Thomson Reuters

Newsmaker

Is Africa open for business?

April 20, 2011

On Wednesday, May 25, there will be a Thomson Reuters Newsmaker in London. This is the second of the series “Is Africa Open for Business?”

Reuters Breakingviews Editor Hugo Dixon will moderate a panel with Amani Abeid Karume, who was President of Zanzibar from 2000 to 2010, Lord Paul Boateng, who was British High Commissioner to South Africa from 2005 to 2009, Arabia Monitor President Florence Eid and Nubuke Investments Managing Partner Tutu Agyare.

A common refrain from companies that are reluctant to do business in Africa is the prevalence of corruption and the lack of legal and political frameworks that insure the rule of law, human rights and the enforceability of contracts, typically covered under the catch-all term of “political risk”. As the world has watched events unfold in North Africa and Ivory Coast, the term is being used profusely by media pundits pondering the short- and long-term effects of every incident on political and economic stability in the region and beyond.

Dixon and the four panelists will discuss the role peaceful leadership succession can play in reducing “political risk” and promoting democracy, good governance and economic development on the African Continent.

Comments

Africa is open for business. For the last few years Africa has always beeb open for business. There is a new generation of Africans who are entrepreneurs, who studied in some of the world’s buiness schools and who are very attached to the free market economy, free trade, private property rights, intellectual property and copyrights law. Africa is a very stable place to do business excepted few countries such as Somalia but the rest of the continent is fairly stable. Africa suffers a problem of public relations, the Western Media always shows the negative side of the African continents.

Posted by EricYepao | Report as abusive
 

As a company who works with businesses that work internationally or are looking to work internationally, we see little interest in Africa. At least in our Cincinnati market, our clients are looking towards China mostly, but also the rest of Asia. Africa is not spoken of as a viable option.

I do not know if this is reality or public relations, or a combination of both, but I think the world is going to need some time before it opens itself up to Africa. Especially for small or medium sized businesses, they want to bet on a sure thing, and Africa is indeed risky.

In addition, there are many countries in Africa and many different markets. We do a lot of website translations, which is a good way for clients to build their brand in another country. Africa has so many languages and cultures, it is not so clear how to enter that market, or even where to start.

Grace Bosworth
President, Global2Local Language Solutions LLC
http://www.globaltolocallanguagesolution s.com

Posted by globaltolocal | Report as abusive
 

By all indications, Africa is steadily becoming more and more business friendly. Peace and security have been significant obstacles to business across the continent for years. But many conflicts have effectively ended and many countries are not just poised for growth – they are enjoying health growth rates. There is a huge consumer market emerging that wants and needs all sorts of products and services. Exporters are becoming more and more competitive as the world learns about their products. Of course, there are still issues – but the governments in the area I live in, West Africa, have shown the will to confront them and find real solutions.
Consider corruption. Our project has worked with a regional body to raise awareness of this problem on the roads and highways and in the ports. When the work started, authorities, low and high, were in denial. But today they are working together to fight it (visit http://www.borderlesswa.com to see how). Exporting companies are increasingly more professional with greater capacity. Smart investors are recognizing and capitalizing on the opportunities. Sure, there’s a lot of work to do but the private sector is increasingly finding a voice and the public sector is being more constructive and innovative. I think the outlook is very positive and years of painstaking capacity building on the parts of many institutions and agencies is going to be paying off well over the next few years and into the future.

Posted by joeaccra | Report as abusive
 

For fifteen years, the company I work for has designed, imported and distributed gifts and home decor items produced by individual artisans and small workshops in nations across Africa.

Working in Africa presents some challenges we might not encounter on other continents, but most issues we are able to accommodate or eliminate entirely as our relationships with producers develop. Many of the producers we work with are educated, sophisticated, globally connected and artistic, often a far cry from the outdated mental image of an African some Western minds conjure. Even when producers contract the labor of undereducated, rural artisans, a prevailing tendency toward cooperation, just dealings and openness to new ideas keeps the production process honest, sustainable and mutually beneficial.

Adherence to modern business protocol, sustainable product development and legal international commerce underpins our transactions with African producers. Most are perfectly comfortable procuring appropriate legal permits, filling out export documents, using online order relay systems and text messaging updates.

Our distribution network experiences a great enough demand for modern African products that even the largest retailers we supply accommodate a margin of deviation on ship dates and product styling, if necessary. We have weathered delayed shipments due to strife on African soil, but to be fair, we have also had containers delayed stateside due to dock strikes, train accidents and the occasionally slow-turning gears of the U.S.D.A. and Customs. Any problem we’ve encountered coming from Africa seems to have a counterpart here in the States.

After 15 years of business in Africa that started with one box of handbags, we find that our main challenge is keeping up with the demand as more and more major retailers adopt handcrafted African products into their lines. A wealth of inspired creativity, sustainable supply of natural and recycled materials and rampant export readiness all seem to indicate that Africa’s craft sector is definitely open for business.

Darla Robbins-Funkhouser
http://www.swahiliwholesale.com

Posted by DarlaRobbins | Report as abusive
 

See the 2010 Ibrahim Index of African governance. It will give you great insights into the countries in Africa and their readiness to do business. You can find it here:

http://www.moibrahimfoundation.org/en/me dia/get/20101108_eng-summary-iiag2010-re v-web-2.pdf

Also, see the Heritage Foundation’s 2010 of Economic Freedom Index here: http://www.heritage.org/index/.

There are definitely major opportunities in Africa not just for China, but for America and in particular American small business investors! But you have to pick the spots.

Here is a prime example of an opportunity awaiting US small businesses: http://investincv.blogspot.com/.

Posted by Mangojulie | Report as abusive
 

The panelists appeared to dodge the difficult issues that were raised in the subject description. Investors from the west actually do confront issues of corruption, the rule of law, certainty of contract and expropriation risk throughout the continent. There is no use pretending they are not there, or sweeping them under the carpet. The best question — whether corruption legislation hindered UK and US investors — was dodged. One panelist — from Thomson Reuters — sits on the board of a company that acquired a copper mine in the DRC under very suspect circumstances last year. That is now the subject of a multi-billion dollar law suit alleging corruption and unlawful expropriation. Hard to see how he could have been neutral on that issue. Another panelist suggested that corruption was a bigger issue in the UK. Another panelist suggested that the we wake up and smell the coffee regarding investment opportunities in Africa, but I would respectfully suggest that he do the same. Until African states demonstrate that they will respect the rule of law, and that corruption has no place in the awarding of state contracts, then they cannot be applauded by the investment community.

Posted by SlaneyAdvisors | Report as abusive
 

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