Africa is the world’s second largest land mass and also the continent with the second largest population. About 15 percent of all humans live in Africa.
The continent has the most abundant resources but also the world lowest level of development with 25 of its 59 countries featuring in the bottom of the human development index.
The reasons cited for the low levels of development include the greed of leaders, lack of central planning and endemic diseases and infrastructure challenges.
The reality is that Africa is changing.
With many organisations seeing the opportunity of larger communities that have a need for real solutions, there is an acceleration of African solutions that is transforming the opportunity, need and manner of investment.
Information technology is transforming the human condition in general with information enabling and informing the attitudes of individuals. With politicians increasingly finding it hard to hide their former abuses, information is becoming the weapon of transformation. And in this transformation it also highlights what is needed and where opportunities are present. With the number of cell phones outnumbering the number of toilets in Africa – it is fast becoming a tool for educating and connecting people. Information in Africa is still a limited resource but as it is coming on-stream it is changing the way we think about the continent.
When people are connected – they become a force for self-planning and self-organisation. Also by tracking behaviour larger communities and markets become visible. What was previously very difficult information that could only be collected at great cost can now be start to be integrated into solutions. So what is the information saying now? Africans need avenues for investment and investment in Africa seems to offer high returns. So it seems that the market that is developing will form the basis of a new wave of entrepreneurs and investors in Africa.
Higher levels of education are also assisting with a different attitude towards trade and investment. Traditional aid based regimes are being redesigned to be beneficial to locals. Insistence on local content and local beneficiation is creating new paradigms of co-investment. While there are a lot of inflows from the major continental players – Africans are also starting to invest in their own countries and other countries in Africa. This is long overdue…
While there is still a long way to go – there is hope that at least we are working on the right issues.
Key issues include
- Creation of African financial markets and institutions
- Access to electricity
- Creation of local manufacturing industries
- Local beneficiation of resources
- Strengthening of law-making and legislative frameworks
If we created the energy to drive the growth of the continent, then we can transform this place into one of the largest and most productive regions of the world.
The challenge is that we often go about it all wrong. We think we need money and skills from other countries and for this we sell the farm. We have more knowledge than we think and when we put our minds to it – we get things done. We must however create more hubs in which knowledge is created and disseminated. For this reason there is a great need to stimulate education and the formation of education institutions in Africa. We have built a perception that foreign education is the way – which there are very good educational options in Africa.
The second aspect is bravery. We need to be brave in Africa and fight economic and financial battles to ensure that we create the infrastructure that allows for further growth. The battle has moved from fighting cultures to fighting with our minds.
The third aspect is opening access. It is difficult for Africans to do business in Africa. We have designed laws that make foreign outflows difficult – so much so that it is difficult for African companies to invest in the rest of the world. We must realise that this will have to change and become smarter in managing our own foreign investments. If we invest in our own countries and in other countries – we will start benefitting from our own resources as well.
One of the challenges in Africa is that everyone believes that there is a quick buck around the corner. It is simply not true. You have to build the building to get the return. You have to invest in the asset to get the income. You have to build the power station to have the power. We get so tricky and want to do so many deals that at the end of the day the power station does not get built and corruption and bribery ate all the money. Nothing is easy and nothing is free. Africans will need to learn to work hard in the next ten to fifteen years – else people that do work hard will take the continent.
For African education institutions it is imperative to teach management skills, technical skills and to create solutions to real African challenges. Africa is going to need a lot of skills to transform and cost effective solutions to make this work is now more important than ever.
So if we can stop selling our roads and buildings and investment opportunities to foreigners – there is hope that Africa can start moving towards a new way of thinking. This way will be one in which the challenges that we face every day gets acted on as opportunities and where groups and teams of investors combine to take on challenges and make money doing it.
For everything that is imported – we must be asking ourselves how will be have an African version of this? For every dollar that gets transacted in Africa – we must ask why the local currency was not good enough for this transaction.
The African way must become – “We solve our own problems here!”. When Africans direct their pride to African solutions and step up in the desire to really have self-determination – then Africa will grow. Africans have always found ways to overcome the toughest conditions and if we take this into the next decade as our call to action – then we will see a new Africa emerge.
As a business, it is important to ask if you have an Africa strategy and what this entails. Africa is a major opportunity – but Africa is also not an easy opportunity.
A feasibility study is recommended for expanding into a country and as a minimum needs to cover
- Legal form required in the new country
- Key markets that can be serviced
- Pricing of goods and services that will be offered
- Regulatory requirements
- Physical location
- Cultural factors of doing business
- Availability of suitable human capital
- Marketing strategy
- Financial planning
It is further important to consider how that operation will be managed. It is a big decision to deploy expats or to recruit and manage in country as both decisions have implications. Communication is critical in both instances and it is important to ensure that communication channels are established and acted on.
The crucial consideration is to know that expanding to any country has a financial implication and you should be ready to invest in order to get returns. This is not always well understood and many businesses under-estimate the required investment in branching out. This should not be a deterrent – but must be considered when putting together your strategy.
The next twenty years will see a massive growth in Africa. As new generations that have been exposed to technology and new thinking start taking the lead in Africa it will be a very definite must to do business in Africa. Every African must take responsibility for creating this investment.