|Ask an African Business Expert
here for the article as seen on the BBC website.
Is there something you would like to know about
doing business in Africa? Or maybe you would appreciate
some advice over a business dilemma you are experiencing?
trading specialist, Luyton Driman is answering
your questions below in this interactive web feature.
Are you hoping to start a business? What problems
are you facing? Is acquiring credit or attracting
investment a challenge? Is your venture failing?
Are you a woman entrepreneur? Or do you wish to invest
Read your queries and experiences followed
by Luyton's responses below:
Damion Rowe, New York, USA: Where can one go to
meet African trade contacts? How can a young man
from the States get into the African trading business?
Where in the USA if you know can i go to get information
about trade shows that focus on African goods. Lastly
which country in Africa is the best place to start.
Luyton Driman: There are many websites available
on trade shows in Africa, should one decide to surf
the net. The largest are in Nigeria, Kenya, Ethiopia
and South Africa. Failing this, many of the African
countries have embassies/trade commissions or consular
in the USA. Depending on what line of business you
are in and/or what service or commodity you are wanting
to trade with, the hottest countries at the moment
are Angola, Ghana, Nigeria, South Africa and Libya.
Josephat Musyoka Mua, Kenyan/USA: Mr Luyton Driman
Thanks for doing business with us Africans. We know
that investing in Africa remains high-risk in some
parts but surprisingly Africa also offers the highest
return on direct investment in the world. How true
is this assessment in your view? Secondly, what will
be your recommendations for anyone wishing direct
investments? Do you think people wishing to do business
in Africa need to take ethics lessons to practice
and pass them along? Lastly, with corruption running
so rampant in many parts of Africa, how do you get
results without paying a bribe?
Luyton Driman: Direct investing in Africa can be
high risk if you do not know what you are doing,
or if you do not understand the situation on the
ground which brings me to your second point; yes,
knowing and understanding the ethics of any particular
country, the customs, laws, cultures, banking regulations
etc certainly will help one to attain success in
any venture. In 16 years of African trading I have
never personally had to pay a bribe, however bribery
and corruption certainly does exist, once again it
depends on what level you are aiming at doing business
and who with. One needs to do PMR (primary market
research), to determine exactly how you plan to execute
your business plan.
Grace Okeng, Brussels, Belgium: I am interested
in investing in processing mangoes which rot every
season in Uganda. Unfortunately I do not have the
capital to do it. It could also suffice if the mangoes
were exported elsewhere for processing. Since it
is not easy to get bank loans, how can I get some
one to do a joint venture with?
Luyton Driman: Interesting proposition; I suggest
you prepare a business plan and try to get one of
the NGOs like USAid or Ecomog interested in your
plan. There are many NGOs operating in Uganda and
I think if you prove the viability of let's say picking,
freezing and processing fresh mangoes for export,
you may have success. Alternatively a local business
man or local bank may want to participate in your
scheme, if they see any merit in it. Consider the
idea of processing and exporting dried mango strips
in plastic packets; they are on sale in South Africa
Laurens Rademakers, Brussels, Belgium: Projections
show sub-Saharan Africa holds the world's biggest
potential for producing bio energy feedstocks, in
the medium to long term. In theory the region could
become the Opec of bio fuels and millions of poor
farmers could lift themselves out of poverty by becoming
energy farmers. What do you think is the most pressing
trade and investment policy measure Central African
governments should take in order to unlock this potential?
Luyton Driman: You have a good point, I have a number
of organizations you could contact on this exact
subject: Agriskills Transfer, USAid Southern Africa
and AmniFPS (food and agricultural processing technologies).
Hernan, Manchester, UK: Mr Driman, I have 10,000
pounds, the desire to multiply that money 1,000 times
and the flexibility to set my own business and live
in any African country. Where and how should I invest
Luyton Driman: To start, visit the British Trade
Commission dealing with African trade and ask them
what projects are currently on the go in various
African countries. Depending on what you have to
offer and what skills you have, merely investing
and hoping to make more money will be very risky.
You need to prudently do your homework and basic
research, remember that many countries are pouring
large amounts of money into Africa at this stage;
countries like China, Brazil and India. It might
be more beneficial for you to perhaps enter into
a joint venture programme with somebody in an African
country that wants to export or import. Another option
is to visit any of the African embassies of the countries
that you may fancy and ask them what business options
are available, most have lists of projects and business
options posted by citizens looking for outside investment.
Interested, Washington DC, USA: I am curious to
find out how the IT field will look for Africa in
the next two years. Would you give a synopsis of
how you see the trends moving for Nigeria?
Luyton Driman: The world of IT and all products
related are booming in Africa generally, not just
in Nigeria. The art of online communication, mobile
telecomm and satellite entertainment are big money
spinners in Africa today. An example of this is an
emerging country like Burundi which recently invested
around $30m on mobile phone relay towers! There are
hundreds of internet cafes in many African cities
in most countries, this obviously creates the spin
off services like the maintenance of these units,
spares sales, the sale of new units, the re-cycling
of old units to pass on schools etc.
Madalena Pedro Miala, Ledeberg, Belgium: I'm an
Angolan woman living in Belgium, but one day I would
like to return to my country and start a business
there. I'm thinking about a shopping centre where
you have shops, restaurants and beauty salons. It
would be great along the sea. But I was wondering
how much money and effort this would need. Do you
need an MBA or is a bachelors degree in economics
enough? What about starting capital? Thank you.
Luyton Driman: I think developing an up market complex
or even attaining the franchise of an international
concern along the Marginal or on the Ileya in Luanda
would be well received. I know that getting the rights
and licensing of property in post-war Angola is very
difficult, but not impossible. It just takes time
to find out who actually owns the land and/or properties,
but there are some great sites in Luanda for development.
Mahmoud MM, Sokoto, Nigeria: I want partners for
managing a hides and skin processing plant with good
supply of raw materials and cheap labour.
Luyton Driman: If you are planning to export, you
would need to know the laws of exporting animal hides
etc before you go ahead with an ambitious programme,
countries like the USA or Australia for example have
very stringent rules on animal products. If you wish
to process hides for the local market the process
may be easier. Suggest starting off with the USDA
( US Department of Agriculture), as they have quite
a few programmes operating in Africa, with American
companies and businessmen who may want to get involved
in you type of project. I'm sure the US Embassy in
Lagos has a USDA representative.
Nura, London: I would like to import East African
wine, I would be very grateful for your advice.
Luyton Driman: Contact the Kenyan Embassy in London,
failing this I'm sure the South African Embassy in
London would be able to help you.
Bazeyi Hategekimana, Pittsburgh,
USA: Big business
companies like Dell, Hewlett Packard, Sony, Google;
were started by people who had very little investment
at the beginning. They had an idea, believed in it
and carried it out. What is impeding African entrepreneurs
to start companies that can have a great impact on
our economies? What can they do?
Luyton Driman: The biggest obstacle in most African
countries is constant stability, soft currencies,
high inflation with the elements of corruption and
remember that most countries are still 'emerging'
and do not have great infrastructures, logistics
and enough sustainable employment. It would be easier
for any budding African entrepreneurs to sell the
afore mentioned products in their respective countries
and build up a network of business that way.
Margaret Clarke, Cleveland, Ohio, USA: How do you
establish trade agreements in various West African
counties to distribute cosmetics and beauty supplies
Luyton Driman: Large fully operational distribution
companies in West Africa are reasonably rare at this
stage, especially if you want to cross borders. Most
companies like yours use a company in South Africa
or the UK (as a sales and distribution arm), with
an established network in various countries in place.
It might pay you to attend a trade show to feel out
the market or to look for a joint venture partner
who knows the market and the female needs and wants
in that particular country. Remember basic cosmetics
is the bulk of the market, up market brands are only
affordable to the top end of the market. Hair and
skin products seem to be the most popular (what I've
seen) in supermarkets, bazaars etc.
Angela, London: I am looking to start a private
equity/venture capital business to finance business
in Africa. I am interested in the energy sector projects
given my background of power engineering and the
huge potential in this sector. Do you have any VC/SME
companies that you can put me in contact with and
what is the best way of going about raising the start
Luyton Driman: I suggest you make contact with one
of the banks active in Africa at this moment like
Citigroup, Stanbic Africa or Barclays, to get a feel
of what is happening on the ground and what you could
expect. Your expertise may be a saleable asset on
Joe Noutoua Wandah, Liberian in Accra: Doing business
in Africa especially the western part where I live
is not a easy task in that I once tried to inquire
about information on how to open an internet cafe
in Accra, upon reaching the registry general office
I was told only to register the business which will
cost me about US$10,000. With this I thought to myself
how much is my capital to only register with such
amount? So I have to abandon the entire plan.
Luyton Driman: I suggest trying to get a job with
one of the cell phone operators or one of the IT
companies and learn the business. This will open
new avenues in the realm of communication, from sales
to marketing to technical support. In my experience,
people seem to make as much money from selling the
hardware, the re-charge cards, as do those who own
Louis Sentamu, Kampala, Uganda: Capital investment
in Africa is quite expensive because of the low credit
facility if any your interest will be very high,
in addition to taxes that are so high hence rate
of return being low. kindly advise on alternative
countries with better investment environments.
Luyton Driman: Actually Uganda has a growing economy,
he should consider any of the options offered by
the New Plan for Africa's Development (Nepad) via
their website, which could help in buying capital
equipment, especially if people are to be employed.
Depending on what he wants to, he could get an investor
and buy re-furbished equipment from Europe which
is quite reasonable. Many more issues here!
Michael King, Circleville, Utah, USA: I have been
going back and forth to Kenya since 2001 and next
time I go will be my seventh trip. I have wanted
to start a wood work business that makes small wooden
parts for custom pens I sell here in the USA. However,
I am very concerned about the corruption in Kenya
and fear if I send expensive equipment over there
I may never get it out of port or at the very least
be held up for unreasonable import fees by corrupt
officials. How does one find a honest shipping agent
in a country such as Kenya?
Luyton Driman: There are many good shipping/freight
forwarders, as most international companies have
offices or branches there. That isn't the problem,
knowing that the product will be economically viable
is the key? Kenya has reasonable spending power and
is one of the 'old guard' in Africa, it has close
ties with many countries and imports from China,
UK, SA, UAE by the tonne. If you plan to use Kenyan
indigenous wood, the pens could become a good export;
you will have to get licences which will take time,
but not impossible.
Josephat Musyoka Mua, Kenyan in USA: I am in the
process of starting a micro credit scheme to help
my people in Kenya by giving small loans here and
there. The basic thesis is that many social problems,
if looked at through an entrepreneurial lens; create
opportunities to launch a business that generates
profits by alleviating the initial problem. What
are my chances of success with security issues being
how they are at the moment? What are the possibilities
of securing a good soft loan with an international
bank? I have never done this before and I don't want
to fail once I start. The idea is to show them how
to fish rather than the other way around. What has
been your experience in the past?
Luyton Driman: There is a new programme designed
for Third world and emerging markets which enables
the man in the street to open a bank account via
his/her cell or mobile phone. A commission is taken
and there is no risk. This could be a good way to
go. I can give the information of the company in
South Africa that designed the system if you wish.
Sunil Gulab, Boston, USA: Greetings Mr Driman. My
question is: How does one keep up with an inflation
rate like what has been predicted for Zimbabwe this
year and still make a profit? What are the mistakes
made by most and how do you avoid them?
Luyton Driman: Inflation in Africa is a huge issue
as many countries have soft currencies, that is why
all operate all trading via the US$, British pound
stirling or the Euro. I would say that 90% of all
traded business is done on a cash basis or other
viable options. Therefore if you have a product or
service to offer, find the right market(s) and negotiate
a deal upfront otherwise if you are at risk, then
rather walk away from the deal.
Karon, Atlanta, GA, United States: Which three countries
in Africa have the best foreign investment environment,
particularly ahead in areas of the following: Deregulation,
stability, infrastructure, civil litigation enforcement,
ethical business practices, private ownership, transparency,
and overall business climate? I am interested in
building roads and providing water resource management.
