Follow our live feed for instant updates or
join our facebook page for further discussion

“Africa is rich in undeveloped land and natural resources – a strategic advantage that must be leveraged by its governments to maximise the benefits for their populations.”

Africa - the forgotten giant offers an untapped market

In many quarters Africa is still seen as the “dark continent”, with its future prospects clouded by pessimistic news coverage and its business environment poorly understood through inadequate commercial research.

Elsewhere in the world, business is business, regardless of one's trading partners - but Africa is perceived to be different. The good news is that this perception is changing - and for the better. Africa, the once forgotten giant, offers a largely untapped and vast market of over 1 billion people.

Africa is rich in undeveloped land and natural resources – a strategic advantage that must be leveraged by its governments to maximise the benefits for their populations. This vast untapped wealth has attracted the attention of economic superpowers such as China and the USA.

Such great opportunity, however, presents even greater challenges, as businesses attempting to enter these markets are faced with the hurdle of local shortages of management and specialised skills. Over the next three or more years African economies are expected to grow at more than 5% per annum, which should trigger a 75% or more rise in the import of expatriate skills. Much of this influx could – and should – comprise Africans having gained expertise elsewhere, returning to their home countries.

Indeed, the costs of doing business in Africa are declining as a wave of economic liberalisation and democratisation sweeps across the continent. African governments are redrafting laws to open up their economies to outside investment. Nevertheless, Africa remains a complex place to do business and classic western-style business practices won't work without understanding the dynamics of the African political and commercial landscape. Increasing research into African business is making it better understood and reducing risk levels. The prospect of significant returns on investment is music to the ears of potential investors.

Even so, this is not the time for complacency, as postcolonial Africa works to overcome its tragic legacy of economic stagnation, political instability, civil wars and poverty. A primary challenge as African economies grow and develop is to reduce its dependency on expatriate workers as its key source of skilled labour. A key problem is that Africa generally lacks adequate higher education infrastructure, so that in recent decades the most talented and skilled Africans left home in search of better education in established economies like France, the UK and the USA.

Many of these graduates did not return home after their studies and assimilated into well-paying positions in their host countries. In a sense Africa is fortunate that the global financial crisis and consequent fragility of western economies have reduced the positions available to expatriate Africans in those job markets, resulting in many skilled Africans returning to their home countries. The continent now has a golden opportunity to attract its talented daughters and sons of the “African diaspora” back home, as well as retaining skilled young Africans in local and growing economies.

Businesses operating in Africa with premises on the continent confirm the need for skilled local employees to manage their African operations, as these managers have an intrinsically better grasp of local markets, cultures and challenges than imported expertise. Although commercial regulations are being reworked, there remains complex local legislation that may even differ from region to region within the same country. This is further exacerbated by the multitude of customs, practices, religions, languages and trade barriers that challenge the ability of expatriate personnel to forge sound business relationships.

Africa's vast mineral wealth and untapped consumer markets offer almost unparalleled markets to companies up to the challenge. They will require business acumen, courage, appropriately skilled and experienced staff and an appetite to venture into new markets. They need also be wary of obstacles that may arise at the last moment - an unfortunate reality of African business.

Competent management without visionary leadership is like a ship with an excellent crew and no rudder. Business relationships in Africa should be underpinned by the spirit of “Ubuntu” (I am what I am because of who we all are), which will resonate with Africa's big-hearted capacity for compassion, reciprocity, dignity and humanity in the interests of building communities. Ubuntu should be applied in terms of good corporate governance and sound business practices. Although Africa may be viewed as an emerging economy, it is a media-fed misconception that the continent is in the “dark ages”. Africa is waiting for businesses with integrity and leadership to fulfil the needs of a 1 billion population with expanding disposable income. Immense rewards await those able to succeed. Africa waits, but not forever. The moment for good business in Africa is now.

Legendary world heavyweight champion boxer Joe Frazier once said: “You can map out a fight plan or a life plan, but when the action starts, it may not go the way you planned, and you're down to your reflexes. That's where your roadwork shows. If you cheated on that in the dark of the morning, well, you're going to get found out now, under the bright lights.” asa

Sources:
African Journal of Business Management
The New Africa-Ernst & Young

Author: Mohsien Hassim CA(SA), NDip (Elect Eng), B.Compt (Hons), CISA, Cert (Mkt Mngt), MBA, is a
Senior Manager with a major bank and a part-time MBA lecturer.