Doing Business in West Africa

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Road Construction - Photo Courtesy
of West Africa Trade Hub
Doing Business in West Africa
May 2012
Heather Byrnes
Senior Commercial Officer
Embassy of the United States
Accra, Ghana
Port of Tema- Photo Courtesy of
West Africa Trade Hub
West Africa - Overview
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One of the world’s regions of highest intrinsic wealth: oil/gas, gold, bauxite, manganese,
diamonds, cocoa and much of the land highly suitable for agriculture;
Currently one of the poorest areas in the world – but almost all countries showing positive
growth – best three performers 6-13% annual GDP growth;
Legacy of colonialism: many countries encompass multiple ethnic groups and have had
long-term internal conflicts. But, growing number of peaceful democracies;
Infrastructure poor: power, water, telecommunications, roads, etc. But, this also =
opportunities for infrastructure companies;
Endemic health problems in region: malaria, water-borne illnesses, maternal/child
mortality – but, progress on almost all fronts;
Known for internet fraud. Check potential business partners with embassy. Payment in
advance is highly recommended or other methods of limiting risk (letter of credit, etc.)
Courts often slow and judgments difficult to enforce;
Formal business culture (suits, use of titles, etc.) but relaxed sense of time (things take a
long time and culturally people are not deadline conscious);
Opportunities for infrastructure companies across the region – growing middle class in a
few markets (ie consumer goods).
West Africa – Key Market Statistics
Benin
Pop’n
millions
10
WB Ease
of Doing
175
Business
Rank
GDP
growth
3.8%
2011
Per capita
GDP $
1,500
Language
FR
Burkina
Faso
Cape
Verde
Cote
Gambia Ghana Guinee Guinee Liberia
D’Ivoire
Bissau
Mali
Niger
17
½
21
2
25
11
2
150
119
167
149
63
179
4.9%
5.6%
-5.8%
5.5%
13.5%
1,500
4,000
1,600
2,100
FR
POR
FR
ENG
Nigeria Senegal
Sierra
Leone
Togo
4
15
17
170
13
5
7
176
151
146
173
133
154
141
162
4%
4.8%
6.9%
5.3%
5.5%
6.9%
4%
5.1%
3.8%
3,100
1,100
1,100
400
1,300
800
2,600
1,900
800
900
ENG
FR
POR
ENG
FR
FR
ENG
FR
ENG
FR
Sources: www.cia.gov/library/publications/the-world-factbook
http://data.worldbank.org/indicator/IC.BUS.EASE.XQ
WATRADEHUB.COM
Road Governance Report
Challenges
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Photo by WA
Trade Hub
Infrastructure: water, power, internet – both reliability and quality
Lack of business service providers (a handful of reliable providers, used by
almost all the companies)
High costs (hotel, car rental, commercial real estate – all expensive)
Difficulty sourcing qualified staff and high training costs
Lack of reliable ‘cold chain’, most goods are trans-shipped through Europe
Contract sanctity – contract seen by many as starting point, not end, of
negotiation. International arbitration clause is a must. Use qualified lawyers.
Check any potential business partner with the Commercial Service or Embassy.
A handful of fraudsters are very active. You would be amazed how legitimate
some of them seem.
Payment in advance is highly recommended or other methods of limiting risk
(letter of credit, etc.) Just because one transaction was ok – don’t let down
your guard.
Culturally some West Africans have a very difficult time saying ‘no’. Actions
speak louder than words when dealing with people from the region.
Opportunities
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Asian and European competitors already very aware of opportunities in the region – but
U.S. companies much less aware/experienced in this part of the world;
In many parts of West Africa, U.S. brands/goods are highly sought after/esteemed;
While risks higher in this part of the world, returns can also be higher;
Sectors of particular opportunity:
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Energy (Power and Oil/Gas – both will see sig. growth in next decade)
Transportation (Bridges, Rail, Ports, Aviation and Roads)
Heavy Equipment (Mining, Construction and Oil/Gas)
Telecommunications (high cell phone penetration, increasing use of
internet)
Agriculture (starting to transition from very small farms to largerscale commercial farming)
Healthcare – equipment, hospital construction in particular
Consumer – Limited for most of region but opportunities in some
markets (e.g. Nigeria and Ghana)
Traveling to
West Africa
• Crime/security issues vary considerably from country to country. Ghana
for example is similar to the United States while Nigeria is more
dangerous. Check travel.state.gov before planning any trip.
