Doing Business in Africa: Challenges and Opportunities
23 October 2019
Africa possesses high investment potential
In the next 20 years the African population will reach 2.5 billion people. You see what an incredible potential for business that is <…> Population aside, Africa has incredible natural resources: minerals, agriculture, forestry, water resources — Yoweri Museveni, President of the Republic of Uganda.
65% of all arable lands on the planet are in Africa. By the time when the global population will reach 10 billion, the areas that are going to have territories for agricultural expansion, for productivity improvement – those are mainly going to be in Africa, — Olusegun Obasanjo, President of the Federal Republic of Nigeria (1976–1979), (1999–2007).
Economic and humanitarian relations between Russia and the African countries are on the rise
According to the Institute of Africa of the Russian Academy of Sciences, during the past 10 years Russian investment into Africa grew by 185% and reached USD 17 billion. As president of the Russian Union of Industrialists and Entrepreneurs I must say that a significant share of these investments came from the members of our union. However, we still can – and should – do more both in terms of increasing the trade volume and in investment activity — Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP).
Russian presence in the African continent and in the Republic of Guinea is 60 years and counting. We are talking about mining, as well as healthcare. We would like to thank the Russian Federation for support in our ferocious struggle with the terrible Ebola, that appeared in the second decade of the 21st century and peaked between 2014 and 2015 — Gabriel Curtis, Minister of Investments and Public and Private Partnerships of the Republic of Guinea.
There are incredible business opportunities with Russia. After coming here yesterday, I already signed 2 memorandums and 3 contracts. <…> If you want to do business in Madagascar, I am ready to sing any paperwork — Richard Randriamandrato, Minister of Economy and Finance of the Republic of Madagascar.
Russian companies are successful in Africa
Rusatom today is an indisputable leader in nuclear technology. We are building 36 power-generating units in 12 countries around the world. During the past 14 years we have commissioned 15 new generating units, and this year we are putting the first floating power plant into operation. Certainly, Africa is a priority region for us. We have been working in Africa for a while now. We have projects in over 20 countries. <…> We see incredible demand and incredible interest to nuclear energy from the African countries — Evgeny Pakermanov, President, Rusatom Overseas.
Renova is among the first Russian investors in South Africa and probably the largest one. Overall investments in the manganese production are projected to reach USD 500 million this year. <…> UMK mine and infrastructure project worth 1.7 billion rand developed rapidly and was commissioned on time. Mining was also developing quite rapidly and in 2013 it reached a record-breaking level of 3.4 million tons — Viktor Radko, Chief Executive Officer, United Manganese of Kalahari.
We have been working in Africa for over 10 years. Over the years we have invested close to USD 2 billion in the African countries — Evgeny Tulubenskiy, Chief Legal Officer, Corporate and Regulatory Affairs, Member of the Board of Directors, Nordgold.
Above all, we are missing a developed infrastructure, as any successful business requires minimizing the costs. More than anything, business must make profit, but you cannot make any profit if the production costs are this high — Yoweri Museveni, President of the Republic of Uganda.
African countries are not united on regulation issues
There are 55 counties in Africa. It is a problem for investors, because nobody wants to trade with Africa. These are 55 countries with 55 different legislatures, 55 different customs regulations. There are fewer than 55 currencies – I think a few countries have common currencies – but still there is over 30. That is hard to overcome. It is a problem — Olusegun Obasanjo, President of the Federal Republic of Nigeria (1976–1979), (1999–2007).
Russian businesses underestimate regional specifics
I would like to point out a few common mistakes our businessmen make when they come to work in Africa. <…> Lack of understanding local mentalities leads to the gravest of errors. Further on, there are civilizational differences that must be taken into account. Without it the work is not going to go anywhere. Another important aspect is that our businessmen are preoccupied exclusively with their own profit. It would be nice to see them also thinking about the interests of African people — Galina Sidorova, Professor, Moscow State Linguistic University.
Expanding Russian-African cooperation as a whole
We need to work on consolidating and coordinating the efforts on promoting Russian-African cooperation with all of the stakeholders. <…> Expanding cooperation with our African partners not only via bilateral cooperation but using the multilateral institutional opportunities as well, including Russian business programmes. <…> Stimulating the development of multilayer cooperation mechanisms to foster business cooperation by increasing the resource potential of Russian companies <…> encourage involving small and medium-sized enterprises, as well as Russian and African regions via project financing, project groups, and so on — Alexander Shokhin, President, Russian Union of Industrialists and Entrepreneurs (RSPP).
It is a huge mistake to try to get as much profit as soon as possible and ignore the long-term investments. It is a huge loss. Third, we do not support small and medium-sized business in Africa. They cannot exist there without state support. So, let us create a few support centres for business, for instance North, South, West, and East. It would be extremely efficient in promoting our investments — Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences; Corresponding Member, Russian Academy of Sciences.
Consider every country’s specifics
For over 10 years now we have been designing security systems for the businesses that work in the potentially risky locations: Africa, Middle East, Latin America. We try to create an algorithm for each structure to facilitate a secure entrance into their country of choice — Mikhail Anichkin, Chairman of the Board of Directors, Peacemaker International Security Centre.
What do we see? Incredible opportunities. As it was mentioned before, there are 55 countries and each one needs to be approached individually. Uralkali, as a business, is ready for that — Dmitry Osipov, Chief Executive Officer, Uralkali .
Creating stable investment environment
There is money waiting to be invested into Africa’s development, but that money is cowardly. It will come when the atmosphere is right. Yet, the moment the situation changes and there is no incentive to stay in the country, it is out. What can we do to motivate investments and trade development? What can we do so that the money arrives into a country and stays there? There has to be predictability, good return of investment, law must prevail because you need to be sure that should a conflict arise it will be resolved fairly — Olusegun Obasanjo, President of the Federal Republic of Nigeria (1976–1979), (1999–2007).
When we talk about Russia we mean stability. We mean security, we mean peace. You, the Russian Federation, you bring peace to different parts of the world. In Syria you pacify every side of their conflict. For us you are a role model, an example of how to act. We are very proud of Russia in this regard and would like for you to help us too — Youssouf Moussa Dawaleh, President, Chamber of Commerce of Djibouti.
Brining science into the development of bilateral relations
Centres of thought have to be linked to businesses and politicians. <…> We have great scientists, but they go underused. There is a huge disparity between industry, politicians, and thinkers. Thinkers must be used. Let all the research be driven by demand, as countries cannot develop without science — H.E. Hala Helmy Elsaid Younes, Minister of Planning, Monitoring and Administrative Reform of the Arab Republic of Egypt.
People thrust into Africa not knowing one thing about its culture, ethnic make-up, or local peculiarities. In order to avoid these mistakes, I recommend consulting think tanks, that have been doing research for decades and can help a lot — Irina Abramova, Director, Institute for African Studies of the Russian Academy of Sciences; Corresponding Member, Russian Academy of Sciences.
The material was prepared by the Russian news agency TASS