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?
Luyton has been involved in African business
for more than two decades
African 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 in Africa?
This Q&A is now closed. Thank you for taking part.
Read your queries and experiences followed by Luyton's
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
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 already!
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
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 my money?
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
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. Good luck!
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
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
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
Margaret Clarke, Cleveland, Ohio, USA: How do you
establish trade agreements in various West African counties to
distribute cosmetics and beauty supplies wholesale?
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 up capital?
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 its
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
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 internet cafes.
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
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
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 in Africa.
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 this issue!
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 market.
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 in existence.
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
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.
Luton's book, Going the extra mile - a guide to trading in
Africa is available from