
Business in Africa: 1.2B opportunities - Turukawa
http://www.economist.com/news/special-report/21696792-commodity-boom-may-be-over-and-barriers-doing-business-are-everywhere-africas
======
dmix
My African friend tells me stories of how his mother runs a successful rose
exporting business in Ethiopia and regularly pays off bank employees so none
of her (personal) money gets stolen.

In western countries it's almost unimaginable to not be able to rely on banks
to store your money safely. They are typically the most conservative and
reliable institutions among the chain of various business services you'd have
to deal with as an entrepreneur. Without this critical underlying consumer-
level infrastructure in place I'm in no hurry to be a pioneer there.

Despite my friends making similar claims about the endless low-hanging fruit
opportunities there to make money.

~~~
vezycash
There are numerous opportunities there. But the deterrents may outnumber the
opportunities. Examples, lack of electricity, trigger happy governments whose
policies are far removed from reality, insane levies on small businesses...

For foreign investors, having an audience with the government is an unwritten
requirement. If not, they run the risk of their businesses being nationalized
by a new government, or their funds frozen for frivolous reasons.

However for "democratic" African countries, having too close ties with a
particular ruling party could pose problems. The next government could give
one hell for being for the "other party."

Recently, the Buhari administration in Nigeria restricted all funds leaving
the country. Theoretically, no funds were seized. And companies could still
wire out their funds but only after lengthy approval processes and were often
subject to insane exchange rates.

A common question on everyone's lips is - why won't the looters invest in
their countries? That's because the next government makes the seizure of
money, property, and businesses the first order of business for the first half
of their tenure.

In my experience, Africa metaphorically is a jungle. Only psychopath and
predator minded individuals thrive there.

~~~
clarkmoody
It sounds like the problem is government.

~~~
vezycash
It's not just the government. It's also the:

1\. Expectations of citizens

2\. Love of Complexity

3\. Culture of respect

Expectations of citizens

In Nigeria and Ghana for instance, people EXPECT government officials to
steal. One who doesn't would be a laughing stock. (No joke)

Love of COMPLEXITY

Rural dwellers prefer politicians who speak using big words that often make no
sense. Here's an example Patrick Obahiagbon. (Unfortunately, his words make
sense grammatically. However there are those that throw out meaningless
words.)

[https://www.youtube.com/watch?v=I1bt-
GyxiYI](https://www.youtube.com/watch?v=I1bt-GyxiYI)

[https://www.youtube.com/watch?v=kSddKH1ZO-U](https://www.youtube.com/watch?v=kSddKH1ZO-U)

[https://www.youtube.com/watch?v=ozxY6V-vx-0](https://www.youtube.com/watch?v=ozxY6V-vx-0)

City dwellers are not exempt. Big sounding agendas like vision 20/20,
revolutionary council... fool the populace. Moneies are spent but the people
are left the same

The Culture

Many African countries have an undue, almost irrational culture of respect for
elders. For instance, there are differences in verbs and adjectives used when
speaking to someone older than yourself in Yoruba language. Ghana and Nigeria
frown upon the use of left hand for waving, writing, handshake, eating, even
raising of hand for answering a question.

Many have active traditional rulers and kings. Elders typically should not be
questioned, at least not without going the roundabout way of hinting and
finally acquiescing to the the choice of the leader.

This respect for authority extends to the University - which should be a place
for questioning of ideas. I've got lots of painful memories as someone who
prefers practicality over tradition.

Here's a well documented example of the effect of cultural deference to
authorities [http://blogs.wsj.com/middleseat/2008/12/04/malcolm-
gladwell-...](http://blogs.wsj.com/middleseat/2008/12/04/malcolm-gladwell-on-
culture-cockpit-communication-and-plane-crashes/)

------
jefe_
I lived in Uganda a few years ago, and pirating movies, burning them to disc,
and selling them from a brick and mortar storefront was considered a good job
for young people, in the north at least. There are way more than 1.2B
opportunities there. People setup power-strips in their neighborhood and
charge people small fees to leave their phone for a charge. People walk around
the streets hawking everything imaginable, you can buy toilet paper, fresh
produce, posters and toys, all while sitting in a traffic jam. I had a guy who
sold me eggs, and he was my egg guy, and every week I'd stop by and he'd sell
me a carton of eggs wrapped in twine. It's just an overall interesting place
with tons of opportunities and existing ingenuity.

------
Fundlab
Not much has been said about the IT industry. Until recently transaction
processing was a huge impediment as Paypal and the likes were blocking
transactions coming from most of Africa. Then there is an inherent problem of
physical addressing, which also impedes delivery and a host of GPS dependent
services from having a good traction. Much of what has been done recently is
to improvise or innovate to suit existing systems eg Mpesa No recognition for
developers or apps

There is still a lot of untapped opportunities existing at the bottom, You
just have to look closely once the cost of access and speed of the internet,
intermittent supply or electricity and load-shedding issues have been dealt
with.

------
steve19
If you run a large business in Africa there is a very real chance you will
need to bride people, including government officials. Also, many African
countries have captial controls, so getting our money back out requires
breaking the spirit of the law (such as importing good and services at heavily
inflated prices from a company you own in the West).

So need to be willing to break local laws and also break your home country
laws if your country has laws against bribing government officials.

Many people have a moral objection to bribery or a self interest in not ever
risking going to to prison (for me it's both).

In my industry every few years the Feds make a couple arrests for bribing
government officials in Africa.

