asian markets slow.
Pfungwa Serima, who heads SAP’s operations in the region, has been meeting with ministers from African countries as good relations with governments are crucial for business expansion, he said in an interview. SAP plans to double the number of employees in Africa to about 1,200 by 2015.
“Africa is the last frontier remaining on this globe where real opportunities are,” Serima said over dinner in Johannesburg, where SAP has its headquarters for the region. “We believe in Angola because of its openness with oil and gas. We believe in the potential of Ivory Coast. We’re very close to what’s happening in Ghana; and the potential of Nigeria, it’s just a matter of time, but it’s one of the giants on the continent.”
The economy in sub-Saharan Africa will grow 5.6 percent this year and 6.1 percent in 2014, the International Monetary Fund (IMF) said April 16. That compares with a forecast of 4 percent growth for the global economy next year. SAP, based in Walldorf, Germany, last week reported first-quarter software sales and profit that missed analyst estimates as it struggled to seal new contracts in the Asia-Pacific area.
SAP shares rose 0.5 percent to 58.02 euros at 9:53am in Frankfurt. That brought the stock’s gain to 18 percent in 12 months, giving the company a market value of 71.3 billion euros ($92.6 billion).
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Software revenue from customers in Asia-Pacific and Japan, where SAP had posted the most growth in recent years, fell 15 percent. Bill McDermott, co-chief executive officer said the region will be, “back on track” this quarter after China’s first-quarter growth dropped and the country’s public sector slowed spending amid a transition to a new government.
By contrast, license sales in Africa grew more than 10 percent in the three months through March. SAP doesn’t break out revenue for the continent.
“We are going to the board in October to present our growth plan and part of that will be talking about amplifying our presence on the continent,” said Serima, who’s had meetings with ministers of Ivory Coast and Senegal over the last four weeks.
Businesses have focused too much on other emerging markets, such as China, while Africa with more than 1 billion people has been misunderstood, Serima said.
Apart from delivering software to foreign companies expanding into Africa, SAP is also seeking local clients.
“If we can assist governments, it gives us an opportunity to participate in whatever they want to do,” Serima said. “They’ve embraced the idea of service delivery and as such it is becoming easier for them to accept the fact that organisations like SAP will make a change.”
