Want to do business in Africa? Read on

WHAT does the Middle East and Africa have in common? The answer is, tremendous potential for growth.

By Joyce Njeri (Inside Africa)

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Published: Thu 6 Dec 2007, 8:41 AM

Last updated: Sun 5 Apr 2015, 1:07 AM

These two regions are currently experiencing rapidly growing economies. If you want to speak of the potential for growth, in Africa, it's nearly limitless, for this is the most mineral-rich region in the world and plenty of multinational companies do enormous levels of work there.

But not all countries in Africa offer an environment conducive to business. Most of them are still struggling due to civil strifes, internal wars and other factors like insecurity and unfriendly business environment. In this article, I've tried to give you a guide to African countries that are ripe for investment and doing business, based on two important research studies recently released by the World Bank and the Kennedy School of Governance at Harvard University.

Property investors have crossed many borders in a global hunt for yield, but few have taken full advantage of opportunities in Africa. To my knowledge, many of these investors lack sufficient resources and market knowledge to establish a strong presence in the continent, and therefore I hope this helps to bring to the fore the continent's potential and hotspots for setting up your investments.

The WB's report is titled 'Doing Business 2008', while the Harvard one is called 'The best governed African countries'. According to the money-lender document, Africa in general recorded a GDP growth rate of above five per cent in the last three years, a factor that has encouraged direct foreign investment. As a result, the continent's commercial and residential markets are growing. The property market is always a good indicator of the performance of any economy.

Therefore, the following African countries should be the first nations people think of when they decide to look for overseas exposure. Of the 52 countries that make up the continent, only three made it to the World Bank's top 10 listing as burgeoning financial and technological powerhouses.

This year, Egypt topped the list of reformers that are making it easier to do business. The country's reforms went deep with 5 of the 10 areas studied by 'Doing Business', and it greatly improved its position in the global rankings as a result. This North African country cut the minimum capital required to start a business, from 50,000 Egyptian pounds to just 1,000 and halved the time and cost of start-up.

It also eased the bureaucracy that builders face in getting construction permits and it established a new private credit bureau that will soon be making it easier for borrowers to get credit. Besides Egypt, the other top 10 reformers are Ghana and Kenya.

Ghana, a top 10 reformer for the second year running, continues to increase the efficiency of its public services. It cut bottlenecks in property registration and greater efficiency at the company registry and the environment agency cut the time for business start-up to 42 days.

On the other hand, Kenya launched an ambitious licensing reform programme. The changes have streamlined business start-up and cut both the time and cost of getting building permits. Property registration is also faster now, thanks to the introduction of competition among land valuers.

Mauritius, with six reforms, tops the rankings in Africa on the ease of doing business and places 27th in the global rankings. Burkina Faso and Mozambique continue to become more business-friendly. On the other hand, the research done by the Kennedy School of Governance at Harvard University on the best governed countries in Africa rated Mauritius, once again, as the best.

This tourist favourite destination recorded the highest score of 86.2, followed by the Seychelles (83.1). Botswana comes in third with a score of 73, Cape Verde fourth with 72.9 and South Africa filling the last slot in the top five category with 71.1.

The index measured the five pillars of good governance, namely safety and security, rule of law, transparency and corruption, participation and human rights, sustainable economic opportunity and human development. Kenya, on the other hand, registered top marks in participation and human rights (64.1), human development (63.8), safety and security (62.9), rule of law, transparency and corruption (57.9) and sustainable economic opportunity (47.9).

The worst country in terms of quality of governance is Somalia, with the lowest score of 28.1, followed by the mineral-rich Democratic Republic of Congo (38.6), Chad (38.8), Sudan (40) and Guinea-Bissau (42.7). So there you have it. A blank virgin canvas where anything business can be done. Despite the challenges posed by a developing infrastructure and bouts of political instability, opportunities in Africa abound.

The writer is a Sub Editor with Khaleej Times. She can be reached at joyce@khaleejtimes.com

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