Do you worry about Africa business risk? If you find an enabling business environment in a certain country, it will most certainly increase your success potential in Africa, simply because you will face less risk. This is why I strongly believe in growing your knowledge and awareness in this regard when doing business in Africa, especially when you are still pondering where in Africa you want to operate.
One aspect I want to make you aware of in this post is:
Good governance
Good governance on its own is certainly not the main indicator or driver for a strong market, many other factors play a role. After all, Nigeria, Africa’s fastest growing economy with one of the highest ‘density’ of entrepreneurs worldwide, is still struggling to come to grips with good governance (I am referring to index ratings!). But good governance usually goes hand in hand with increased stability, less corruption, a strong or attractive policy framework for businesses, higher investor confidence, and often less volatile markets.
So indeed, we should pay special attention to the new findings on African governance that were presented yesterday, on the 29th September 2014, by Sudanese Philantophist Mo Ibrahim in London – the event was attended by several African state representatives.
It may quickly help you to understand that the Ibrahim Index of African Governance (IIAG) provides an annual assessment of the quality of governance in African countries. Compiled by combining over 100 variables from more than 30 independent African and global institutions, the IIAG is the most comprehensive collection of data on African governance.
Great, so now that this is understood, let’s have a look. Here – black on white on the table below – are Africa’s top 10 countries for good governance:
Let’s focus on the best results. As you can see, the top 5 countries are Mauritius CaboVerde Botswana SouthAfrica Seychelles and it may also be worth mentioning that they have been at the top since the beginning of the IIAG. Today I want to provide you with quick insights regarding doing business in these five top countries. Pay attention, it will get interesting!
Mauritius – TOPS Mainland Africa as a business location
Mauritius, the little island in the Indian Ocean does not only rank top for good governance, it also is top for safety, and Africa’s top country for the World Bank’s index ‘ease of doing business’ – in fact in this category it is among the top 20 destinations in the world.
Mauritius is also a tax heaven (now this one has to convince you!) and has seen a steady 5% growth over the last few years.
Here are the businesses sectors Mauritius tries to advance: Manufacturing, tourism, hospitality and leisure, finance, ICT, property, seafood industry, biomedical, and energy. Personally, I have become aware of African entrepreneurs running their business service outsourcing firm and events organization from Mauritius. I don’t blame them, in fact I have to confess, Mauritius is on my list for further inspection regarding my own start up, because it has distinct advantages, which should not be overlooked.
Cape Verde – Where you can start a business, well,…..tomorrow.
And…..another island! Ok, the good news for those who consider starting a business in Cape Verde is that it is straight forward and among the easiest in Africa to do so – you can register a company within a couple of days. This is only a recent development, in fact Cape Verde moved up 63 rankings in this regard to support economic growth! The island has only ½ million inhabitants, but the climate is mild, and it is somewhat in reasonable proximity to Europe and easy to access en route from the USA, which is good news for those who want to export or invest in Cape Verde. So what do you do in Cape Verde? Well, the government welcomes in particular businesses in the area of fishing, energy and tourism industries. So much so, that you receive a 100% corporate tax exemption in the tourist industry for the first 5 years as an incentive. Fishing, energy, and tourism are fast growing industries across the continent, so Cape Verde may open new perspectives for you.
Botswana a business gem that produces……gems.
Botswana is one of the few countries in Africa that managed to make the most of its mineral wealth and invest it into the common good. Today Botswana has ambitious goals to become a financial capital in the region (and they are hiring in this regard!). Botswana also have a strong cattle industry, so if you are into milk, meat, or leather production, Botswana is a market you should consider. And here it comes: Botswana has the lowest level of corruption in Africa, it comes 3rd for good governance, and 4th for ease of doing business. In African terms that sounds like a gem! Right, talking of gems the diamond sector is also thriving in Botswana and it is focusing on value addition inside the country offering you opportunity in this regard.
South Africa…..The story of staying put and getting there
South Africa is visibly struggling to meet some of its challenges I would suggest. Not only did it loose its title as Africa’s fastest growing economy to Nigeria earlier this year, but despite the country’s strong market and overall good governance we do hear increased voices about failures in particular in regard to youth employment and support for business start ups. And these concerns were again voiced by the audience and South Africans following online during Mo Ibrahim’s presentation on African governance. Having said that, South Africa offers you a diverse range of dynamic industries to tap into. Many business start ups are successful in the area of technology, others have found that South Africa’s under-served and largely ignored townships are new profitable markets for restaurants & cafes, recreation, affordable housing, and pharmaceuticals. You may want to consider to target South Africa’s townships as unique and promising markets!
Seychelles: and why it has more to offer than beauty
The Seychelles are an obvious travel destination but not many of us would have thought of doing business there. Seychelles made the biggest improvement in Human Development last year, but that may be easier to do than elsewhere considering only less than 90,000 people live on those islands. Frankly, the national market is tiny, but the good news is that trading across borders is so easy, ranking among the top 30 countries globally. Fact is, some see the island as a secret business destination and I think there are certain niches that do well there. While tourism, real estate, and fishery are the countries strongest sectors – there are two growing trends you should be aware of as it may be perfect time for you to step into: One is the ambition by the government to develop its financial services sector the other is a growing presence of Africa’s film industry and international films on the island. So if you are interested in providing financial services or you have a start up idea that could be of use in the film industry – put Seychelles on your list for consideration! But be patient, starting a business in the Seychelles is not so straight forward and requires several steps.
Continue to get to know your market and try to widen your horizon when thinking about doing business in Africa. It may pay off to go for some of the less obvious destinations above, and we all have to agree that good governance and stability go a long way when planning to do business in Africa. Wishing you all the best and as always, we look forward to your feedback and suggestions in the comment section below!
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Wonderful site,looking forward to know about someother countries too
great job.
regards
Bharat