“His stress on contacts and people has a corollary: it is advisable for foreign entrepreneurs to enter into partnerships with local people when launching their enterprises”

Africa is often stereotyped as a continent of failed states, military coups, corrupt and brutal rulers, wars, deep and enduring poverty, astronomically large debt burdens and continuing dependence on foreign aid.

Like most stereotypical thinking it contains a kernel of truth. But there is a much larger truth that needs to be taken into account.

While Africa attracts a miniscule share of the world’s foreign direct investment, a mere 2 % according to Paul Runge, a Johannesburg-based Africa consultant, there are palpable signs that it is beginning to steadily and perhaps even spectacularly increase its share.

As recorded in State of the Nation 2007 - which includes an excellent chapter on “South Africa in Africa” - new investment into Africa increased by 50 % between 2004 and 2005 and the trajectory is still upward.

It is a positive sign for a continent that is too often dismissed as incurably backward with a cynical shrug of the shoulders.

Another equally positive sign is the growth in the continent’s annual gross domestic product. It stands at 5.1 % at present. While the growth is admittedly off a small base, it is nevertheless an auspicious development; particularly as it is full 2 % higher than the world annual average gross domestic product growth.

A caveat needs to be added. Africa’s current growth is largely powered by the spectacular rise in commodity prices. Africa, which has large reservoirs of oil and deposits of minerals, is benefiting from the world demands for these natural resources. Commodity prices, however, are subject to the boom and bust phenomenon: hence the cautionary note.

Fortunately, however, the propitious indicators are not confined to oil and minerals. There are positive indications that Africa’s reputation as a continent characterised by destructive internal strife is beginning to be countered by successful resolution of several of these internecine struggles.

The last 18 months have seen the settlement of apparently intractable disputes in the Democratic Republic of Congo (DRC), Liberia and Sierra Leone and, as important, the holding of elections that have been judged by international observers to be free and fair.

These states have not been changed in utopia. The DRC, with its huge geographical dimensions and its highly diverse population, still has problems to overcome and challenges to meet So do the Liberia and Sierra Leone, though on a smaller scale.

These developments have nevertheless made them much more attractive to foreign investors.

The conspicuous improvement in their stability and transparency of their policies means that investors are not hostage to the unpredictable whims of petty tyrants or the fortunes of war.

Runge, who talks about the Africa’s improving prospects with the conviction of a preacher of the gospel, cites Rwanda as a state that has survived the trials of a genocidal war and emerged as though it has been resurrected from a corporate death into an investor-friendly and viable polity.

Runge commends South Africa as a base or springboard for expansion into Africa for foreign companies in general and multi-national corporations in particular. Apart from the advantages of location, South Africa is the most developed state in Africa and the one best equipped to facilitate economic expansion into the rest of Africa.

Since the late 1980s when the first clear signs of reform away from apartheid began to emerge in South Africa, and perhaps particularly since its watershed non-racial and fully democratic election of 1994, South African companies have moved into Africa with spectacular success.

It is possible today for a South African entrepreneur to sit in the lounge of hotel in, say, Kinshasa owned by a South African company, sipping beer brewed by a South African brewery, watching a South African rugby match courtesy of the South African-based DSTV television company.

One of the most striking South African successes in Africa has been the extraodinary achievement of the South Africa-based MTN company in capturing a dominant share of the cellular phone market in Nigeria.

To quote from the State of the Nation 2007: “[It is a] demonstration that business can be done and money made in Nigeria. In MTN’s wake most of South Africa’s companies have set up shop in Nigeria, selling commodities and providing services to Africa’s largest consumer market.”

Two relevant points should be noted en passant:

• These achievements invited the deduction that Nigeria’s reputation for streetwise crooks at home and high expertise in fraudulent dealing abroad owe as much to urban legend as to reality.
• Nigeria is the third most important African market for South African exports after Zimbabwe and Mozambique (both of which share boundaries with South Africa).

It is erroneous to think that South Africa has a position of unassailable economic dominance in Africa.

Far from that being so, South Africa is increasing challenged by United States, Britain and most spectacularly, China (whose president, Hu Jintao has visited Africa three times in the past three or four years) India (which is asserting its presence aggressively) and Brazil (which has notched successes in Portugal’s former colonies).

Runge who speaks fluent French, adds another state to the above list: France. He thinks France’s presence and the tenacity with which it defended its stake in Africa and fought to extend its influence is vastly under-estimated.

To substantiate his point, he rattles of a list of French possessions around the world and comments, “It used to be said that the sun never sets on the British Empire. It can still be said about the French Empire today.”

He relates that he is often asked to list the three most important perquisites for successful entrepreneurship in Africa. His answer is contacts, contacts and more contacts. . People are perhaps Africa’s most important resource.

Hence his emphasis that contacts are indispensable to entrepreneurs venturing into Africa for the first time. He admits that a fourth quality is often important too: patience.

His stress on contacts and people has a corollary: it is advisable for foreign entrepreneurs to enter into partnerships with local people when launching their enterprises. The entrepreneurs need to develop their own models for black economic empowerment in order to enlist the intelligence, drive and profit-driven energy of the emerging modern African generation.

It is perhaps apposite to end with a quote from Robert Calderisi’s widely praised book, The Trouble with Africa: “Most Africans are heroes, coping with obstacles that would have flattened the spirits of others. Ingenuity trumps daily over adversity.”

(Patrick Laurence is a Johannesburg-based independent political analyst.)

The approximate 300 Chambers of Commerce, (and its members), located throughout Africa are an invaluable resource for any organisation wishing to conduct trade or to establish business in Africa. These Chambers of Commerce can provide expert regional and local knowledge – offer economic, political and financial advice, and its networking opportunities through their member organizations is essential to undertaking business in Africa. We encourage organizations interested in establishing trade relations with African companies to make contact with the relevant Chamber of Commerce. Please see a list of the different Chambers of Commerce below.

Should you wish to participate in this campaign please Register Here: