This article aims to bridge the gap that continues to exist among many potential investors not yet doing business in Africa. In so doing we highlight the factors that one needs to consider and be aware when embarking doing business in Africa.
Key factors are:
- Securing Credits
- Registering Land
- Investment Protection
- Availability of Electricity
- Tax Policies
- Starting a Business
- Doing Business
- Cross-Border Commerce
Enforcing Contracts There are 48 countries in Sub-Saharan Africa but for the sake of this article we shall focus on 14 member states of the Southern African Development Community [SADC]. SADC’s role is to achieve development, peace and security, and economic growth, to alleviate poverty, enhance the standard and quality of life of the peoples of Southern Africa, and support the socially disadvantaged through regional integration, built on democratic principles and equitable and sustainable development.
An important objective for each Member State of SADC is to achieve sustained Economic Growth and Sustainable Development so that people in the region have better living standards and employment opportunities. Since its inception in 1980, SADC has formulated policies and strategies for Regional Integration in support of economic growth and development. The economic benefits expected from Regional Integration, as shown elsewhere around the world, include increased market size, improved intra-regional trade and investment flows, and increased transfer of technology and experience.
Below is a table showing how each SADC country ranks; the data was derived from a survey carried out by the World Bank in 2011.
Six countries from the SADC region feature in the top 10 best countries to do business in Sub-Saharan Africa, with Mauritius ranked at number 1; South Africa at number 2; Botswana 4; Namibia 6; Zambia 7 and Seychelles at 8. It is no wonder why the number of Foreign Direct Investment [FDI] projects in Africa grew 27% from 2010 to 2011, according to Ernst & Young Africa 2012 Attractiveness Survey. Despite this growth, there remain lingering negative perceptions of the continent – only by those who are not yet doing business in Africa. The UNDP projections show that Africa’s economies are expected to grow by 4.8% in 2013.
Newcomers to Africa need the advice of an intermediary or cross-cultural adviser.
Arnold Matimba is a generalist consultant with nearly 20 years hands-on experience in Telecommunications, Aerospace and Defence, Construction, Retail & Hospitality. Arnold has had exposure to diverse cultures making him highly attuned and aware to clients needs in different regions. Despite having lived and worked in the UK, his desire to promote a positive image of Africa led him to set up Avalanche Consultants Pty Ltd, whose main aim is to offer cross-cultural and consulting services to those keen to do business in Africa. He is also passionate about helping individuals maximise their potential. (Twitter @ArnMatimba)
Thankfully Africa is rising and is shaking off the stigmas attached to it, breaking down the mental walls that are limiting. For years Africa has been treated like a single entity despite the fact that it is a vast continent with a billion people. It is strange that no one assumes that the British and the French share one culture or sees Europe as one country.
What’s happening in Africa today can be likened to what happened to the United Arab Emirates since its independence from Britain in 1971. The UAE has grown to be one of the Middle East’s economic centres. The late Sheikh Zayed, ruler of Abu Dhabi and president of the UAE at its inception, was quick to seize on the potential of the oil industry. He oversaw the development of all the emirates and directed oil revenues into healthcare, education and the national infrastructure. Likewise, Africa is full of natural resources, e.g. gas and oil, whose potential can be used to develop infrastructure. Africa can also seize on the foreign investment opportunities.
So who is investing in Africa? Since the global economic downturn several U.S. companies are moving into Africa. To show how broad-based foreign investment is in Africa, here is a sample list compiled by WSI research:
In March 2012, The Gap opened its first store in Johannesburg with two more opening in 2013 (one in Cape Town and another in Pretoria).
Porche operates dealerships in South Africa (selling 800 cars a year), Angola, Ghana and in the midst of the world’s largest concentration of millionaires – Nigeria’s Victoria Island.
Africa is Diageo’s biggest emerging market. 40% of all Guinness brewed and consumed in Africa. Diageo announced last year that it would be expanding into Angola, Mozambique, and DRC. Africa contributes 14% of Diageo’s total net sales and the company paid $225m for Ethiopia’s state-owned brewer Meta Abo.
Heinz operates production facilities in South Africa and Egypt and is making a strong push into Nigeria. The company enjoys 21% sales growth in Africa and 10% growth in South Africa.
Africa is Moneygram’s fastest growing geographic segment due to the huge number of Africans in the diaspora who send money back to the continent to support family or local businesses. The company added nearly 6000 locations in 2011 and now has 267,000 agents in Africa.
GE ELECTRIC Co.
With its first aircraft-leasing office in Ghana for Central and West African airlines, GE has a stronger focus on Africa.
We Africans need to keep rising up and come up with African solutions to African problems. We are well able and capable, what we need is a sense of oneness. Yes we do need foreign investments, but we too must invest on our continent and support our own products. Yes We Can!!!!
Arnold Matimba is a generalist consultant with nearly 20 years hands-on experience in industries such as Telecommunications, Aerospace and Defence, Construction, Retail & Hospitality. Arnold has had exposure to diverse cultures making him highly attuned and aware to clients needs in different regions. Despite having lived and worked in the UK, his desire to promote a positive image of Africa led him to set up Avalanche Consultants Pty Ltd, whose main aim is to offer cross-cultural and consulting services to those keen to do business in Africa. (Twitter @ArnMatimba)
Women of Africa!
The global financial crisis continues to have a huge impact on the business environment, while political and environmental problems add on to negative business pressure. Diversity and Inclusion (D&I) plays a key role in the development of African businesses. Unfortunately, many leaders do not realize that they are failing to be inclusive while others know that equality of opportunity for all regardless of age, ethnicity, religious belief, sexual orientation and disability creates business benefits. According to a study by Berenice Kerr-Phillips and Adèle Thomas, organisational culture and employment equity led to talent loss amongst identified top talent (micro issues) in South Africa during the period 1994 – 2006.
