Africa in the Center of the Global Prosperity Battle - Doing Business in Africa

Africa in the Center of the Global Prosperity Battle

Posted: May 19th, 2014 by: HartNamtemah Team

By Kathleen O'Connor in collaboration with Marc Andre Hart.  

Africa is an important player among emerging markets. On one side, there are countries like France, Germany, the US, and Japan on the lookout for new buyers for value-added products as well as opportunities for entrepreneurial growth. On the other side, China is looking for partners to maintain its power in the production of low-priced products. They are searching for low-cost raw materials, as well as for buyers who require low-cost tools and might not be able to afford European quality. Africa is at the center of this international division.

Over time, Africa is set to become a source of survival for countries looking to expand their economies. Within the next 10 years, experts believe there will be an increase in real estate costs as well as in salaries at all social levels across the continent. This is why early contractors and investors will benefit from taking the plunge now and riding the wave of exponential growth Africa is expected to see in the next few years.

Roadblocks to Economic Growth

Perhaps one of the issues investors might find with doing business in Africa is the impact of cultural differences. It remains to be seen how the continent will respond to cultural diversification, especially in more conservative African nations. It’s still too early to tell how the local people and the government will handle greater international participation in local commerce. If the process becomes one-sided or abusive towards the local economy, new rules will need to be put in place. After all, the point of establishing foreign relationships is to ensure that both parties benefit.

Because this is an ongoing process for much of Africa, investors should be open to change and a fluid marketplace. This gives them a chance not only to learn from the growing economy, but also to help shape it into a successful market. For example, experts believe that one of the challenges in growing Africa’s economy will be to find a qualified workforce at a reasonable cost. That means investors will have to spend time training workers and give the local workforce time to adjust to Western standards.

There Are Challenges, But Also Enormous Potential

Infrastructural stability might be another big challenge in modern Africa. It might take up to 20 years before the continent’s infrastructure is anywhere near what Western investors expect. In a recent report by China Daily, the company China Hyway Group Limited, which has numerous ongoing construction and manufacturing projects in Mozabinque, Guinea, and other African countries, says there are challenges to building in Africa but also a lot of potential.

Some African countries are more stable and accommodating than others. For example, development in South Sudan has been slow because of recent unrest, but Angola has grown significantly over the past couple of years and now has a few railway lines connecting its towns and cities. For investors searching for opportunity, Africa caters to a variety of risk and comfort levels – it’s just a matter of finding the perfect match.

Doing business in Africa remains a challenge in many regards, but those who take the plunge can also reap countless rewards. Would you be willing to develop and support innovative African ventures? Or are you more comfortable with tried-and-true business opportunities? 

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