Luyton Driman: Your list is a very professional
and logical one. It is difficult to say if any African
country can come up 100% on all your points to be
honest. The other point is that the Chinese have
a massive head start in road building, general construction
and exploration in many African countries. Of the
most dynamic countries in Africa at the moment are
South Africa, Angola, Nigeria and Egypt. I suggest
you join a UN department regarding your services
and try to get business being a vendor to them. Here
you would tender and could end up getting a job in
any of the 54 countries!
Anyadiegwu Cosmas, Falconara, Ancona, Italy: Dear
Sir, It is interesting to learn that you have a wide
knowledge of African business. Please in what items
are you an expert? Is telecommunications system included
in your area of speciality? Get me informed. Thanks.
Luyton Driman: Yes, I can help with telecommunications,
CCTV, GSM & satellite/general consumer electronics
WS, London, UK: The biggest hindrance to investing
in Africa is lack of security simple as that. You
can have all the infrastructure and necessary equipment
in place but so long as ones life is not guaranteed
to enjoy ones investments, very few will take that
risk. The lack of basic infrastructure can be tolerated
and investors are willing to improve these as their
business grows, after all there is always no big
competition when you invest in Africa, which always
guarantees maximum profits.
Luyton Driman: On the contrary, in my experience
security is not too much of a problem. It all depends
on what country you are planning on investing in,
some are perfectly safe, others not. I would say
issues like the local economy, exchange controls,
profit repatriation and other international influences
are more of a challenge. I would assume people may
be put off by the sensationalism seen on TV, it is
perhaps human nature to be put off but for the record,
people are still doing business in Zimbabwe for example.
The Chinese investment into many African countries
is creating plenty of work right now. My point here
is that the options are there, one needs to seek
them out and avoid notorious hotspots which have
not yet settled, like Liberia, Sierra Leone or Ivory
Joseph Bushby, Cape Town, South Africa: I am a mixed
race man that started a regional newspaper a year
and a half ago. The problem was not getting funding
to start the newspaper but the sustainability of
it. Most businesses in Cape Town are still being
owned by white people with 95% black cliental and
the majority of them does not want to support or
spent their marketing money at black-owned companies.
Trying to allocate advertising from such businesses
are very difficult. Last year one of our marketers
a family man with two kids was physically assaulted
and out of action for nine weeks with a broken wrist,
knee and facial injuries just for marketing our newspaper.
Our courts did nothing. Although we use business
principles as we speak directly to their clients
we still find it hard to survive. Please help us!
Luyton Driman: This is indeed an unusual case, especially
in South Africa at this time, when operations like
this are encouraged, especially under the auspices
of Bee ( Black Economic Empowerment) and the freedom
of speech act as stated in our charter. This case
could have hidden issues attached that we don't know
about. A different marketing technique should be
employed here, such as the use of the weekly "caxton" regional
newspaper distributors. It is a case of walking before
running. An alternative option may be trying to promote
a niche market difference between the paper in question
and others in the same region.
HK Wass, Philadelphia, PA: How do you create valuable,
long term contacts and network with African traders
for an import/export business based out of the US?
Luyton Driman: In my book I explain how to grow
and nurture this difficult phenomenon. Briefly, it
is a timeous operation and one has to understand
the basics of who controls what in African; roughly
the northern part is controlled by Arabic traders
who lean towards Europe for two-way business, the
eastern side is mainly dominated by Indian traders,
the south by Europeans and the west by a mix of Lebanese,
Indian and African businessmen. This is a generalization
but credence should be read between the lines.
Wossene, Bloomfield, NJ, USA/Ethiopia: As a small
import business owner I am experiencing the gap that
exists between the Western world and the way us Africans
do business. The lack of understanding of Trade Fairs,
AGOA regulations, fair trade and the importance of
advertising one's business before making a trip for
trade shows is extremely important. Again it goes
back to educating the business owners in various
African countries and showing the gap that exists
and needs to be bridged. which cost a lot of money
and I hope foundations will fund it besides USAid.
