Friday, Feb. 24, 2017

Out of Africa: business opportunities abound

By Export Council of Australia · September 18, 2015

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The continent has its challenges, but they are no reason why exporters should avoid this complex, exciting region.

Thanks to its natural resources Africa has become an interesting export market for Australian mining companies and investors. However, governance and cultural aspects make it a challenging place to do business. Here’s a snapshot of Africa and some pointers on doing business there.

Africa comprises 54 countries with their own cultures and features, shaped for many by a colonial history. So know where you are heading before entering a market. The way business is done depends on the economic condition of the country. A wealthier country like Gabon will be more selective in its choice of overseas partners than the Central African Republic, which has a more pressing need to attract investors to help its fledgling economy. 

The continent is on the threshold of a demographic explosion that will see its population double by 2030. In twenty years the African market will consist of one billion people with a large majority living in big cities. The consequence of this is the emergence of a middle class with sufficient means to afford consumer goods.

Showing respect

Wherever you are it pays to heed cross-cultural differences. For instance, patience and trust is essential. In Africa professional relationships are built over time. Becoming impatient is inadvisable, even more so if a contact is surrounded by employees.

It’s important to develop an individual relationship with your contact. Do not hesitate to call them instead of sending emails, and invite them to visit you every time they are in your country. It is also important to take the time to ask about their family and friends.

Make an effort with your dress, even in the most remote regions. This is particularly true in Central Africa. Start by removing the dust from your shoes. This is a mark of respect and a way to establish your own credibility.

The new frontier

Africa is no longer a vanquished land, but one ripe with opportunity. It offers promising economic growth, both now and in the long-term.

Investment, private investment in particular, has never been greater. This is significant enough to meet major needs such as transport and energy infrastructure, without which any true development would be impossible. It’s worth noting the number of junior Australian mining companies present in Africa is increasing.

But what Africa really needs is expertise and technical know-how. It requires trustworthy and reliable partners committed to long-term best practice, not short-term investors looking for a quick buck.

While geopolitical risk should be a consideration, in countries such as Cameroon, Senegal and the Ivory Coast the political environment is beginning to stabilise. This is creating improved macroeconomic and legal frameworks.

However, Africa needs better governance practices. Corruption is widespread, and political power is too personal and subject to influence. It is imperative good practices are extended across the continent so one day Africa emerges as a civil society capable of taking responsibility for its future.

Africa is not looking for charity. It is merely hoping to take its rightful place in the global community.

This article was written by Tea Dietterich, 2M Language Services for the Spring 2015 edition of the International Business Today. 

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