Doing Business In Africa: 4 pitfalls to avoid

David Kipre

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The African continent is vast and presents a huge number of opportunities to do business. It could be import-export targeting African markets, developing real estate projects with high potential or creating various service companies in the African market.

However, as elsewhere in the world, there are many reasons that can make your entrepreneurial adventure in Africa more complicated than you might think. Whether you’re in the diaspora or even if you’re on the field, there are many pitfalls you should avoid when venturing into business in Africa. Here are 6 pitfalls to avoid.

1. The wrong choice of partners

A quick survey made us realize that most entrepreneurs in Africa entrust their business to relatives. These are people living in the diaspora or even in some cases, on African soil. They entrust their projects to friends and family members.

This configuration has advantages. For example, it allows them to know the person in charge of their project. It also allows them to “keep the money at home“, to create an ecosystem of wealth creation. On the other hand, however, this type of choice can be very damaging.  It can create harms that, in our opinion, outweigh the benefits. The downsides can include:

  • Lack of seriousness due to extreme proximity
    • Inability to deal with breaches properly
    • Difficulty in prosecuting a fraud (suing your brother, sister, friend…)
    • Temptation to not follow the chain of command

Apart from the choices following proximity, it could also be detrimental to choose partners, collaborators or employees based on factors other than the primary factor of competence.

2. Not knowing the terrain or business of the region

Africa, as we said before, is big. There are different realities in each region. It will be necessary to adapt your business plan to the location in order to be successful. Africans have particular norms and histories. Acting as a business without taking these realities into account can be dangerous.

We remember the mistake of the brand H&M. They tried to sell clothes with the words “I am the coolest monkey in the jungle”.  Anti-racist activists came down on her. The brand was forced to apologize.

Other more subtle mistakes for your business can be made if you don’t study the business or surround yourself with partners who know the business. Even the most subtle mistakes can be very harmful to your company’s image and your turnover. Stay humble, ask questions and learn the culture of the area.

3. Ignoring the regulations of the country’s authorities

In some (many) countries in Africa, there are habits and government regulations that may seem strange. It is important to be aware of them.

For example, some African countries have a very high level of corruption. In other countries, there are written rules that nobody practices on the ground. Nobody seems to know them. Elsewhere, there are unwritten rules that everyone respects. By the way, it’s not just in Africa.

If you are not well informed, you will pay more taxes than you have to pay, you will miss opportunities, you will not be able to acquire your operating licenses…

Learn the rules of the “game” in the marketplace and play to your advantage.  

4. Ignore the aspects related to the purchasing power of the populations

 Africa is a continent with very diverse economies, ranging from stable to unstable. Africa’s economy consists of sectors ranging from agriculture to mining and quarrying. Not all African countries are equal.

The World Bank defines the poverty line as an income of $1.90 per day or less than $2 per person per day. Some people consider these figures to be inaccurate because they do not take into account the cost of living in different countries or cities. Some African countries are rich while others are poor.

It is therefore important to determine whether the market is suitable for the product you want to sell there. A product that is too expensive will not be successful.

5. Bonus

To succeed in business in Africa, it is important to be in a circle that can guarantee you access to business opportunities.  We provide you with the Telegram Opportunities Insiders group. It will give you a head start on opportunities.

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