Africa is growing rapidly as the modalities for the establishment of the continent is constantly changing. Small and medium scale enterprises constitute the number businesses spread out in Africa. Someone might be asking what Africans actually do to get by, as a large chunk of the continent is poverty stricken; it is a consuming continent, not a producing one. SMEs however, are part of the development going on in Africa. We will study these businesses and see opportunities for Americans as well.
The majority of raw materials in America and some other parts of the world like China are sourced from the African continent. Some countries have leveraged on the fact that the continent doesn't have the capacity to carry out some of the full-scales projects going on in other parts of the world. Agriculture is as old as humanity itself in Africa, it is no surprise every part of it is brimming with agricultural activities. While countries like Nigeria are giants in Cassava and crude oil, the likes of the Ivory Coast specializes in cocoa as a means of foreign exchange.
Crude tools used to be utilized in farming but all that has changed as governments in Africa are now leveraging on the abundance of resources at their disposal. More mechanized ways are been employed to better service the continent and the huge demand from foreign neighbors.
Agriculture as a business is huge in Africa because of the favorable government policies. Loans to the agricultural sector go for as low as 9-0% as interest rates in some African countries. Lands are easily allocated and sold for full-scale agricultural programs and businesses. Favorable climatic conditions are another reason this continent is so blessed. In Africa, there are 3-seasons in every country you visit. Rainy, harmattan and dry season. Setting up this business doesn't require much capital per se, that is the reason it is one of the biggest businesses to venture into in Africa. Go into it large-scale, and the return on investment will be huge.
This is a business that is very lucrative in Africa solely because an African loves the coordination and organization of the western world. It is, however, not a surprise that so many Africans will go at any length to enter America, Europe or Australia all in the need to look for greener pastures.
Smart entrepreneurs know this and go ahead to set up agencies for those who are willing to pay through their noses to get there. The charge to America is almost $1,200 dollars depending on the country you are coming from the exchange rate. That is a huge amount of money for most African where statistics have said some people live below $1 a day. It is a business with huge potential if anyone has the skill for taking care of logistics for the government and individuals.
Flights schedule and destinations can be arranged manually and online depending on the country you operate in. Visas and flight ticket can be sorted out using local and foreign contacts. Most entrepreneurs over there are leveraging on the gap created because of lack of airports and hotels as well in this continent.
A lot of used cars by Americans and Europeans are shipped to Africa every day because there is a market for it. The demand for used cars is because new ones are way too expensive, carry huge import duties as much as $1,000 and the myth that new ones don't last as long as old ones. This mindset has been ingrained in most Africans when it comes to the time for buying a new car.
Owning a car is seen as a luxury and cars are ostentatious goods with heavy import duty. The average African cant affords that, so the need for clean used cars comes in. Most dealers usually have friends and relatives in America and Europe who coordinate the buying and shipping of these cars to the continent. The prices are steep as well but compared to a new one and excise duties to be paid, it is way cheaper.
For some reason, most international car manufacturers don't have plant or assembly points in Africa. Even when they do, it is just to carry out repairs and sell new cars that have been imported and cleared. Venturing into this business might not be a bad idea after all. This business is so huge all over Africa. Although the African countries exchange rates differ, for someone coming from the US, it is a piece of cake.
As we all know, buying a car is not new but to finding the right spare for use as a utility for your vehicle is quite a problem. In many cases, it is a huge problem in Africa. A problem that took entrepreneurs a lot of time to fix. Years back, it is the norm to order cars outside the Africa and when some components begin to develop faults, it is shipped to the manufacturers as far as Japan, US, France for repairs.
Today the story has changed. A huge number of SMEs have learned to import this component or parts new and old and sell to the huge market available over there. Since they don't normally buy new cars, it is easier and cheaper to replace them with new or old parts. Funny you might say, but it sells. Entrepreneurs are cashing in on it including in the US.
If you have ever been to Africa, you will find out there is a huge gap in the number of world class or should I say 5-star hotels. The infrastructural decay in that sector is quite enormous as an article was run on The Economist to emphasize on it. Consortiums from Europe have started to investment in this gold mine and soon it will be a huge industry that takes a few just to survive.
It is not funny to know that while some countries are actually exporting electricity, Africa just doesn't have enough power. The US has four ways of generating power and some African countries have just one. Solar power is the fastest growing business in Africa right now. In fact, its potential is set to hit $500 Million by 2017. With a market that is yearning for more power, this business opportunity is coming at just the right time.
Solar panels and solar batteries are selling very fast, as Africa is tired of noisy generators and epileptic power supply. On the hand, governments are handing off power generation to private companies who have the capacity to provide stable and regular power supply. This is another goldmine in Africa that is waiting to be tapped.
People in Africa will always tell you Africa is beautiful. To someone who must have grown up watching the news, documentary, and listening to radio, it might seem like the worst place to live. From devastating diseases to famine, war etc. the continent has seen it all. The landscape of most African countries is so unique to them that you cannot find two that are the same. From Egypt, South-Africa, Nigeria, Kenya, Malawi, Congo DR etc. the uniqueness is unbelievable.
Tourism has the potential of being a huge employer of labor if properly managed. First, the enabling environment will have to be put in place to attract investors from the US especially. Who can employ locals and turn some of these beautiful places in Africa to tourist attraction. Take for example the Ogbudu ranch resort in Nigeria, wildlife in Kenya and the Pyramids in Egypt this are wonderful places for tourism business to thrive.
Instead of the countless aids and grant be given to Africa to develop, that is not properly utilized by its leaders, some of it can be used to improve its tourism potential. Each country in Africa has its own problems internally. It is not enough reason for one not to invest. Investment opportunities are boundless in Africa. You just have to choose and do your research.
The travails of working together in Africa can only be experienced and done in a special way. Some mistakes must not be made include:
1. No one business model works in every African country
2. Respect the local authorities and local communities
3. Never make business connections online until you have met and certified the business.
Some of the reason you might not want to invest in Africa are;
1. Political inconsistencies; which some African countries have been able to curtail e.g. Ghana just had a transitional democratic government
2. Ethnic Uprising; like what is happening in Northern Nigeria has also been reduced.
3. Xenophobia; in South-Africa is still an issue that needs sensitization.
There is a whole lot of reward to reap from Africa.
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Posted 9:10pm, Fri 24th October, 2014 by HAVILAH CENTER