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A return on investment is not the only parameter to consider when planning to invest or to do business- especially in Africa. This immense continent, spanning 11.7 million square miles and home to over 1.1 billion people across 54 officially recognized countries, is full of complexities, hurdles, and unique challenges and opportunities. To fully capitalize on these opportunities, and if you are a newcomer to Africa, perhaps the most important element in any business endeavor is a reliable local partner with the experience and knowledge to guide you in the right direction and help avoid obstacles. Still, there are several other basic, but crucial, factors to take into account on this continent, which is not only unparalleled in terms of potential and opportunity, but also complex in its workings.
Electricity supply, while taken for granted in many developed nations, remains a challenge in many African countries. Consider the following infographic:
Many manufacturers and business owners struggle with an inconsistent supply of electricity to power their businesses. This is not only true for many west, central, and east African developing economies, but even for the developed ones. South African factory and plant owners faced unforeseen problems when the demand for electricity in this huge non-oil dependent economy outgrew supply and caused nationwide blackouts. Operational costs skyrocketed and business outputs fell. Investor confidence plummeted. So, when making your business plan for Africa, be sure to include the purchase of a generator.
Infrastructure and connectivity should also not be taken for granted. The roads and highways, although constantly being improved and expanded, do not provide investors with satisfactory options for transportation. Potholes, traffic, and a lack of paved roads not only give many business owners (and the drivers working for them) huge headaches, but also significantly increase the cost and time of transporting goods and providing services. In general, the continent is quickly catching up, though, and constructing maritime ports and airports to make doing business easier.
Laws, rules, regulations, and policies are very different across each of the 54 nations on the continent. Moreover, in certain countries, there are inconsistencies in their implementation and enforcement. Although CEMAC—an intergovernmental organization formed in 1999 by Cameroon, Chad, Central African Republic, Equatorial Guinea, Gabon and Republic of the Congo—envisions the harmonization of many economic and fiscal policies across its member states, there are countless differences that every business owner and manager will have to deal with when in any of these countries.
While the list contains many more factors—economic outlook, demographics, climate, workforce, ICT services, corruption, and ease of doing business, just to name a few—perhaps a key determinant of whether to expand your business operations in Africa should be political predictability. Political predictability (as opposed to political stability, which is a different concept) refers to the proper functioning of democratic processes, and the confidence of the private sector that its investments and businesses will not be radically effected by any political changes. A case-in-point example of a lack of political predictability, and its effects, could be Venezuela. Following turbulent political times, and the nationalization of many foreign businesses, the country experienced capital-flight and the exit of many businesses. The economy collapsed.
Africa is the next frontier for economic growth. The opportunities truly are unparalleled and immense. However, the challenges can also be unique. White Storm Capital and The Growth Partner Alliance (TGPA) of business supporting companies specialize in assisting businesses to succeed in Africa. The American- African grouping of companies specializes in a wide range of services. From marketing using traditional and social media, tax consultancy, accounting, human resource management, and general consultancy, we are a partner that can propel and Simplify your business growth. We are Africa-based but maintain offices in the United States. Our solutions Simplify the management of your finances, people, time, and processes, and allow businesses to grow, prosper, and be noticed in and beyond Africa! Partner with us and Let’s Grow in Africa today, and in the world tomorrow!
Written By: Robert Romaniuk | White Storm Capital