Business in Africa: 1.2B opportunities
economist.com
economist.com
In western countries it's almost unimaginable to not be able to rely on banks to store your money safely. They are typically the most conservative and reliable institutions among the chain of various business services you'd have to deal with as an entrepreneur. Without this critical underlying consumer-level infrastructure in place I'm in no hurry to be a pioneer there.
Despite my friends making similar claims about the endless low-hanging fruit opportunities there to make money.
For foreign investors, having an audience with the government is an unwritten requirement. If not, they run the risk of their businesses being nationalized by a new government, or their funds frozen for frivolous reasons.
However for "democratic" African countries, having too close ties with a particular ruling party could pose problems. The next government could give one hell for being for the "other party."
Recently, the Buhari administration in Nigeria restricted all funds leaving the country. Theoretically, no funds were seized. And companies could still wire out their funds but only after lengthy approval processes and were often subject to insane exchange rates.
A common question on everyone's lips is - why won't the looters invest in their countries? That's because the next government makes the seizure of money, property, and businesses the first order of business for the first half of their tenure.
In my experience, Africa metaphorically is a jungle. Only psychopath and predator minded individuals thrive there.
1. Expectations of citizens
2. Love of Complexity
3. Culture of respect
Expectations of citizens
In Nigeria and Ghana for instance, people EXPECT government officials to steal. One who doesn't would be a laughing stock. (No joke)
Love of COMPLEXITY
Rural dwellers prefer politicians who speak using big words that often make no sense. Here's an example Patrick Obahiagbon. (Unfortunately, his words make sense grammatically. However there are those that throw out meaningless words.)
https://www.youtube.com/watch?v=I1bt-GyxiYI
https://www.youtube.com/watch?v=kSddKH1ZO-U
https://www.youtube.com/watch?v=ozxY6V-vx-0
City dwellers are not exempt. Big sounding agendas like vision 20/20, revolutionary council... fool the populace. Moneies are spent but the people are left the same
The Culture
Many African countries have an undue, almost irrational culture of respect for elders. For instance, there are differences in verbs and adjectives used when speaking to someone older than yourself in Yoruba language. Ghana and Nigeria frown upon the use of left hand for waving, writing, handshake, eating, even raising of hand for answering a question.
Many have active traditional rulers and kings. Elders typically should not be questioned, at least not without going the roundabout way of hinting and finally acquiescing to the the choice of the leader.
This respect for authority extends to the University - which should be a place for questioning of ideas. I've got lots of painful memories as someone who prefers practicality over tradition.
Here's a well documented example of the effect of cultural deference to authorities http://blogs.wsj.com/middleseat/2008/12/04/malcolm-gladwell-...
I would think HN readers were a bit more enlightened that this, no? Such absolutist pronouncements remind me of Yahoo news
Nice people are routinely walked over and preyed upon. On the other hand, people whose only care about you stops after collecting your money are the successful ones.
You may have found genuinely successful nice people. But I haven't.
For instance, my mum's business remained very unprofitable until my dad... One who fits the psych group above took over money matters.
I lost my own life's savings at one point and owed some more after running a joint business with some friends. The business was very successful in my point of view.
I set out to make sure that the customer experience was superb. And that our customers were always satisfied. I achieved that. The partners on the other hand were emptying the company coffers.
Many of the inefficiencies of the US government were deliberate trade-offs made to avoid examples of this pattern that fell under the general name of the "spoils system".
My relative lost seven figures from Cypriot bank just a few years ago. In Greece bank will not allow you to withdraw money or transfer it to foreign country.
I do not know of the situation on Ethiopia, but my first-hand knowledge (being originally from Ghana and now living in the US) is that banks are generally just as reliable as in the West. It would have been shocking to lose money to bank employees without recourse.
Of course a run on the bank is a different matter, but I never saw one in decades of living there.
So, they travel to Switzerland, US, Dubai... And get list of properties, accounts, even companies owned by past government officials.
To prevent seizure, the incumbents go a step further and some how grab powers that even the current government can't touch. (I really can't explain it but that's how it now works.)
So, the only thing the new government can do is complain, and leak lists of properties, accounts owned by people in the outgoing regime.
Furthermore, through a gradual desensitization process, people no longer care if stolen money is repatriated because we all know that the money is only moving from one set of thieves to the other.
There is still a lot of untapped opportunities existing at the bottom, You just have to look closely once the cost of access and speed of the internet, intermittent supply or electricity and load-shedding issues have been dealt with.
So need to be willing to break local laws and also break your home country laws if your country has laws against bribing government officials.
Many people have a moral objection to bribery or a self interest in not ever risking going to to prison (for me it's both).
In my industry every few years the Feds make a couple arrests for bribing government officials in Africa.
They are VERY willing to offer you a service at any price range you want. American businesses in particular are not so flexible on price and standard.
One popular way of stealing funds is awarding of road contrasts. The German company Julius Berger makes solid roads that lasts for at least a decade.
Typically, or rationally, Berger should win every road contract. However, the officials do not want a road that would last for ten years because it'll cut their lucrative source of income.
Africa is not a country, you can't speak about it as such. The North, West, East and South are as different as any two random countries in the world and within each there is even more diversity.
South Africa is a first world country, Nigeria is a crazy mix of poverty and development, Kenya is bursting with technology innovators taking their first steps, Burundi is barely hanging in there.
You can't use the term Africa and make any general statement about it, it is just too damn big and varied. Most people just have no concept of the scale there, but I always love pointing people to this map to help: http://static02.mediaite.com/geekosystem/uploads/2010/10/tru...
