Out of Africa, Opportunity

Chinese and Indian companies are rapidly expanding their footprints on the continent. But for U.S. firms, the opportunity is tempered by uncertainty.

But not all U.S. companies share in this optimism. American companies are more likely to be expanding their international footprints in other regions, such as Latin America and Asia.

What They Don’t Know Won’t Help Them
What’s holding U.S. companies back?

A large part of their hesitancy may be driven by a lack of information. In a separate survey of U.S. small-to-midsize businesses, Africa garnered the highest percentage of “do not knows” (42 percent) when finance executives were asked how easy or difficult they thought it was to do business in different regions of the world.

Part of their reluctance has to do with the comparative lack of development. “In general, Africa lacks the infrastructure of China, even the basic roads and bridges,” says Graham. “There’s a lot of room for outsiders to help them.”

Then there’s the business practices. Half of the African respondents in the Duke/CFO Business Outlook survey cited corruption as a “very significant” risk factor, far outstripping any other region of the world.

“Putting in a new customer — that’s a pretty thoughtful process,” cautions Blanken. “We usually insist on starting off with smaller orders, until we can establish a more solid basis for trust.” That trust has to be nurtured on the ground, reflected in the emphasis that African finance executives place on their local communities when asked about their commitment to corporate social responsibility goals.

“Once our goods get to the dock,” Blanken says, “the biggest challenge is getting them off the ship, into a truck and delivered. Sometimes that can take as long as the time in the ship.” The way around that problem also takes time. “We’re working with people we know,” says Blanken, “and who have a history of reliability.”

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2 thoughts on “Out of Africa, Opportunity

  1. Great article, maybe what Africa government need to do to attract more US capital is to market themselves and put in place mechanisms that will create business friendly atmospheres with streamlined processes less prone to corruption. The bottom line is: African countries can hire public relation companies here in the US to market their markets better.

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