~~~
tim333
One reason China does ok as they are fairly laid back on that stuff.

~~~
vezycash
It's not just because gift giving is an accepted practice in China. It's
because they are very flexible.

They are VERY willing to offer you a service at any price range you want.
American businesses in particular are not so flexible on price and standard.

One popular way of stealing funds is awarding of road contrasts. The German
company Julius Berger makes solid roads that lasts for at least a decade.

Typically, or rationally, Berger should win every road contract. However, the
officials do not want a road that would last for ten years because it'll cut
their lucrative source of income.

------
nicpottier
What in the world.. I would expect better..

Africa is not a country, you can't speak about it as such. The North, West,
East and South are as different as any two random countries in the world and
within each there is even more diversity.

South Africa is a first world country, Nigeria is a crazy mix of poverty and
development, Kenya is bursting with technology innovators taking their first
steps, Burundi is barely hanging in there.

You can't use the term Africa and make any general statement about it, it is
just too damn big and varied. Most people just have no concept of the scale
there, but I always love pointing people to this map to help:
[http://static02.mediaite.com/geekosystem/uploads/2010/10/tru...](http://static02.mediaite.com/geekosystem/uploads/2010/10/true-
size-of-africa.jpg)

Yes there is tremendous opportunity in various countries there, and yes, they
come with caveats, but please, let's stop treating an entire continent as if
it was a country.

~~~
cb18
South Africa seems to be having a lot of trouble lately, of a sort that
doesn't comport with most people's understanding of 'first-world' country.

[https://www.google.com/search?q=south+africa+trouble](https://www.google.com/search?q=south+africa+trouble)

[https://www.google.com/search?q=is+south+africa+safe+for+whi...](https://www.google.com/search?q=is+south+africa+safe+for+white+people)

[https://www.google.com/search?q=south+africa+violence](https://www.google.com/search?q=south+africa+violence)

Accounts of Johannesburg:

[http://imgur.com/BO5YwQl](http://imgur.com/BO5YwQl)

[https://www.youtube.com/watch?v=IuNYOwKlDIE](https://www.youtube.com/watch?v=IuNYOwKlDIE)

~~~
toyg
Racist 4chan screenshots, really?

South Africa is a complicated country, but it's not like the "first world" (US
_in primis_ ) is completely void of huge ghettoes and racial issues.

~~~
Will_Do
I really don't understand the cherry picking of arguments. Someone posts 6
links and you have a problem with one. So what?

Anyways south Africa is definitely not a first world country. Gdp per head at
ppp is 13k[1]. This is substantially poorer than countries like Turkey and
Thailand that are often considered third world.

Middle income though? Sure.

[1][http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?order=...](http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?order=wbapi_data_value_2014+wbapi_data_value+wbapi_data_value-
last&sort=asc)

------
cb18
Why did stable governmental structures evolve in the west that allow citizens
in those countries to enjoy greater prosperity?

Why is it that citizens with relatively stable but more authoritarian
governments, in the far and middle east for example, seem to enjoy less
relative prosperity than the west? (save singapore)

What makes singapore special?

Is the greater prosperity enjoyed in the west simply a function of the
characteristics of the people living in the west?

Are the types of governments found in various regions simply a reflection of
the people living in those regions?

