South African companies are involved in various projects throughout the African continent. Countries that have the most the involvement from South African companies are in no order Angola, Botswana, Ghana, Kenya, Mozambique, Namibia, Nigeria, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.
Whilst almost all respondents indicated that doing business in Africa is not easy, they acknowledged that potential for good returns outweighs the difficulties of doing business in a continent that is in transition.
The common frustrations and challenges facing South African companies conducting business in these countries include:
The common attractors and encouraging aspects attracting the South African companies to conduct business in Africa are:
- Poor or a lack of infrastructure (in particular transport and telecommunications);
- Corruption (at both government and private business levels);
- High costs involved in conducting business in the various African countries (high start-up costs, including skills training);
- High travel costs and irregular flights into Africa;
- Difficulty in obtaining visas and expatriate quotas;
- High corporate taxes;
- Currency fluctuations;
- Language and culture barriers;
- Government or political interference in decision making;
- Inconsistent or limited sector specific policy making.
It was indicated by the majority of respondents that Corporate Governance does exist in some form or another in various African countries. However the degree of Corporate Governance varies from country to country. This was attributed to the fact that many of the African economies are in a transitional phase, and are still heavily under the influence of the various heads of state and are still relatively unsophisticated markets. Respondents also commented that in general, the various African countries do have acceptable levels of adherence to Accounting and Audit Standards. This is probably due to the influence of the large number of Multi National Corporations operating in Africa.
- The growth potential of the various African countries due to their emerging markets;
- The large size of many African markets;
- The political and economic stability of various African countries;
- The emerging democracy/ African optimism;
- The willingness of the various African countries to embrace new business; approaches and to conduct business with South African companies;
- The openness to Foreign Direct Investment;
- The fact that many Global/Multi National Corporations are already operating in the various African countries.
In order to improve or enhance Foreign Direct Investment in the African continent, respondents indicated that the African countries need to:
There are 3 clear messages arising from the survey:
- Create more stable political and economic foundations;
- Create better economic policies;
- Combat the negative effects of corruption;
- Remove excessive governmental controls, like the difficulty and expense of getting licenses to operate in various sectors;
- To better utilise the funds arising from existing investments to further grow their country's infrastructures and skills.
- The Nepad Business Initiative needs to change business leader's perceptions that it is a politically run initiative.
- The Nepad Business Initiative needs to include other countries/regions so that it does not acquire the perception that it is a South African dominated initiative. Business leaders from all over Africa need to be involved in order to make this initiative a success. The incorporation of these other African countries will further encourage the creation and maintenance of stable economies in Africa, and will encourage African leaders to rise to the challenge of creating economic wealth.
- The Nepad Business Initiative has the potential to unlock the development opportunities that exist in Africa. Nepad can enable this by living up to its objectives and standards and by creating actionable agendas that identify and prioritise Nepad projects.