Views from Chris Berardini, Principle at Iron Bridge Strategies.
For American companies, Africa has always been an intriguing albeit intimidating place to expand their business footprint. Africa can be a very good option for companies looking to be an innovative corporate leader in a specific field, nation or demographic market within the African Continent.
Most American companies are unaware that there is already a modern day “scramble for Africa” happening right now. China, Saudi Arabia, Russia and many traditional Western European nations are claiming and seizing market share in many emerging nations in Africa at a rapid rate.
But there are still many opportunities left for American companies. One example: the Kingdom of Morocco is currently the only African nation that enjoys the benefits of a Free Trade Agreement (FTA) with the United States. This means there are strong incentives for American companies to develop their African headquarters at the Finance City in Casablanca.
Alternatively, some other access points include having your company join the International Conservation Caucus Foundation (ICCF). The ICCF is a well-respected and well-run organization that brings corporate America, American-based NGOs and United States Members of Congress together with conservation as the common thread. The ICCF has strong longstanding connections in many African capital cities and is a great resource if an American company is looking to penetrate a specific region of the African Continent.
Lastly, I would encourage an American company to join the Corporate Council on Africa (CCA). The CCA is led by many thought leaders and professionals who are experienced in doing business with African nations and in the African continent. Much of their focus is on finance and trade but the CCA also organizes corporate trade missions to individual African nations and can brief American companies on the complex and intimidating bureaucracy of the African Union which is headquartered in Addis Ababa, Ethiopia.
What surprises do US companies run into when they first try to do business in Africa?
One of the biggest surprises is how closely aligned many African nations are with the European nations whom they have historically had connections with. Often times, American companies could be doing business with two different sovereign African nations located next each other but the language of doing business and legal systems could be totally different from each other.
Africa is a large market with many different regions and nations that have complex histories that have ties to specific European nations. These historical realities are important as they will dictate the language spoken in formal business interactions, the legal system used for business transactions and even how religion will impact business dealings.
American companies are also surprised to find they will have to be able to be much more flexible than they are used being and they will need to make every business engagement customized to the specific nation/region that it is targeting.
What's your experience with "on-the-ground fixers" who can cover the African continent?
For our clients, we recommend not doing anything that feels too good to be true or that cuts corners. American businesses need to understand that many individuals that present themselves as “fixers” are merely trying to separate them from their money.
Strategic partnerships are a normal process of developing international business relationships but companies should be very certain before sending or wiring money to nations outside the United States as it can be very difficult if not impossible to get the money returned. Our recommended strategy would be to retain experienced, individual American citizens to act as a surrogate on behalf of the American company.
How do US Embassies and consulates come into play?
The hard working men and women working in American Embassies and consulates throughout Africa are truly remarkable people and should be viewed by American businesses as a great asset and advantage. Many times, Americans working in these diplomatic outposts are the individuals who know best what is really going on in-country and can provide the most up-to-date intelligence.
An important nuance: not all Ambassadors are career State Department diplomats; there are many nations that are assigned non-career or “political” ambassadorships. This is determined the current President and Secretary of State although there is typically a lag time between changes in leadership. This is often an important factor when we craft plans for clients and impacts timelines and expected costs.
What issues with bribery exist?
While there is no question there is a tremendous upside in expanding your business into Africa, unfortunately there are still instances where corruption and bribery is accepted and tolerated in business dealings. This occurrence is actually not anything specific to Africa but it is a “growing pain” seen in many markets that are still in the emerging phase of their business culture.
We strongly recommend to our clients not be tempted to take the easy way in their business transactions as it will lead to a slippery slope and will likely tarnish your company’s brand and its international reputation. Being the recipient of a bribe or being the initiator of a bribe never ends up working out positively for an American company doing business in Africa.
What first step do you recommend US companies take after deciding they want to do business in Africa?
The first step that an American business should take is to work with experienced professionals to draft a strategic plan. Start with a simple set of goals. Work with one or more experienced international government relations to draft a recommended strategic plan based on your goals.
You cannot select a particular country, region of interest or set a realistic timeline without understanding the unique circumstances on the ground in each country, and often in each local region within each country. Moving forward without a detailed plan more often than not leads to missed deadlines and wasted resources. At worst, it can lead to negative first impressions and legal risk for your company.
Knowing which nations in Africa are best to do business in and how to prioritize company resources effectively is important when planning a strategy.
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To schedule a consultation with Chris Berardini and other experienced international government relations consultants, email us at [email protected].