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Business in Africa

Our sister company, Diversity Resource International recently co-hosted a networking event with the British African Business Alliance to encourage business leaders in Sussex to look at how they can work with their African counterparts or the continent itself; and with good reason, as Africa is seen as the ‘final frontier’ of emerging markets, and it has been growing in popularity over the past few decades. Africa is rife with opportunity and investment, featuring a huge and young population keen for work, expanding trade links and growing economies. However, the continent can be a daunting place to set up a business, and it seems for every opportunity there is a handful of risks or obstacles. So what are the pros and cons of setting up a business in Africa?

Africa offers the highest return on foreign direct investment in the world, according to the Overseas Private Investment Corporation (OPIC). The first benefit of investing in Africa is the huge amount of natural resources that the continent has to offer. From oil and uranium through to diamonds and gold, and many of these materials remain untapped due to a lack of infrastructure and finance. Perhaps the most important factor is the population of Africa; The continent makes up for just under 15% of the world population. This means there is a truly massive consumer base, ready to utilise the appropriate products.

However, as mentioned there are risks to working in Africa. Governments in Africa are known for their corruption, and this can translate to a lack of policy or obscure procedures. These factors can lead to further problems such as extortion and nationalization, as well as just making it difficult and long-winded to do business. Another issue is infrastructure – the electricity grid and roads of Africa are poor compared to other developing countries. Finally, conflict -while generally declining in Africa- is still a major issue, and a change in regime can seriously affect a business.

Some final things to consider are the vast amount of languages spoken in Africa, and similarly to China business is built on relationships rather than transactions – a good reason to get involved with business leaders at certain networking events! Ultimately, Africa is a smart place to get involved in and as conditions get better more and more people will get involved.



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