How Do Investors Enter Africa?
Whether you represent a large company looking to expand in to Africa, or you are tasked with building a start-up in the continent, how do you go about setting the foundations for success? There is no doubt that the African continent offers very lucrative opportunities for investors. If you have a service or a product, the chances are you will find a huge market to sell to, but of course, every investment comes with its risks.
If you go to any conference or talk on business in Africa, you will invariably hear people talking about all the risks that are involved in doing business in Africa. From corruption to security issues, there is no shortage of people explaining why to worry about your African investment, but whilst these worries need to be considered, they don’t need to inhibit your chances on the continent. If you have the right person to lead you through the process in its entirety, that you can trust fully to give you an honest opinion, these risks should not affect you.
There are couple of ways in which potential investors navigate their initial African experience. Firstly, there are the businessmen/developers that fly down with business class, are picked up from the airport, driven to an exclusive hotel, enjoy a nice comfortable sleep and breakfast and then get driven off to their investment interest, their embassy or meetings. If they are lucky, they will find some time to do a little tourism and eat in a nice restaurant, but before their trip back home, it is unlikely they will get a real feeling and understanding of the culture and atmosphere of the society.
Without this feel and understanding, how is it possible to know whom to trust, or what decision to make regarding your business? Whether you decide to go forward with your business, or put it on hold and wait for a better time, or location to set up, you need to make those decision based on a real life understanding.
Another way in which investors often enter the country is through a partner on the ground. In many instances these partners have the best interests at heart, but in some circumstances they are chancers. I have met people that met necklace sellers at Cape Coast Castle, a popular tourist destination in Ghana, who promised them a meeting with the president as part of the initiation of their business. Of course, this didn’t and couldn’t happen, but it is remarkable how many of the smaller foreign investors believe these stories.
Investors need knowledgeable support that has both their interests and the interests of the society at heart. The support must have an understanding of both cultures and the experience to guide the investor through real life, as well as give frank advice on who to trust, and what decisions to make.