Luyton Driman: Yes, the West does operate differently
from Africa. The total way of doing business is different,
the modes of operation, the understanding of principles
and what needs to be done to hone what options are
open to one and how to make them work. The annual
trade fair held in Addis Ababa each February is a
good way to start, especially you seem to operate
between both countries. Much more can be said on
Sijuwade Salami, Montreal, Canada: I would advise
that people dispel the myths they hold. Investment
in Nigeria might not be as easy as giving buy-sell
directives to your stockbroker by email, but the
Nigerian Stock Exchange is modern enough and a quick
internet search would provide you with stockbrokers
that allow online trading on the NSE. No Nigerian
abroad has an excuse for not investing on the stock
Luyton Driman: Quite a few up and coming African
countries have stock markets, I personally do not
know anybody that has funding floating in many of
them, not to say that there is anything wrong with
them. But in all fairness, they have to prove themselves
on the world stage before people will invest heavily
from the international arena. Nigeria is in a strong
position because of its oil reserves and South African
banking has bought into that country's banking sector
fairly heavily. Not being a broker, I would monitor
the results for a period before investing; I would
also check on the repatriation of dividends and the
tax applicable. This is my humble opinion.
Clive Ayumbi Wankah, Buea, Cameroon: Starting or
doing business in most African countries is almost
similar to going to hell or even developing high
blood pressure. There are not good areas for investment.
Most African countries like Cameroon levy high taxes
on business, as a result rendering the atmosphere
very unfavourable for business take off. It is hell
to think of doing business in Cameroon. Turn over
is slow since the existing businessmen are trying
to meet up with the exuberant taxes by increasing
prices. It is harder to succeed in clean business
in Africa. In effect black marketing is seriously
Luyton Driman: With all due to respect to the writer,
I have personally done very good business in Cameroon.
It depends on what business one is doing I suspect.
If in trading, one needs to find the market opportunities
and exploit them, legally. Perhaps an option is working
with and/or for somebody before going on your own
or try a franchise option, eg the exploding mobile
phone market, the satellite TV market, motor spares
etc. Being a mainly French speaking country, one
could even start a business as being an interpreter
- you get paid whilst you network.
Allanie Njateni, Dowa, Malawi: Here in Malawi, it
is very difficult to register a business due to cumbersome
procedures, you move from one office to another,
moreover once you register you have a punishment
of paying heavy taxes. So here we prefer to operate
Luyton Driman: I obviously would not condone trading
illegally, without being naive on the issue. I know
it is tough, that is why people need to look at the
first prize of getting a job say, in a selling position
- any selling position. The idea is to learn the
basics, network, look for opportunities and when
one comes along, 'piggyback' the first couple of
deals with an established trader (using an example
of a traded commodity in this instance). Malawi has
had a tough time with droughts, but normally, tobacco
and coffee are excellent crops which thrive there
and are great export earners. There is a tobacco
and coffee controlling body, whom I would assume
would invite contract vendors to sell to them. I
also know that Malawi has its own plastics factory
which manufactures everything needed for the household
(and some), plus a plant making paint, a plant making
washing powder (and selling 10g bags to hawkers).
One needs to be motivated enough to find these 'local'
products and opt into selling. Learning a trade is
an option I would like to stress to every concerned
person out there. Tradesmen and technicians are very
short in all African countries. I mean motor mechanics,
electronics repairmen, IT technicians etc.
Justin Ball, Harlow, UK: Sir, I am looking to relocate
to Ethiopia and would be appreciative of any info
you could give on the setting up of a travellers
style (cheap simple accommodation) campsite/hostel.
I am looking to get out of the rat-race here in the
UK and become my own boss in a more relaxed and laid
back atmosphere. Ideal place would be in an African
bush type surroundings.
Luyton Driman: You really have a good idea, why?
You've chosen a remote, beautiful, geographically
unexploited country. Ethiopia has some tough bureaurocracy
but there are options for tourism, which is quite
poor there at this time. There are a couple of operators,
but nobody markets themselves enough. My book deals
with some of the beautiful scenery available in this
country. Getting a work permit to invest and set
up a business is not too much trouble, especially
as the British embassy in Ethiopia has a huge infrastructure
and were very helpful when I worked with them.