Yes there is tremendous opportunity in various countries there, and yes, they come with caveats, but please, let's stop treating an entire continent as if it was a country.
https://www.google.com/search?q=south+africa+trouble
https://www.google.com/search?q=is+south+africa+safe+for+whi...
https://www.google.com/search?q=south+africa+violence
Accounts of Johannesburg:
South Africa is a complicated country, but it's not like the "first world" (US in primis) is completely void of huge ghettoes and racial issues.
You can find plenty of other info from more respectable sources. Albeit more staid in presentation.
http://www.dailymaverick.co.za/opinionista/2015-12-09-the-da...
Anyways south Africa is definitely not a first world country. Gdp per head at ppp is 13k[1]. This is substantially poorer than countries like Turkey and Thailand that are often considered third world.
Middle income though? Sure.
[1]http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?order=...
Why is it that citizens with relatively stable but more authoritarian governments, in the far and middle east for example, seem to enjoy less relative prosperity than the west? (save singapore)
What makes singapore special?
Is the greater prosperity enjoyed in the west simply a function of the characteristics of the people living in the west?
Are the types of governments found in various regions simply a reflection of the people living in those regions?
(I don't mean a one to one reflection, I don't think everyone living under a ruthless dictatorship have themselves the characteristics of a ruthless dictator, but are they simply more tolerant or accepting of this societal arrangement?)
Competent mostly benevolent ~dictatorship for ~50 years? :)
Hans Rosling's thing is interesting showing Africa catching a bit towards the end https://www.youtube.com/watch?v=jbkSRLYSojo
Maybe some nations just express their prosperity in different ways. For example the awe-inspiring artifacts of the ancient cultures in Europe and other areas. While maybe ancient cultures in the South Pacific were content to just chill on the beach, or cross the seas, or on Easter Island, do that Easter Island thing.
It took the west a long time to figure out the stable government structures.
What do you mean by that?
Those 'cultures around the med' were basically the longest lived in the history of the world. In many ways they are still living.
Europe has enjoyed great prosperity in for over 2500 years. Waxing and waning in terms of breadth perhaps. But not hard to find throughout the historical record.
http://www.citylab.com/design/2014/09/africas-population-wil...
Africa is huge, and 4 billion could live there. But will there be mass starvation? If they got to 4 billion, then I'd say not ;-)
Malthus isn't an inevitability. Strong institutions that balance local-responsiveness and long-term-planning could have prevented things like the Irish Potato Famine.
Think of what Africans could've accomplished with consistent, basic decent governance from the top, over the last ~50 years. Hong Kong, anyone?
The road to hell is paved with good intentions. White guilt is a staggeringly destructive impulse. It makes me sad.
How much of it is of the sort described in the article, of securing safe passage for french citizens out of Cote d'Ivoire because a civil war was breaking out?
From History books I've read and talks with the older guys, the British pursued a divide and conquer approach to keep the country dependent for a long time.
The Western part of Nigeria had the highest rate of education (still does). The Easterners were more interested in business than in school or politics. And the Northerners had the worst education rates, procreated regardless of resources to take care of the children but were very obedient.
So the British pushed for them to enter the military. And they did enmasse. Till date, the military training facilities still exist only in the northern states.
The string of coups, looting and stupid policies that dragged the country down were done mainly by the Northern born heads of states e.g. Buhari, Abacha, IBB. They are interesting reads btw.
"Together we stand, divided we fall" I believe is a lesson these countries need to internalize FIRST, before any meaningful progress can be achieved. And this bonding is easy to achieve.
"Nothing bonds like having a common enemy." - Blair Warren.
US presidents have always done a good job of providing a clear enemy. For their founding, the enemies changed at different times. From the Indians, to the black slaves, and finally to the British.
Later, it was communism. The time when the USSR was the enemy resulted in a lot of innovations and development (internet, satellite launch, moon landing...) for the country.
What I'm about to say is a mixture of facts and pure speculations.
There was a Ghananian president called Kwame Nkrumah. He wanted a unified West Africa. If you check the dates of independence of many west African countries, you'll notice they revolve around the 60s. A Judge in Ghana told me that Nkrumh was the cause.
He set up schools training "revolutionaries," teaching them governance and how to fight. And this hastened their independence - Nigeria was one.
His plan was a united Africa where the countries trade amongst each other. And would not be forced to accept rates dictated by the west for their produce.
Unfortunately, before he could effect lasting change he was overthrown. And he ran to Guinea where he was made a co-president. (I see the CIA's hand here (IMO))
It's not like governments only know how to loot. A chief source of problem is the rapid change of policies. A new government used to mean a completely different environment and rules for businesses.
So, you have one step in one direction and then the next government moves two steps in the opposite direction. Partisian thinking is just ridiculous.
Another big problem is tribalism. It's so big a problem that I'm chuckling right now. A person is often elected for no other reason than the tribe the person represents. The current Nigerian president is on that seat for that very reason.
According to people I've Nigerians I've talked to, there would have been a killing rampage by the Hausas if the current president didn't win.
First world were the NATO group while the second world were the rusians and their alies... See https://en.wikipedia.org/wiki/First_World
Africa is growing economically, and I think China sees Africa as an economic insurance. E.g there are people in the US who want US to block imports from China.
Additionally, I think they want to take over the role of US as the guardian so to say. It's a step towards making their own currency the dominant international currency instead of the US dollar.