Doing business in Africa is becoming more appealing and simple For Western Companies that are discovering new prospects on the African continent. Due to this, even though China is the primary investor and provider on the continent, both European and American nations are putting measures in place to get access to African markets.
In addition to the reforms that the majority of African nations have been putting in place over the past ten years. Western businesses should consider several factors in making Africa their target market in the upcoming years.
There are many reasons provide that Investment in Africa is one of the best Business to manage,
In this article we mention the 6 secrets to opportunities for Business in Africa since Business in Africa plays an essential role in solving the continent’s biggest challenges.
Reasons to Investment in Africa
Africa now has 1.3 billion people, but by 2050, that number predicted to double, and this is a great indicator that there are many opportunities for doing Business in Africa
Consistent economic development:
The International Monetary Fund expects that projects in Sub-Saharan Africa will have an average annual growth of more than 5% over the next three years.
Africa is the continent that has the most financing from multilateral institutions (World Bank, African Development Bank, etc.) to undertake investment projects in infrastructure, energy, environment, agriculture, training, etc.
Potential Country risk:
Several African nations, including Ghana and Côte d’Ivoire, have a national risk rating of B from the French insurance company COFACE, making it permissible to cover both export and investment activities in these nations.
The Emergence of a middle class:
There are many countries such as Egypt, Angola, Nigeria, Senegal and South Africa with a growing middle class that is in a position to purchase imported products. Which means that here is a necessity to increase the opportunities of doing Business in Africa
For European nations, particularly those in the Mediterranean region, Africa is a close continent in comparison to Latin America or Asia.
Although the business elites of African countries have received their education in Europe, primarily in the United Kingdom (East African countries) and France. The African business culture is very different from that of the Western world.
This is true despite all of the incentives for doing business in Africa. Western Companies must consider five crucial factors while dealing with Africans, as listed below.
Five Essential Factors while Dealing With Africans
1- PROFESSIONAL/PERSONAL RELATIONS
In Africa, personal and family responsibilities take precedence over work. The foreign negotiator must put some effort into making friends. There is a lot of formality, but there is also a lot of hospitality. The foreign CEO should not act arrogantly or bring up how behind the times Africa is since Africans are immensely proud of their nations. A network of relationships with officials in government ministries and businesses must be established to reach them, or they must be reached through local agents and representatives with the right connections, given that many transactions in Africa are directed towards the public sector.
2- USE OF TIME
It is one of the few things in abundance in Africa. Showing haste can provoke rejection or mistrust. There is a concept of the past and the present, but not of the future. Negotiators concentrate on what is happening now, mostly in the short term. Business planning does not exist. Issues must be dealt with on a one-to-one basis; otherwise, a lack of seriousness may be conveyed.
3- COMMUNICATION RECOMMENDATIONS
Communication in Africa is “high context”, indirect, and not very expressive. Education and etiquette are highly valued; professional titles used in presentations. Africans are very careful in their comments: they often tell their interlocutors what they think they want to hear so as not to make inconvenient remarks. On a personal level, Africans are rather reserved; they do not convey too much emotion or express thoughts on deep subjects. They prefer to keep the conversation on a superficial level. It is not appropriate to enter into political or religious conversations as this could offend the sensitivities of the other party
4- ARRANGEMENTS AND CONCESSIONS
Most African nations, especially those that were historically British colonies (Kenya, Nigeria), concessions slowly make throughout the negotiating process. The essential aspect of the negotiation is the price. A common tactic used by buyers is to ask for price reductions to mention competitors’ offers. The request for concessions uses direct language, and usually, the conceding party shows an attitude of displeasure.
Relationships with people and verbal agreements are more significant. It is challenging to initiate claims for the violation of contract terms in jurisdictions with weak legal systems.
5- DECISION MAKING
In Africa, the “Big Man” as they are sometimes called or the leader of the organization has authoritarian and centralized control over business choices. Loyalty and trust between managers and employees are highly valued and play an important role in decision-making. The norms derived from tribal culture can be more important than the rules set out in the country’s legal codes.
The different cultures that condition the negotiating style of African executives should therefore be associated more with ancient kingdoms or tribes (there are more than 3,000 of them) than with national borders. African culture is a strange mix of ancestral customs and Western values inherited from the colonial era, with significant differences between countries.
The potential for Africa’s growth as a market for Business is still increasing, and the investment opportunities are still open widely which plays a transformative role in solving the continent’s biggest challenges.
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