SAP to Accelerate Africa Investment on China-Sized Opportunity

SAP AG (SAP), the largest maker of business-management software, said its spending in Africa could match that for China to boost annual sales growth from the continent to more than 20 percent, its co-chief executive officer said in an interview.

SAP, which has a target to lift its global revenue to more than 20 billion euros ($25.8 billion) in 2015 from 16.2 billion euros last year, announced in late 2011 an investment plan of more than $2 billion for China. Its first-quarter software sales and profit missed analysts’ estimates as the Walldorf, Germany-based company struggled to close some contracts in Asia.

“We’re seeing the beginning of a boom of business in Africa partly because of the access to resources,” Jim Hagemann Snabe said at the company’s offices in Johannesburg. “If I look long term, probably Africa becomes the main driver. If you look at the amount of people and the improvement opportunities of connecting billions of people here, it’s as big as China, no doubt.”

SAP said in April it plans to double its employees in Africa to 1,200 by 2015 as it pushes further into the continent’s oil- and gas-rich regions.

Growth in African revenue from software licenses and cloud subscriptions will probably exceed the company’s global forecast of 14 percent to 20 percent this year, Snabe said.

Photographer: Angel Navarrete/Bloomberg

SAP, which has a target to lift its global revenue to more than 20 billion euros ($25.8 billion) in 2015 from 16.2 billion euros last year, announced in late 2011 an investment plan of more than $2 billion for China. Close

SAP, which has a target to lift its global revenue to more than 20 billion euros ($25.8... Read More

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Photographer: Angel Navarrete/Bloomberg

SAP, which has a target to lift its global revenue to more than 20 billion euros ($25.8 billion) in 2015 from 16.2 billion euros last year, announced in late 2011 an investment plan of more than $2 billion for China.

“Over a five-year period the compound average growth rate will be beyond 20 percent” in Africa, Snabe said yesterday. “It’s going to be an accelerated investment plan, which means it’s beyond what we normally do, it assumes an accelerated return.” He declined to discuss specific spending figures for the continent.

Sub-Saharan Africa’s economy will grow 5.6 percent this year and 6.1 percent in 2014, the International Monetary Fund said on April 16. That compares with a forecast of 4 percent growth for the global economy next year.

To contact the reporter on this story: Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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