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AFRICA I OVERVIEW Is Africa the new China? R o m a n I t s k o v i c h , V P f i n a n c i a l p r o d u c t s a t E b u r y , o n d o i n g b u s i n e s s i n A f r i c a Africa today is in the position of China in the 1980s. A vast land mass with a huge population that is just starting to urbanise, rich in natural resources. Africa and China are markedly similar in the culture of their business relationships and there are a number of lessons that can be learnt and characteristics which can be mimicked from China’s success, even for the smallest of businesses, as recognition of the potential Africa presents increases. It would also be wrong to assume that opportunities are restricted to only large business. All business, regardless of size can benefit from working with and in Africa as long as they have the right knowledge and appropriate support to maximise on the time of opportunity. Since major corporate receive significantly more support from traditional institutions, this may be tougher for the smaller business however certainly not impossible. on various factors. These countries also performed well on an international level, three of the top 50 performers worldwide. Conversely, Eritrea and Libya are two of the hardest countries to do business with worldwide. Therefore some countries are easier than others for business. In addition, different countries offer different prospects for businesses from natural resources, industry and technology therefore suitability is likely to depend on the type of business being sought. Based on this, it may be easy to assume that Africa is 54 countries, in answer to the question above. However, this would be incorrect as practically there are often regional similarities which can be identified and utilised when undertaking business endeavours. It is therefore important to do extensive due diligence to assess which country or region offers the greatest opportunity. Where in Africa? Making and maintaining relationships First, one must consider – What is Africa? A continent or 54 individual countries? And naturally following, is Africa one culture or many cultures? Once the opportunity has been identified, the next challenge is making a connection. It is often helpful to have an individual or intermediary help make introductions. The answer to these questions are not simple. Culture is king On a macro-level, the continent of Africa is vast and is not a connected economy. Additionally, each African country is both economically and geographically unique, with its own structure for doing business. The benchmark report “Doing Business 2015: Going beyond Efficiency” from World Bank Group evidences that between June 2013 and June 2014, 230 business reforms were made by 189 countries to encourage international trade and enterprise. Half of the top 10 improvers were in Africa, accounting for the majority of regulatory reforms. It is therefore easier to do business than ever before. The report continues that Mauritius, South Africa, and Rwanda are the three easiest places to do business in Africa – assessed Similar to China – culture is king when doing business in Africa. Fundamentally it is relationships which drive transactions. It is important to know the company you ae working with, understand their business, ‘AFRICA AND CHINA ARE MARKEDLY SIMILAR IN THE CULTURE OF THEIR BUSINESS RELATIONSHIPS AND THERE ARE A NUMBER OF LESSONS THAT CAN BE LEARNT AND CHARACTERISTICS WHICH CAN BE MIMICKED FROM CHINA’S SUCCESS’ their needs and their pressures. Contact in person is strongly regarded and regular contact helps to maintain this. There are different levels of internet penetration in different parts of Africa however emails are common. Mobile phones are relatively synonymous across the board and therefore contact by phone and text is regarded highly. Currency risk Although one continent there are 42 active currencies across Africa. This itself presents opportunity as managing currency risk effectively can both protect and enhance margins. Learning to manage currency risk and to strategically plan the approach to finance helps increase profits and maximise the value of overseas payments. Africa’s perception of the wider world As important as your view of Africa, is Africa’s view of international business. Recognising the importance of international trade, there is willing to enter into international arrangements however this is balanced with acknowledgment that some international relationships may hinder growth of businesses within Africa itself. For example, relationships between Africa and the EU can see some European countries take precedent over home-grown industry. The success of China has come through African recognition of Chinese reliability and culture. China is relationship driven, makes fast decisions and has a historical record of delivery. When approaching as a new business, demonstrating the same qualities will help ensure success. Roman Itskovich joined Ebury in 2014 from Bain Capital where he was part of the private equity deal team. Prior to this he held positions at Foundation Capital VC, co-founded an SME software start-up – QWeek, and was a consultant at Mckinsey & Company. 25