According to the Overseas Private Investment Corporation (OPIC) and the UN trade agency, UNCTAD, Africa offers the highest return on direct foreign investment in the world, far exceeding all other regions. While petroleum products are the driving force behind those returns, other sectors offer impressive growth. One of the fastest growth areas is telecommunications.
Africa is of increasing strategic interest to the global economy. The continent is expected to soon provide the US with more petroleum than the Middle East. The top supplier of oil to China is Angola. China and India are rapidly increasing their business dealings with Africa. These new power-houses are often beating out American and European firms.
Starting a business in Africa can be a great way to reduce your manufacturing costs. It can however be a challenge to get started. There are a lot of differences between running a business at home and in Africa, and you need to make sure that you understand this before you start your business.
The first thing that you are going to have to do in order to start a business is to get all of the necessary approvals and permits. This can be a real challenge as many African countries lack the bureaucracy to handle this. In addition there tends to be a lot of corruption, which makes things even more difficult, so you would be best advised to start the process a long time in advance.
One of the things that you are likely going to find if you try to start a business in an African country is that you will need to have somebody local to help you. In many cases there will be laws that require that locals own a certain percentage of the company. Even if this is not the case, you are going to want to have somebody with local knowledge to help you so it is important to find a contact that you can trust in the country that you are planning to start your business in.
Africa offers a consumer base of more than 900 million people. While more than half of Africa is estimated to live on a dollar or less a day, the other half does not, and they are hungry for products and services. Even among the poor, there are surprising opportunities. Incremental profits may be low, but vast numbers of potential consumers can result in high overall profits.
Before you make a decision to start a business anywhere in Africa, however, you are going to want to make sure that the necessary infrastructure is in place. This is particularly important if you are planning to manufacture a product. Things that you take for granted at home like a regular supply of water or electricity may not be available. In addition you may find that there are no employees available who have the necessary skills. That being the case before you spend any serious money you want to check all of this out to make sure that you can actually get the business up and running.
There are a lot of benefits to starting a company in Africa and if you do it successfully you can dramatically reduce your costs. You do have to understand however that it can be a very frustrating experience to get your business started. You are going to want to make sure that you give yourself lots of time and that you have lots of patience. You are also going to want to make sure that you get help from people who have experience in the country you are planning to start your business in.
The risks of investing in Africa remain high, just as they are for most emerging markets, but keep in mind that the perceived risk is much greater than the real risk. Starting your own company is serious business and for that professionals should always be consulted to guide you in proper directions.
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