Panelists gathered in Salt Lake City recently agreed that U.S. companies can be successful with ventures in Africa, but only if they do their homework and have strategic business plans.
At the “Africa is Calling: Open for Business” event, presented by the African Chamber of Commerce of Utah, panelists said Africa represents huge opportunities for U.S. business and investing. But the realities, they said, differ from many people’s perceptions and misperceptions about the continent.
“When we talk about the U.S. going to Africa and making investments there, the reality on the ground is it’s extremely competitive,” said Shaka Kariuki, partner and managing director of Kuramo Capital Management LLC. “It’s no longer an issue of going over there and setting up a tent and thinking that somebody’s going to be successful. It takes a lot of work.
“Also, it’s not an issue of ‘briefcase investing,’ where you go over there for two days and you come back and you think you’ve made the necessary contacts and networks to be able to ensure that you’re successful. It’s a little bit more than that.”
Several speakers cautioned against overgeneralizing about Africa. Elizabeth Goryunova, executive vice president and chief operating officer at the World Trade Center Utah, noted that the continent has 54 countries, including 48 in the sub-Saraha region. She suggested that businesspeople learn about specific countries, their micro-economies and which industry sectors are getting government encouragement for investment.
“Africa is many, many different peoples … Cultures are very different from region to region,” said Franz Kolb, regional director for international trade and diplomacy at the Governor’s Office of Economic Development. “And when we do business over there, from a risk standpoint, we eventually do business with people and with systems, with governments. And due diligence is always important.”
Kolb encouraged businesspeople to visit Africa, meet the people, establish relationships that are long-term and experience the cultures as they proceed with any business ventures there. “I think we need to have an attitude that they’re great business partners and great opportunities,” he said.
Several panelists stressed that good business principles are needed in Africa, just as they are in other parts of the world. Kolb said business plans help companies “avoid any surprises.”
“When you do an international venture, you need to do the same thing,” he said, although he acknowledged that overseas business activities feature more unknown factors.
Mark Garfield, senior vice president of international banking at Zions Bank, said people need to learn about individual business sectors, including those with government support; individual countries; and whether sectors are government- or consumer-based. “It’s not one-size-fits-all in any way,” Garfield said.
Goryunova noted, for example, that China is investing heavily in African economies but excels in infrastructure projects. U.S. companies can be successful by avoiding those and instead focusing on services, software and high-knowledge industries.
“Don’t go into something that you know you will never succeed [at] because you will never compete on the costs,” she said. “You will always compete on the smarts.”
Much of the panel’s discussion about investment risk and long-term planning focused on corruption, but speakers downplayed its breadth, depth and impact.
“If you are investing in companies that are doing work or anything to do with the consumer and so forth, for the most part, I don’t think you will have any issues. … For the most part, the groups that I deal with, I really have never experienced corruption,” Kariuki said.
“I think sometimes when you hear about corruption, it’s a little bit amplified. However, the attitude on the ground is different.”
He said people often are influenced by what he called “the CNN sound bites” about Africa. But he noted that many U.S. institutions are “voting with their pocketbooks” by nonetheless investing in Africa.
“Is the investment safe? In my opinion, my investment is as safe in Africa as much as it is safe in the U.S.,” Kariuki said. “Obviously, I do my homework. It’s just like with my kids: I tell them I always trust them, but I always double-check.”
Although not part of the panel, Grace Ooja Kajo Ogwuche, former minister of education in Nigeria, said Nigerians deal with questions about corruption “wherever we go.” She said corruption exists everywhere, including Nigeria, but “we know we are corrupt but we are improving on the corruption” by increasing government transparency.
“The reason why China is standing out in Africa is that China is ready to take a risk, China is ready to believe in people, but some people don’t want to believe. They want to depend on what they hear from outside. Honestly speaking, if we depend on what we hear about America in Africa, no African would come here, because what we hear about America is they shoot you on the street. In the street, dead bodies are picked up every day, and who wants to die? … But is that the truth? That is not the truth,” she said.
“If you want to invest in Africa, please have an open mind and be ready to trust the individuals that you are going to be [working with], and I bet you, we have men and women of integrity in Africa who will not want to bring themselves down.”
Despite the risks discussed by the panel, its members appeared to be optimistic about prospects for U.S. businesses to succeed there.
“Now is the time to show our commitment, not just on the humanitarian side, but from an entrepreneurial standpoint,” Kolb said.
Kariuki said the same issues and questions discussed by panelists in Salt Lake City were raised by people two decades ago about other parts of the world, including Asia.
“And yet, over the last 25 years, there have been tremendous investment opportunities in those regions of the world,” he said. “And Africa, for the most part, should not be an exception, that over the next 20 to 30 years, the wind is out our back as far as making investments there, and hopefully the outcome, if you make the right investments, should be very profitable from an economic standpoint.”
While introducing the panel, Thomas Appiah, president and chairman of the chamber, said that “whatever we have here in surplus, there’s a greater need for them in Africa.” He encouraged a long-term approach for U.S. business activities in Africa.
“The goal is connecting businesses to businesses, businesses to government, beyond tomorrow. The concept here is, let’s not just go do a business for one time and then leave, but let’s make it sustainable for generations to come,” he said.
“Africa is ready for your investment, Africa is ready for your business, the opportunities are enormous, and this is the time.”