Sweeping economic reforms and liberalisation policies open up a huge market in Africa
Sweeping economic reforms in many African countries have turned the world’s attention towards Africa as conditions in many African countries are beginning to become more conducive to business development. Positive moves and policies adopted by many African governments have played a significant role in promoting Africa as a viable business partner in the global market. Exchange rates have been liberalised; restrictions on imports have been removed; tariffs are being reduced; price controls on agricultural products and manufactured goods have been removed; steps have been taken to address the financial stress on banks; and economic growth has picked up to around 4 per cent overall for the continent. All these factors have contributed in the development of a thriving local and international business community within Africa.
The United Arab Emirates, a traditional trade partner of Africa, has been one of the main beneficiary of the economic rennaisance sweeping through Africa. Geographical proximity and well established business contacts have helped UAE-based companies to establish a niché for themselves in the African market, specially in East and Central Africa. The success of the UAE in promoting its services and products has been seen as a threat to the monopoly of European and South African businesses which have dominated the African market for a long time. The UAE is well positioned to provide a healthy competition to European and South African products because of its well established links in the Far East. Goods manufactured in Far Eastern countries of China, Taiwan, Korea, Malaysia, Indonesia and Japan are now being introduced in the African market by UAE-based enterpreneurs. The European and South African goods are unable to compete with the pricing of these products and are losing their traditional markets to the UAE. Kenya, for example, had been a permanent market for South African and British goods for the last two decades. Yet, the UAE has emerged as one of the top three trade partners of Kenya in the last five years. Other countries in Africa are also slowly realising the benefits of doing business with the UAE and are emerging as major markets for UAE-based traders and manufacturers.
As the United Arab Emirates establishes itself as a reliable supplier of goods, there is an urgent need to provide more exposure for UAE-based companies in African countries. Trade fairs like the upcoming 3rd Afro Business Trade Fair which is being held in Kampala, Uganda can play a vital role in attracting more business from Africa. United Arab Emirates has taken positive steps to emphasise its presence in Africa – Department of Tourism and Commerce Marketing (DTCM) has opened offices in Kenya and South Africa; Emirates Airline has also started operating flights to Dar-E-Salaam and Entebbe to add to its already flourishing sectors to Nairobi and Johannesburg; a large number of Dubai-based companies will also be participating in the forthcoming Afro Business Trade Fair to be held in Kampala, Uganda later this year; not to mention the Afro-Arab Trade Fair that was hosted in Sharjah.
With so much happening between Africa and the Middle East, it is only natural that trade between the two regions will register an impressive growth in the near future. East Africa has already emerged as one of the fastest growing markets for Dubai and there is talk that UAE companies will be entering the East African market in a big way once the political and economic situation stabilises in countries like Kenya, Congo and Eritrea.
The Market of Tomorrow
As a new frontier and the next emerging market, Africa is a continent that GCC firms cannot afford to ignore. From Tunis to Cape town and from Dakar to Mogadishu, African societies exhibit unparalleled dynamism and changing attitudes. Several countries are currently linked to the information superhighway; some of them even have CNN or other European networks. This is a market ripe for picking by business. But the Gulf-based businessman must understand that they will have to compete with Europeans who have several centuries of historical relationship with Africans, as well as South Africans who currently are aggressively pursuing developing African markets.
The future of UAE’s business with Africa is bright, provided the efforts made by the public and private sectors to provide information and support are maintained. The GCC countries must intensify their efforts to provide information, support, and guarantees to local businesses in order to encourage them to do business with Africa. Publications like the Business Guide to United Arab Emirates have been instrumental in filling up this void. After all, even the US Department of Commerce has concluded that Africa is the most ‘profitable place in the world’ for business.
Business relations between Africa and the United Arab Emirates are historical, dating back to several centuries. As the 21st century approaches, these relations will become more strategically important. With a population of nearly 700 million, Africa is a continent with enormous physical resources. As a sizeable potential market, it is a continent that UAE-based companies cannot afford to ignore. However, one of the keys to successful business with Africa is a good understanding of African business culture. How does African business culture differ from the Middle Eastern business culture? How should Middle East companies introduce themselves to the African buyers? These are important questions for the local entrepreneur because success or failure in Africa will depend on the ability to understand and adjust to Africa s dynamic market. The complex and changing African environment requires businessmen to have a degree of flexibility. The potential for turbulence requires businessmen to monitor and assess the political risks in the countries with whom they are doing business.
Here are some examples of what you should note:
i) People are sensitive about how you pronounce their names
ii) They do not want you to be patronising or to show prejudice,
bias, or stereotypical beliefs
iii) You should avoid condescending behaviour.
Among the Wolf of Senegal and in Ghana, children are trained not to look adults in the eye since this is considered an act of defiance or a total lack of respect. This means that eye contact, considered a mark of trust or truthfulness in the Middle East, may not occur when some Africans are talking to their superiors. In many African countries, using the left hand to receive or give a gift is considered impolite and therefore, unacceptable. In most African cultures, greeting is very important, so it is not unusual to see the same greeting, such as welcome, repeated several times. Handshaking is very common in Africa, but it could range from simple handshake to prolonged, and sometimes vigorous forms. It is not unusual to find younger people, women, or subordinates offering both hands as a mark of respect. In most cases, women are expected to accept a handshake, not offer one.
Africa’s considerable cultural diversity, if understood, is not an impediment to successful business. To manage these cultural differences, one must understand the need for personal relations and the role that connections play in African business and the African respect for hierarchy, titles, and age. One must also comprehend the concept of African Time and recognise it in arranging business meetings, as well as ensure that there is considerable follow-up.
The UAE entrepreneur needs to realise that certain practices that are not tolerated or permitted in the UAE may be rampant in Africa and must draw a line, making a decision from the start and sticking to it. The rule of thumb is to do what is legal and avoid what is illegal. He needs to know how the rules operate and that often laws are openly broken because of lack of enforcement. Further, the entrepreneur must understand that although African workers have a positive work ethic, they may lack the motivation and the skills for high productivity and that Africans tend to be communal, emphasising collectivism instead of individualism. Likewise, the UAE businessman must note that there is often a clear definition of gender-based roles. The tendency to take decisions more slowly, looking for unanimity before acting, creates a reluctance to contradict or challenge the system. Inter-cultural business is always a challenge; African business is no different. But with the cultural knowledge presented here, the UAE businessmen, if they keep an open mind, should be able to proceed with confidence that they will reap the many profitable rewards the dynamic African market offers.
Where to do business in Africa
If you are considering entering the burgeoning African market, where would you begin? Which countries are most likely to be on your top ten list? The World Economic Forum has answered that question for you in its comprehensive Africa Competitiveness Report, published in collaboration with the Harvard Institute for International Development. Here is the list of Africa’s top performers in their order of ranking:
1. Mauritius, 2. Tunisia, 3. Botswana, 4. Namibia, 5. Morocco, 6. Egypt, 7. South Africa, 8. Swaziland, 9. Ghana, 10. Lesotho, 11. Cote d’Ivoire, 12. Zambia, 13. Kenya, 14. Uganda, 15. Burkina Faso, 16. Tanzania, 17. Ethiopia, 18. Mozambique, 19. Cameroon, 20. Zimbabwe, 21. Malawi, 22. Nigeria, 23. Angola.
The report measures the competitiveness of 23 countries in Africa based on estimates for their medium-term economic growth and their control of income levels. The index is based on national economic characteristics of most interest to business, such as transparency in national decision-making, good governance, financing, labour, infrastructure and institutions. As one of the continent’s most vibrant economies, Mauritius ranked number one on this list.