Over decades of working on African issues – analyzing governments and economies and working with businesspeople wanting to enter African markets – it has become clear to me that while doing so is neither simple nor easy, it is well worth the effort. It is not, however, for those who give up easily.
The first thing to understand is that Americans and Africans approach business (and indeed life) quite differently. American businesspeople are more oriented to getting straight to business; it’s not often personal for them, especially in international trade.
This is in marked contrast to the more relationship-based commercial practices of African businesspeople. Africans want to know who they are doing business with.
Americans believe in vetting their partners, but it is more focused on business practices and numbers in commercial activity. Africans want to know who you are as a person and your familial relationships to determine your character.
I have found that this relationship-driven style in Africa can offer both drawbacks and benefits to Americans.
Because of the relationship style African businesspeople use, they try to build on these connections, and when partnering with Americans coming onto the continent, their first recommendations for contractors and vendors will be with their relatives and friends – both because they use them and also to help family and friends achieve success in business.
Of course, the upside in this style is that once an African business partner comes to know you and trust you, he or she can recommend partners in other ventures and open up broader opportunities for the American partner. For Americans unfamiliar with the commercial environment in African countries, this can create an entire network of partnership opportunities, even in sectors not originally considered.
Moreover, it allows a trusted American partner to bring in others who come under their mantle to do business in an environment of existing relationships.
Another factor Americans often overlook having to do with families in Africa is that most Africans are responsible for more than their immediate family. While African Americans tend more to honor extended families than other Americans, increasingly such broader familial relationship are being neglected.
Consequently, such relations are often not considered when forming partnerships in Africa. The tendency of Africa employees to stay off work to take care of family or to seek additional employment to meet broader financial needs is not taken into account to the extent that it should be.
These are not frivolous matters and involve commitment that cannot easily be laid aside.
Improvement
There are other challenges to doing business in Africa that must be acknowledged. These would include too much red tape in establishing and operating businesses.
We have a lot of that in America, but there is the realization here of how it depresses business formation and operation, and there are those in government who attempt to restrain the bureaucratic impulse to exert control through regulatory action. That has not yet been adopted broadly in many African countries where colonial legacy paperwork and procedures can smother new businesses.
However, a 2014 World Bank report showed that even then there was an improvement among reforming African governments. Doing Business 2015: Going Beyond Efficiency found that Benin, the Democratic Republic of Congo, Côte d’Ivoire (Ivory Coast), Senegal, and Togo were among the 10 top improvers worldwide, having improved business regulation the most in the previous year among the 189 economies covered.
Since 2005, all countries in the region had improved the business regulatory environment for small and medium-size businesses, with Rwanda implementing the most reforms, followed by Mauritius and Sierra Leone. The report series showed that over a five year period, 11 different sub-Saharan African countries appeared on the annual list of the 10 global top improvers.
Some had done so multiple times, such as Burundi, Cabo Verde, Côte d’Ivoire, and Rwanda.
Nevertheless, Senegalese entrepreneur Magatte Wade, in a YouTube commentary, says that overregulation is an under accounted for reason for economic failures in Africa.
“Africa is the poorest region in the world today because it is the most overregulated. It is the place in the world where it is hardest for entrepreneurs to do business period,” she says.
If we can overcome the outdated concept that US-Africa trade is a government-to-government matter, then genuine progress can be made in linking businesses who stand to enjoy mutual benefit, and intermediaries seeking to take a cut in commercial activity without contributing to the ventures involved can be bypassed
The mere perception of corruption also is an impediment to those new to Africa. Then again, there is a reality behind the corruption.
Transparency International, which monitors transparency worldwide, stated in a 2015 report that nearly 75 million people in sub-Saharan Africa are estimated to have paid a bribe in the past year – some to escape punishment by the police or courts, but many forced to pay to get access to the basic services that they desperately need.
In the United States, there continues to be corruption, but the Foreign Corrupt Practices Act prevents American businesses from getting away with paying bribes to do business abroad. The Organisation for Economic Co-operation and Development (OECD) is an international organization that works to build better commercial and economic policies.
Through its Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, it is supposed to prevent bribery as the US law does. However, some governments cleverly include payments that amount to bribery in their laws without calling it bribery or just look the other way at bribes paid by their companies.
This allows them to outflank US firms that hold to the American law.
Linking Businesses for Mutual Benefit
Both overregulation and corruption are challenges that are being addressed, but it takes time to unravel problems that developed over decades. They will not be solved overnight, but there are mechanisms developed to help successfully address these issues.
Prosper Africa was created in 2018 to serve as an intermediary between African governments and the US government, but more importantly between US and African businesses. Having worked on the development of Prosper Africa, I know that the intention was to overcome challenges to increase US business and investment on the continent.
It has had success in achieving those goals.
The President’s Advisory Council on Doing Business in Africa (PAC-DBIA) since 2014 has advised the President, through the Secretary of Commerce, on ways to strengthen commercial engagement between the United States and African countries. Members are selected from small, medium, and large U.S. companies across the United States representing a diverse range of industries and economic sectors to serve two-year terms.
As the liaison for the US Agency for International Development during my tenure there, I participated in discussions with the PAC-DBIA and traveled to Africa with the group. Its members are well aware of the challenges to doing business on the continent, but every two-year term new US companies want to join to help overcome the disadvantages identified.
There is little pessimism about achieving that goal.
Multinational companies such as Boeing, Coca-Cola, Caterpillar and Exxon have used their economic might to avoid these challenges. It is the small and medium companies that need help to navigate often difficult environments.
This is imperative because not only are connections between small and medium companies on both continents the key to mutual economic development, but small and medium enterprises are the real job and wealth creators that have the deepest economic impact.
Business anywhere in the world poses challenges that must be identified and defeated. Thus, Africa is no different except in the fact that reform has been slow in coming, partly due to colonial bureaucratic legacies and interference from foreign interests that care more about their own prosperity than in assisting Africans to enjoy their own earned increased wealth.
If we can overcome the outdated concept that US-Africa trade is a government-to-government matter, then genuine progress can be made in linking businesses who stand to enjoy mutual benefit, and intermediaries seeking to take a cut in commercial activity without contributing to the ventures involved can be bypassed.