With an emerging middle class of 400 million people, 10 of the fastest growing economies globally, and the most youthful population of any region, Africa is a continent of significant opportunity. There are also risks, as there are anywhere, including the challenge of combatting corruption, navigating opaque regulations and developing a skilled workforce. Below are tips for business success in Africa:
Build Personal Relationships: Most Western businesses are data driven and transactional in nature. Business in Africa is predicated on relationships. Developing personal relationships and trust with business counterparts and government officials is a key dimension to commercial success. Leaders in government and business on the continent will take time to understand what is being presented to them and ensuring that any transaction is genuinely win-win.
Engaging Government: The role of government in the African business environment is more pronounced than in most other regions. It is important to reach out to key decision-makers at various levels of government to keep them informed of broad commercial objectives. This can be done in a time effective and transparent manner.
Align Commercial and Development Objectives: Every African government has a national development strategy. Whether a company is making an investment in life sciences, ICT, energy or manufacturing, demonstrating how an investment is going to help the government achieve its development objectives in a particular sector is very helpful to commercial success.
Mitigating the Corruption Risk: Corruption risk varies greatly by country and sector, and companies that mitigate it successfully start with a thorough risk assessment and appropriately tailored compliance measures. They also treat compliance as a critical “business enabler,” and use a mix of compliance, government affairs, and commercial levers to mitigate risk.
Investing in Africa’s Talent: It is worth including a high-quality-skills-training program as part of any investment strategy. The appetite and capability of young African men and women to learn global best business practices cannot be overestimated. Hiring locally and investing in career development will pay significant long-term dividends.
Come with Solutions: Some of the most immediate market-entry challenges include the nascent consumer credit market, currency risk, and the need to bring financing for most projects. Products must also be tailored to market realities of affordability and infrastructure limitations.
Local Counsel: Finding the right local counsel in Africa’s 54 jurisdictions can be challenging, especially in smaller markets. Covington has worked on matters in virtually every jurisdiction in the region and can be helpful in identifying, engaging, and coordinating the work of well-qualified local counsel.