Marketing dilemma: to invest or not to invest in Africa?

8 Aug 2008

For the past year or so, African governments and marketers have stepped up campaigns aiming to convince potential investors to do business in Africa despite a litany of serious problems hampering the continent's socio-economic development.

Delegates who attended the presentation of one such initiative, the Intra-Africa Business Breakfast Executive, held yesterday in Johannesburg, were told: “Come to do business in Africa, the opportunities and benefits far exceed the risks.”

“African leaders need to acknowledge that democratic governance, peace and security and development are critical issues that need to be addressed in order to build viable economies and a prosperous region,” Rirhandzu Mahlale, of the SA Department of Trade and Industry (DTI), said.

Mahlale, who presented the DTI's Intra-Africa Trade Strategy, added: “In integrated markets, good policies by regional economic growth leaders may have positive spillover on peripheral countries. The spillover will be effective only if African countries foster integration in neighbouring economies.”

Analysts said that intra-Africa trade accounts for only a mere 12.5% of cross-border trade and on average of 5.3% of GDP. And according to a Sunday Times recent report, economic growth in Africa is forecast at 6.3%, above the growth expectation for advanced economies of 1.3%.

Many African countries boast vast and almost untapped natural resources and very flexible labour practices, tempting many SA firms to invest large amounts of capital there. However, their ‘wait and see' strategy, coupled with their ‘to invest or not to invest' attitude, continue to frustrate marketers, who believe the lack of information and negative media reports constitute major obstacles to the continent's economic advancement.

But the DTI said that it has put mechanisms in place to strengthen stakeholders' relations to redress negative perceptions against SA firms in the region and encourage them to adopt backward or forward linkages to develop local business.

The DTI's other facilitation measures to encourage SA companies to invest in Africa include, among others:

Underwriting bank loans and investments by SA companies outside the country (minimum R200 000).

90% of political risk cover (expropriation, wars, breaches of contracts, inter alia).

Provide partial funding to potential investors and exporters (for example, travel, accommodation and science and technology costs)

Investment and infrastructure development.

The DTI said that some of these schemes are run through stakeholders such as the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA).

The Intra-Africa Business Executive Breakfast is an initiative that aims at promoting trade within African borders and marketing Africa to organisations based in Africa, said Nathalie Chinje, director of Upbeat, the marketing company that is facilitating the project.

Chinje, who is originally from Cameroon, added that the campaign initially focuses on SA companies operating in Africa, with a long-term plan to cover the whole continent.

Participants at the session included buyers, sellers, exporters, entrepreneurs, market analysts, brand and marketing managers and representatives of firms that have identified Africa as their growth strategy.

Chinje said that the Intra-Africa Trade session helps potential investors to know how to do business in Africa, develop the right strategy for their products, with an emphasis on their distribution channels, like moving their products from SA to country X.

“And lastly,” she said, “we help you to overcome language barriers, particularly in French-speaking countries - where business solutions can be packaged in both English and French.”

For information, log on www.dti.gov.za and www.upbeat.co.za, or send an email to .

Issa Sikiti da Silva

About Issa Sikiti da Silva

Issa Sikiti da Silva is a winner of the 2010 SADC Media Awards (print category). He freelances for various media outlets, local and foreign, and has travelled extensively across Africa. His work has been published both in French and English. He used to contribute to Bizcommunity.com as a senior news writer.