Washington DC — Jean AbiNader
Executive Director of the Moroccan American Trade and Investment Center (MATIC)
What's the most important element to consider when getting started with investment in Africa? There's really only one answer: People.
In Africa, business is personal in a variety of senses, and it's crucial to be aware of the connections one must make with people during every step of the investment process. Outlined here are the various ways in which developing connections with people is at the core of business in Africa.
Upon entry: Connecting for insight
One of the most important things to consider as a company is where to get your information about markets, and that aspect of planning is all the more important in Africa. When new to the continent's business environment, be sure to listen to people who have been to your destination of investment. Regardless of whether or not they were successful in their business ventures, it's valuable to ask them about their experience in the country.
Furthermore, make sure to think broadly when seeking advice; look beyond your own sector, and consult U.S. commercial officers in your country of interest. Participating in organizations that bridge business between Africa and the international private sector is also important because of those organizations' multiplier effects for experience and knowledge.
Research shows that most American companies in Frontier Markets base their decisions more heavily on word of mouth than on official studies, and truthfully, that approach makes sense. There's no replacement for personal experience in the ambit of African business.
On the ground: Connecting for relationships
Once you've entered a market in Africa, it's absolutely critical to know that in emerging markets, business is still all about relationships. If you want to sell in Africa, you have to be present, you have to make an impression on partners, and you have to make an effort to understand the people you're working with. That means having headquarters in Africa is a major advantage, and personal meetings with potential partners are vital.
The more that your company can understand that business in Africa is not a function of sending emails, the better off your business will be. Instead, business is a function of picking up the phone and talking to people, and it's a function of traveling to the places where you're finalizing transactions. It really is all about relationship-building.
In the long term: Connecting for sustainability
Another indispensable insight on business in Africa relates your company's work to the local population. Your business must realize that Africans don't want corporate philanthropy. Africa wants impact investing to create sustainable development that will encourage the growth of the continent's human resources.
Companies have to look at aspects of business like training and improvements in infrastructure as serving not only the company, but also the locale. To make investments both profitable and sustainable, companies must execute on impact investing that uses value chain and supply chain analysis to determine how the local community can contribute to the investments of the company.
At its core, a business must remember that it has two audiences: its shareholders, and its local people. When you contribute to skills building in an area, you enable people to take better control of their lives. The benefits spill over into the economic and political sectors.
Think globally, act locally
The question of engaging with the local community through investment relates directly to the approach that advises to "think globally and act locally." A larger vision that is complemented by connections with African business leaders and the local African population at the grassroots will undoubtedly be a stronger vision. Correspondingly, a vision that is disconnected from local, human realities doesn't have nearly as much promise. Africa's increasingly global role will only accentuate the importance of those local African voices.
