Business Opportunities And Risks In Africa

          Investment in Africa is growing and more money is actually coming in. But some companies are still skeptical and hesitate to put their money in Africa. The truth is, the perceived risks about doing business in Africa are by far greater than the actual risks.  Lots of European companies have actually invested in more than 40 African countries and those businesses are doing very well, making lots of profits in sectors like telecommunication, transportation, agro business and so on. And we already can see an overall growth in GDP in the entire continent.

• Nigeria: Nigeria is the United States' largest trading partner in sub-Saharan Africa and supplies a fifth of its oil (11% of oil imports). It has the seventh-largest trade surplus with the U.S. of any country worldwide. Nigeria is currently the 50th-largest export market for U.S. goods and the 14th-largest exporter of goods to the U.S. The United States is the country's largest foreign investor. According to Citigroup, Nigeria will get the highest average GDP growth in the world between 2010-2050. Nigeria is one of two countries from Africa among 11 Global Growth Generators countries. 
• Angola: Overall, Angola's economy has undergone a period of transformation in recent years, moving from the disarray caused by a quarter century of civil war to being the fastest growing economy in Africa and one of the fastest in the world, with an average GDP growth of 20 percent between 2005 and 2007. During 2001–2010 Angola has the world's biggest Annual average GDP growth with 11.1 percent. In 2004, China's Eximbank approved a $2 billion line of credit to Angola. The loan is being used to rebuild Angola's infrastructure, and has also limited the influence of the International Monetary Fund in the country.
• South Africa: At the start of 2000, the President Thabo Mbeki vowed to promote economic growth and foreign investment by relaxing restrictive labor laws, stepping up the pace of privatization, and cutting unneeded governmental spending. His policies faced strong opposition from organized labor. From 2004 onward economic growth picked up significantly; both employment and capital formation increased. South Africa is ranked 25th in the world in terms of GDP (PPP) as of 2008, and is considered a newly industrialized country. By UN classification South Africa is a middle-income country with an abundant supply of resources, well-developed financial, legal, communications, energy, and transport sectors, a stock exchange that ranks among the top twenty in the world, and a modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the entire region.

         In fact, all over the continent, entrepreneurs, foreign business owners, investments companies and banks are getting involved and are learning how to deal with the execution and political risks of doing business in Africa and getting local partners to help them with local problems.  One of the greatest needs for Africa’s growth is the infrastructure. This creates the biggest opportunity for investment. The potential to trade with this new infrastructure is huge and we are all looking forward for that. Lots of business analyst forecast an overall economic growth in Africa and the good news is that almost all type of investment can take advantage of such a growth:

• The infrastructure sector,
• The telecommunication sector, with a phenomenal growth,
•  Financial services,
• Consumer businesses for the middle class with huge demographic numbers,
• Energy supply,  Hotels.

We also have other sectors that support the consumer sector like logistics; banking and mortgage activities with are important issues for new entrepreneurs. Some other challenges we need to overcome to accelerate this growth are: 

• Facilitate the business environment and then lets the private sector to come in,
• Remove government in order to reduce barriers to the private sector,
• Reduce the overall time it takes to open a business,
• Create an information pole or stop shop to have an ecosystem where, instead of an investor coming to a country and having to go to 10 different ministries, they can go to one place and get all the information they need. 
• Provide funding and permit banks to lend more than 1 year: African banks need help because they can’t finance long term projects, making lots of great ideas by young entrepreneurs never get funding. 
• Create a dialogue between the private sector and the public sector: The government needs private sector businesses to boost the economy; it should therefore listen to their problems and try to find solutions to mitigate them.

The risks

Doing business has always been risky. Every time you are starting a business in a new place (different from what you’re used to) you will surely encounter some difficulties and there are always risks. Some of the African investment risks are civil war, unreliable judiciary procedures and court. And many people are afraid to invest just because they imagine that a civil war in any given country will propagate to the entire continent; that’s simply not true.

African countries are really trying to improve their exposure to the world and build their credibility by adopting democracy, opening borders and avoiding civil wars. And a good way to get a real sense of what are the risks in the African market, is to talk with someone already established in Africa and ask him or her about what the situation really is and what are the ongoing improvements that are being made to the system to facilitate investments as a whole and to enable an environment for business creation both for local and for foreign investment.

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