Women make up over 50% of Africa’s growing population but are under-represented in social, economic and political spheres. Africa’s private sector is increasingly attracting investment making Africa the most sought after destination for global investment. The women of Africa play an important role in the growth of Africa and so it is vital that these inequalities are addressed. Africa must harness the power of women to drive economic growth and social development.
Across the globe it is very apparent that without the skills, talents and capabilities of their people, businesses simply cannot succeed. And to do so there has to be a substantial investment in diversity and inclusion, for example:
- Developing programmes to increase women’s success at work because it has positive impact on both business and society.
- Balancing representation of previously disadvantaged ethnic groups
- Integrating Diversity and Inclusion into Human Resource systems to ensure that they recruit and retain the right talent.
- Holding senior management accountable for Diversity and Inclusion
- Delivering on Corporate Social Responsibility through sustainable community partnerships.
It is worth pointing that diversity by itself without inclusion erodes employee engagement. Talent is on the top of many CEOs shopping list, with many fearing that a limited supply of candidates will adversely affect business success. The reality is that the talent already exists and just need to be identified.
Women of Africa are the untapped economic force and their participation in decision-making has a proven positive impact. Leaders must address inequalities and harness the power of women to drive economic growth and social development.
What Makes Business Partnerships Succeed? By Arnold Matimba
Business start-ups can be daunting, for example choosing whether to form a partnership or go it alone as a sole trader. Not all entrepreneurs are cut out to work in a partnership, but there have been some success stories, including Microsoft, Twitter, and Apple, which were formed by individuals with productive relationships.
Long-time friends, old school mates, or relatives build most partnerships and the key is in recognizing individual strengths and weaknesses. Most importantly the partners respect what the other brings to the partnership. Most partners have gone to run companies that have revolutionized the world.
Apple: When Steve Jobs and Steve Wozniak met in 1970, Wozniak was building a computer and Jobs saw a business opportunity to sell it. One had technical skills and the other business foresight to turn the computer into money. Today Apple Inc. designs and sells consumer electronics, such as the iPod, the iPhone, the iPad to name just a few.
Twitter: Evan Williams and Biz Stone worked together at Blogger before Google acquired it. Their mutual respect, ambition and camaraderie helped to keep them together and achieve business success. Today Twitter has over 500 million active users generating over 340 million tweets daily and has become one of the most visited websites.
Microsoft: Bill Gates and Paul Allen were childhood friends with a passion in computer programming. Their partnership succeeded because they shared an obsession in computers and passion for business. On 25 June 2012, Microsoft announced that it is paying $1.2 billion to buy the social network Yammer.
In order for a partnership to work the following must be adhered to:
Written and signed partnership agreement A lawyer qualified and well versed in business partnerships must draft the legal agreement. Every obligation must be clearly defined and written and agreed upon by all parties.
Shared capital instead of expenses Agree on an arrangement where expenses are shared in an associative arrangement, it makes it easier to walk away when things go wrong.
Integrity Ensure the person you are partnering with is full of integrity and is upright and has not spiraling debts that will tempt him/her to use company money.
Exit Strategy In the partnership agreement, define the exit strategy that allows either party to walk away from the partnership.
Here are 10 obstacles each and every entrepreneur should look out for.
- Lack of Integrity. Latin integritās meaning: adherence to moral and ethical principles; soundness of moral character; honesty.This is the master key to success, without it your credibility vanishes.
- A know it all attitude. Sir Winston Churchill once said “Personally I’m always ready to learn, although I do not always like being taught.” Unfortunately this is so true of so many entrepreneurs today. Sometimes being highly educated can prevent us from learning.
- Wrong selection of associates. This is very critical. Do not keep the company of negative, critical, cynical people they will pull you down. Surround yourself with upright, positive people who believe and inspire you. “If you accept the expectations of others, especially negative ones, then you will never change the outcome.” Michael Jordan
- Lack of self-control. “There are many men whose tongues might govern multitudes if they could govern their tongues.” George D. Prentice. Control yourself and do away with negative habits and qualities. Make sure your tongue does not prevent you from succeeding in all you do.
- No Sense of Purpose. If you have no sense of purpose then you will jump from one activity to another with no success. That’s why successful people, who have a clear vision and goal in their life, are very few. “Looking good and dressing well is a necessity. Having a purpose in life is not.” Oscar Wilde
- Poor at building relationship. “Without relationships, no matter how much wealth, fame, power, prestige and seeming success by the standards and opinions of the world one has, happiness will constantly elude him.” Sidney Madwed. If you are poor at dealing with people, you will not be successful.
- Undeveloped Talent. We all have hidden talents, if we fail to discover and develop them, they will prevent us from growing. “Talent is God-given. Be humble. Fame is man-given. Be grateful. Conceit is self-given. Be careful.” John Wooden.
- Procrastination. Lord Chesterfield said, “Know the true value of time; snatch, seize and enjoy every moment of it. No idleness, no laziness, no procrastination: never put off till tomorrow what you can do today.”
- Lack of drive. Often times people are good starters, but given up when they hit the first obstacle. Obstacles are a chance to refine and become better. “The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather in a lack of will.” Vincent T Lombardi
- Negativity. If you are negative then your whole world is negative. “I don’t have time to be negative.” Venus Williams.
By Arnold Muchi Matimba