As part of the MaDI program, we are lucky enough to have regional and country seminars that are based on ‘doing business’ within a particular place around the world. For a Master’s in International Business, seminars like these are going to come in handy. They are given by an industry expert, such as Katia Marínez from HOW2Go who came to speak to us on 13th April about doing business in Sub-Saharan Africa.
Doing Business in Sub-Saharan Africa
Sub-Saharan Africa is defined as the African countries located south of the Sahara, more or less! Some Arabic countries fall between the north and the south ‘region’ of Africa, such as Nigeria or Somalia. However, those countries follow Islam and their main language is Arabic. Therefore, they remain a part of the Arab States and not Sub-Saharan Africa.
When it comes to doing business in Sub-Saharan Africa, it is a good idea to get your head around the difference between the ‘north’ Arab States and the ‘south’ Sub-Saharan countries as the markets are completely different. For example, if you are a producer of Spanish ham, you might want to stay away from the Arab states as pork is a forbidden food according to the Quran.
What language should you speak?
Many people think that people from Africa will speak English as a first or second Language. This is not entirely true and is a misconception most likely due to South Africa. Africa has up to eight official languages (and we are not counting the dialects), that if you are planning on doing business in a particular part of Africa, you’ll need to ensure that you can communicate.
A way “in”
It’s a good idea to inform yourself on the connections between the countries within Sub-Saharan Africa. By doing this, you can take advantage of the different ways to enter and expand within Africa. Similar to how Spain is an “in” to the European Union or how Mexico is an “in” to Canada due to their NAFTA connection. Many segments of Sub-Saharan Africa will have the same language, currency, and regulations. For example, eight countries in the north region of Sub-Saharan Africa share the same currency which is actually fixed with the Euro. This is going to reduce the risk greatly for European companies that are trying to enter with their product.
Pan-Africanism is a political/cultural movement which strives to unify all African countries under one sovereign state. Recently, the African Union stated that they do want to go further with the idea that Africa could one day be under one economic union. However, not much yet has been done in regards to reaching this goal.
The government body would also like to take advantage of the products Africa has. At the moment, Africa produces many products from the land, such as fruits, vegetables, nuts, and cotton. When it comes to cotton, they usually sell it in its natural form. By doing this, they are not taking advantage of what they have. They should be turning the cotton into sellable items to be sold at a higher price.
African countries rarely do business with other African countries, they highly depend on the exterior. For example, traditional African dress is made in Holand! As mentioned before, Africa is not taking advantage of the resources that they have.
Global Peace Index
Interestingly, if you take a look at the Global Peace Index (which is updated each year), it allows you to compare the risk of countries all over the world. You will be able to compare the risk against ‘thought to be high-risk countries like Africa’ against countries that perhaps you feel less afraid of or know more about. Africa’s GPI map may surprise you! You will also find information on political instability and terrorist risk.
Sub-Saharan Afric Data
- GDP growth: The second region in the world with the highest GDP growth rate.
- Demographic growth: The younger population (25 years and under) grows at 3% annually.
- Urbanization: Average annual growth at 4%.
- Development of ‘middle-class’: Gradual growth depending on the country.
Sub-Saharan Afric Opportunities
Africa is the future and the future is today! A country that is growing is a country with opportunity, Africa has agriculture, infrastructure, health, diamonds and gold, urbanization, tourism, oil, energy and so on. There are opportunities for business ventures in Sub-Saharan Afric that we should be taking advantage of.
Doing Business in Sub-Saharan Africa: Guidelines
Be prepared, Respect the way things work and adapt.
Perceptions of time:
Be patient, they will respond when they have an answer. Don’t go in all guns and blazing!
Personal relationships are essential:
Put the time in, have an interest in the culture and don’t just talk about business.
The boss is the boss:
Respect the hierarchy.
Presence is key:
To be successful in doing business you’ll need to be there! One trip followed by an email is not enough, it doesn’t work like that. You have to put the time in, show your face and invest.
Be polite and inform yourself about the culture and the differences the different parts of Africa.
The offer has to be of quality and in keeping with European standards.
Where possible, contract local people.
So, if you are thinking about doing business in Sub-Saharan Africa, don’t let pre-perceptions put you off. If you do your research, you’ll have a world of opportunities at your feet.