(I don't mean a one to one reflection, I don't think everyone living under a
ruthless dictatorship have themselves the characteristics of a ruthless
dictator, but are they simply more tolerant or accepting of this societal
arrangement?)

~~~
tim333
It took the west a long time to figure out the stable government structures. I
saw one theory that civilisation started around the Med because it was easy to
get about by boat and was slow in Africa because it was pretty hard to get
about before jet aviation. I figure that now they've got internet they'll
catch up.

Hans Rosling's thing is interesting showing Africa catching a bit towards the
end
[https://www.youtube.com/watch?v=jbkSRLYSojo](https://www.youtube.com/watch?v=jbkSRLYSojo)

~~~
cb18
Interesting video, but the two axis graph he presents is not a particularly
good method for understanding the development of the world. Especially when
one of those axes is average life expectancy _from birth,_ which is mostly an
illustration of the fact that we figured out how to significantly reduce
infant mortality. Yes we figured that out likely due in part to the growing
prosperity in society but there are I believe better ways for understanding
development and prosperity around the world.

Maybe some nations just express their prosperity in different ways. For
example the awe-inspiring artifacts of the ancient cultures in Europe and
other areas. While maybe ancient cultures in the South Pacific were content to
just chill on the beach, or cross the seas, or on Easter Island, do that
Easter Island thing.

 _It took the west a long time to figure out the stable government
structures._

What do you mean by that?

Those 'cultures around the med' were basically the longest lived in the
history of the world. In many ways they are still living.

Europe has enjoyed great prosperity in for over 2500 years. Waxing and waning
in terms of breadth perhaps. But not hard to find throughout the historical
record.

~~~
tim333
I mean that in the UK say, we only moved to a constitutional monarchy and had
a bill of rights in 1689. And there have been glitches like Hitler and Franco
coming to power. Europe has only really been stable and fully democratic
government structure wise since Franco died in 1975.

------
fiatmoney
4 billion by the end of the century, if current trends continue. It is however
likely that Malthus will intervene before then. Depending on exactly what
you're selling, you may or may not want to be anywhere nearby (including
Europe, it looks like) when that happens.

[http://www.citylab.com/design/2014/09/africas-population-
wil...](http://www.citylab.com/design/2014/09/africas-population-will-
quadruple-by-2100-what-does-that-mean-for-its-cities/380507/)

~~~
clarkmoody
Certainly you're familiar with _The Population Bomb_ from 1968[1], predicting
mass starvation by the '80s.

Africa is huge, and 4 billion could live there. But will there be mass
starvation? If they got to 4 billion, then I'd say not ;-)

[1]
[https://en.wikipedia.org/wiki/The_Population_Bomb](https://en.wikipedia.org/wiki/The_Population_Bomb)

------
Snargorf
It's a shame the West abandoned Africa to the warlords and tribal
supremacists.

Think of what Africans could've accomplished with consistent, basic decent
governance from the top, over the last ~50 years. Hong Kong, anyone?

The road to hell is paved with good intentions. White guilt is a staggeringly
destructive impulse. It makes me sad.

~~~
blacksmith_tb
Clearly one way of looking at that is "abandoned after having extracted
millions of Africans (as slaves) and significant amounts of raw materials".
While plenty of guilt for the current state of affairs lies at the feet of
Africans running corrupt governments and industries, most would agree that the
West set the stage. That said, it's hard to know if the people who are
suffering under the current conditions would or wouldn't be willing to
consider outsourcing the running of things (or perhaps that's what China is
offering, in fact).

~~~
toyg
"Set" as in the present verb: "the West" is still very much meddling in
African politics, France in particular routinely engages _in direct military
terms_ all over the continent.

~~~
cb18
_France in particular routinely engages in direct military terms_

How much of it is of the sort described in the article, of securing safe
passage for french citizens out of Cote d'Ivoire because a civil war was
breaking out?

~~~
toyg
From wikipedia: "French forces returned to Côte d'Ivoire in 2011 to remove the
Ivorian president. In the same year, France played a pivotal role in the 2011
military intervention in Libya against Muammar Gaddafi. The year after, France
intervened in Mali during that country's civil war"...

------
jkot
China is massively investing in Africa, and there is a growing political
tension for that :-(

~~~
vijayr
Maybe they are more interested in African raw materials than Africa as a
market?

~~~
vezycash
It's beyond that. I read about the origin of the world "third world
countries." It so happened that the original meaning wasn't "poor countries"
but countries that did not align themselves to the two great powers at the
time.

First world were the NATO group while the second world were the rusians and
their alies... See
[https://en.wikipedia.org/wiki/First_World](https://en.wikipedia.org/wiki/First_World)

Africa is growing economically, and I think China sees Africa as an economic
insurance. E.g there are people in the US who want US to block imports from
China.

Additionally, I think they want to take over the role of US as the guardian so
to say. It's a step towards making their own currency the dominant
international currency instead of the US dollar.

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doktrin
Africa has never been short of potential, but that doesn't mean it will live
up to it in our lifetime.

