Wednesday, October 25, 2006

Challenges facing Africa's entrepreneurs

Africa is often seen as a high-risk place to do business, but the continent is increasingly becoming a hospitable destination for investors. Mobile phone voucher salesman in Kigoma, Tanzania

Africa's wars, coups and famines are constantly in the news - the image of starving children is what often comes to mind every time the continent is mentioned. But what about the men and women who are starting businesses, and risking their own money to build Africa's economies? Despite all the obstacles, growth rates across much of Africa are rising and there are successful ventures to be found everywhere from Mogadishu to Dakar. It is one of those seldom told stories - the success now being notched up by men and women doing business across Africa. The results are not hard to see. Economic growth has been running at a very respectable 4% in at least 15 African countries for the last decade.

Red tape

Of course a good deal of the growth can be put down to rising prices of minerals. Oil is now benefiting countries all along the West African coast, from Nigeria to Angola. But there is much more to it than that. From telecommunications and banking to the export of fruit and flowers, Africa is now finding and cultivating niche markets around the world. Behind these statistics are stories of initiative and drive to overcome the familiar problems of endemic corruption and mountains of red tape.

Business of politics

Many entrepreneurs are cashing in on the mobile telecoms boom.The absence of a strong business class at independence for many countries in the 1960s was a major inhibition to growth, argues Teddy Brett, of the London School of Economics. It meant that fighting to control the levers of politics became a key way of winning economic advantage. And the results are plain to see. Doing business in Africa is still hard work, as a recent World Bank study indicated. It showed that out of the 35 least business-friendly countries in the world, 27 were in sub-Saharan Africa. Some are impossibly hard. In the Democratic Republic of Congo, registering a business takes 155 days, while enforcing a contract in Angola involves 47 procedures and takes over 1,000 days. All this means plenty of room for the so called "gate-keepers" - the bureaucrats whose palms must be greased to get things done.

Taking risks

As if that isn't bad enough, roads are bad, electricity unreliable and skilled labour in short supply. But if you succeed, the profits can be large. South African mobile phone company MTN took a risk and invested in a country as notoriously difficult as Nigeria, but has made a tidy profit. And the business climate across the continent is improving.

Fresh funding

Critics say too few are benefiting from Africa's oil wealthPromises made by world leaders at last year's G8 summit in Gleneagles are beginning to come through.In August, Malawi became the twentieth African country to have its debts cancelled. And fresh funding is beginning to come through, to meet the promise of doubling aid to Africa by 2010. This means more money for improving the energy supplies and renovating everything from airports to shipping terminals. This has provided an environment in which business can begin to grow, and it is a challenge that men and women across the continent are starting to take up.