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?
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 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 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 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 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 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. 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 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 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 own!
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 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 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 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 Coast.
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 without registration.
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.
Luyton's book, Going the extra mile - a guide to trading in Africa is available fromhttp://www.kalahari.net/