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Rise of the Anatolian Tigers

27 August 2014

A group of small family businesses centres have become major international players that now present an opportunity for investors, finds Nicholas Clayton

Read more: Anatolian Tigers Turkey SME

Regional ambitions
Since the mid-2000s, the Turkish government has pushed hard for local companies to expand their trade and investment ties with non-EU neighbouring markets both as a means of ameliorating the country’s high current account deficit and also to position the country as a regional economic centre.

Turkey has steadily made in-roads into the CIS and Middle East and north Africa markets by expanding exports and providing know-how in the construction and manufacturing sectors, but Turkish companies have only recently penetrated sub-Saharan Africa.
The Confederation of Businessmen and Industrialists of Turkey (Tuskon) announced in 2011 that it had prioritised the establishment of stronger business ties in new African markets, and some progress has been made.

Turkey had just 12 embassies in Africa in 2003, but has since expanded that to 34, with new posts for commercial councillors created in 17 sub-Saharan states.

Turkey’s bilateral trade volume with Africa has surged from $16bn in 2010 to $23.4bn last year, and Turkish Airlines now flies to 39 destinations in Africa, adding its latest — Cotonou, Benin — in June. Turkey formally joined the African Development Bank last December and Turkish companies have launched a series of ventures in Africa over the past few years, although many of them remain at the early stages of development.

In Uganda, for instance, a consortium of 11 Turkish companies called the Turko Group announced earlier this year that it had earmarked $20m for a series of ventures in agriculture, healthcare and construction.

Into Africa
The Turkish government has also signalled its interest in establishing a foothold in even the riskiest of African markets. In 2011, Turkish Prime Minister Recep Tayyip Erdogan became the first non-African head of state to visit the Somali capital Mogadishu since the country descended into conflict in 1991.

Turkey has since given hundreds of millions of dollars of aid to Somalia, and has followed its humanitarian entry with private investment. Last September, Turkish company Favori, a part of the familyowned Kozuva conglomerate, took over the management of Mogadishu’s Aden Adde International Airport and pledged to invest in a $10m expansion. Turkish construction firms have also been reportedly linked to a series of infrastructure and retail projects under development in Somalia.

Analysts say Turkish banks have been slow to follow the country’s trailblazing construction and manufacturing companies entering the African market. With little presence on the continent, Turkish lenders have been reticent to grant companies project finance or export credit for investments there. This has created a potential opening for liquid foreign investors seeking partnerships with Anatolian Tigers on African ventures.

Gun says he is bullish on the opportunities that now exist for foreign firms seeking to ride Anatolian Tigers’ aggressive globalisation, but added that misunderstandings in negotiations are common. "You really have to try to understand the culture that is unique to the environment," he says.

He adds that foreign investors should be aware that many of these companies conduct their business in a way that is similar to handling a family’s personal finances, and "not all business transactions will be reflected in the books". Although such discoveries can be disconcerting from a western corporate point of view, they do not necessarily indicate mismanagement, he adds.

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