6 aspects of doing business in Africa and beyond

by Ofentse Sefolo
6 aspects of doing business in Africa and beyond

Many developers and built environment professionals have set their sights on Africa as a new frontier for growth. As an architect, specifier or designer in South Africa, moving across local borders into Africa can help you spread your risks and generate more streams of income – something that many companies need during challenging economic times.

While there is a promise of rich opportunities on a continent that still needs to be developed, Africa can be a tricky terrain to enter and navigate. IESE Business School lists these aspects to consider:

1. One country, one approach
African countries are isolated from one another both economically, culturally and geographically, which means each country will require an independent approach and effort. Built environment professionals should carefully consider which countries to enter. Countries with a growing population size and middle class, such as Kenya and Ghana, may appeal more to the type of projects you do, whereas criteria like an abundance of natural resources such as oil and gas, for example in Nigeria, Mozambique and Angola, are critical for energy, construction and industrial goods companies.

2. Take a long-term approach
There are three main hurdles that need to be overcome, namely:
I. Navigating the complex political and regulatory complex,
II. Developing your operations and logistics perimeter,
III. Sourcing as well as upskilling local talent.
According to Forbes magazine, experienced foreigners advise adding at least an extra two to three years to your contingency time to reach your goals.

3. Identify your local context
The complex regulatory and approval landscapes will require you to build local connections and knowledge. Historical ties with local government, such as the French in West Africa and British/Dutch in East Africa, and a strongly-connected spread of people from their original homeland – Lebanese in West Africa, Indian in East Africa – have led to successful foreign business incursions in the past. The direct acquisition of an established local entrepreneurship is an alternative approach that many multinational companies have chosen to use to overcome this hurdle.

4. Plan for extra effort
While South African built environment professionals are largely accustomed to planning for power interruptions, many auxiliary services such as water, transportation and supplies may be missing in Africa – even in large cities. Depending on your role in projects or the service you provide, you may need to develop your own power generating facility, sewage system or need to import fuel. Overcoming these hurdles can count in your favour as they are often an effective barrier to entry for built environment professionals from the West who want to follow this path.

5. Develop local talent from the get-go
This is far more of a necessity than a corporate social responsibility initiative. Expats demand salary premiums to accommodate the risks and high living costs of living in Africa – which are prevalent in many cities. On the upper end of skills needed, there is huge competition for managerial expertise and professionals in these positions are often paid even more than what they would earn in developed economies. At the lower end, illiteracy and lack of training lead to the shortage of talent being “by far the largest problem in Africa”. Make sure you take a grassroots approach and work with local NGOs and universities to develop talent from the start, as you will need it as your business grows.

6. Avoid corruption and help communities
Like many places across the globe, there is a corrupt side to Africa. Be public and open to the media in everything that you do. Seemingly “corrupt politicians” may have hidden obligations to the communities they belong to. Improving connections in these communities and getting to know their real needs can help open doors without having to slip envelopes below the table.

According to all the anecdotal evidence that Harvard Business Review has gathered, since the 1990s American corporations have performed better in their home environments than in foreign countries, especially in emerging markets. Not surprisingly, many CEOs are wary of emerging markets and prefer to invest in developed nations instead.

As South Africans, we are uniquely positioned to expand into Africa with relatively greater ease. Preparing yourself for new challenges and a different economic and political landscape is tough, but can reap great rewards. Fortune favours the bold!

Full thanks and acknowledgement are given to www.forbes.com and www.hbr.org for the information contained in this article.

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