Doing business in Africa can be safe and easy, and I will reveal to you in a moment which countries you need to choose if you do not want to deal with ‘the typical headaches’ of doing business in Africa.
I think this is an important issue to many Africans in the Diaspora: finding ways or alternatives that allow us to throw some of our worries over board. One alternative I already addressed in my blog was to start your Africa business from abroad.
Now here is a small indicator how much the matter really is of importance to many: Towards the end of last year I posted a question in one of the Africa groups on LinkedIn asking why the African Diaspora would not do business in Africa given the huge pool of opportunities out there. Rather unexpectedly, my post sparked huge interest and passionate discussions. I am not sure how familiar you are with LinkedIn groups, but posts and top contributions usually rotate on a daily basis and you can be lucky if people comment at all. But: my post was rated the top contributing post for 4 months! And what that really tells us is that many Africans in the Diaspora are concerned.
I counted all the comments that gave particular reasons why many would not return. And while a significant number felt optimistic, those responding though that 1) bad governance, 2) corruption, and 3) poor infrastructure where the main reasons that were holding many Africans back to build a business.
Oh yes, and lack of information…I hope I can contribute to narrow down that gap a little.
But it is indeed bad governance/bureaucracy, corruption, and poor infrastructure that are rated in various professional Africa surveys as the top obstacles towards doing business on the continent.
But here are good news for those who worry too much. There are countries in Africa where doing business is both safe and easy. We should all move on from only wanting to do business in our country of origin at all cost….instead, you should focus on the best markets in Africa and take into consideration any issue that is of considerable importance to you – such as security fears. If the worries about insecurity are indeed interfering with your decision making, you should know that there are options.
So here we go, and by the way, I am using data from the AfDB and the World Bank.
TOP 5 countries – Best Governance Score
3. Cape Verde
5. South Africa
TOP 5 countries – Least Corruption
2. Cape Verde
TOP 5 countries – Ease of Doing Business
2. South Africa
Ok, we can already see a trend. But we are planning to start up a business, so we need to look for markets that are fairly dynamic and that allow easy expansion into other countries. Seychelles and Cape Verde are somewhat limited in this regard, although Seychelles does come 6th right after Ghana in regards to ease of doing business in Africa. Cape Verde does not have a strong position regarding the ease of doing business, so the two are out.
South Africa is without a doubt Africa’s most developed market, but the real issue in the context of this very post is the high crime rate in South Africa. On the other hand, the country provides other form of security and convenience through a well developed infrastructure.
Rwanda is certainly among the top when it comes to the low level of corruption and the ease of doing business there. So it is a country to seriously consider. It does not have top scores regarding governance, but at position 15 out of 54 countries it is not doing too bad in this regard.
The winners therefore are:
Botswana and Mauritius
(Followed by Rwanda and South Africa)
Botswana and Mauritius are both growth countries and both governments are putting a great effort into attracting businesses and investment in. Both are small countries, which are never the less attracting increased attention from the business and investment community. Mauritius is of course not on the main land, but it is among the world’s top 20 countries in ease of doing business and it is trying to establish itself as the new gateway to Africa. Oh, and it’s a tax haven, which comes in very handy for any business….but especially when considering that high tax rates belong to the 5 top obstacles of doing business in Africa according to the African Development Bank.
So if you do not want to worry about lengthy business bureaucracy, corruption, poor leadership, re-occurring conflicts, or high taxes then Botswana and Mauritius are your best choice (according to the ranking figures I have to stress).
It would be really interesting to hear what you think regarding the risks of doing business in Africa.
Source: Jumpstart Africa