• Malaria is big risk across region. We advise all travelers to take
prophylaxis. Other vaccines etc. are important. Visit the CDC website for
more information on health preparations: www.cdc.gov.
• Weather is HOT and air conditioning can be variable. Suits are a must for
business but lighter fabrics are better.
• Bring any medicines you take regularly – not all pharmacies are reliable
and some medicines available in the U.S. are not available here. (Also,
counterfeit medicines are a problem.)
• Visa in advance is required for some countries. Allow 2-3 weeks for
processing for each country.
• Lots of new flights coming and many airlines already here: Delta, United,
BA, KLM, British Airways, Virgin Atlantic, Emirates, Lufthansa for example.
Photo by
Tullow
Is West Africa for my
company?
Photo by
Tullow
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Business is West Africa is very relationship driven. Business relationships take time
to develop. (Any process takes time in West Africa.) Do you need an immediate
sale? Or are you willing to wait a year or two?
Business in West Africa is personal. You may need to travel to West Africa on a
somewhat frequent basis – even if you have a partner on the ground. Are you
prepared to travel to West Africa?
To develop in West Africa long term, you will need a local partner. Are you
prepared to work through a distributor, reseller or other partner?
West Africa can be challenging for new-to-export companies. Do you have
experience in other export markets?
After-sales service/repair/support can be a challenge in West Africa. Does your
product or service depend on on-the-ground after-sales service or support?
Infrastructure can be unreliable (power, water, internet, etc.) Does your product
depend one or more infrastructural aspects?
Are you a flexible, patient person with a sense of adventure?
Spotlight on Three Markets:
Ghana, Nigeria and Senegal
GHANA
GHANA: MARKET OVERVIEW
12th fastest growing economy
in the world last year. Steady
growth over last decade.
Growth from low base, just
moving into bottom of middle
income status. High debt to
income ratio.
Ghana one of the fastest growing economies
in the world in 2011 at 13.5 %.
English
speaking,
former
British colony
24
million
people
Growing popularity as regional HQ for
U.S. companies: stable, good quality of
life, easy to attract ex-pat employees,
ease of travel.
Lots of real opportunities for U.S. companies – U.S.
exports grew more than 30% in 2010 vs. 2009
Your Gateway to West Africa
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Sub-regional market of 250
million people.
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Immediate access to all markets
of the Economic Community of
West African States (ECOWAS).
Although, not completely free
trade.
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Many companies moving
regional HQ’s from other
countries in region to Ghana.
A Vibrant Democracy
July 2009 – President Obama visited Ghana, first visit
by President Obama to sub-Saharan Africa.
Third sitting U.S. president in a row to visit Ghana,
Presidents Bush and Clinton also visited.
WHY GHANA?
•Two peaceful handovers of power between parties in a row – best track record
on the continent and by far in the West African region.
Two main parties: NDC (National Democratic Congress) and NPP (New Patriotic
Party). Each have over 40% of the vote.
•Last election was roughly 8 million voters, decided by 40k votes. No sig. violence.
•Free and active media (albeit sometimes rather colorful).
Akwaaba (‘Welcome’)
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Ghana is sometimes called the Ireland of Africa. Ghanaians known everywhere as
friendly, welcoming and fun-loving.
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Relaxed mode of life, and business. Can be enjoyable (when you want to relax) and
frustrating (when you want to get something done).
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Although pace is relaxed, aspects of society very traditional, formal: Ghanaians
dress formally and modestly. Greetings and titles very important.
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Traditional rulers still important feature of power structure.
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U.S. companies setting up presence in Ghana encouraged to
establish and maintain good relations with both elected
government and traditional rulers.
Opportunities
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Steady growth of 5-7% for past decade. Oil find in 2007 (and further oil finds since)
have created further economic momentum. 13% last year.
Number of inquiries to Embassy Ghana has more than tripled in last three years.
Companies already in Ghana have increased footprint (e.g. GE, IBM, etc.).
POWER
GENERATION &
TRANSMISSION
OIL AND GAS
Consumer Goods
HEAVY
EQUIPMENT
E.G. MINING AND
CONSTRUCTION
PORT/MARINE
DEVELOPMENT
Franchising
AUTOMOTIVE
HEALTHCARE
If you are interested in
opportunities in Ghana..
GHANA
Heather Byrnes, Senior Commercial Officer
Email: [email protected]
Direct tel. +233-21-741-086
Cell: +233-244-331-244
OR
Abdul-Aziz Anyang, Commercial Clerk
Email: [email protected]
Direct tel. +233-21-741-498
Cell: +233-244-331-245
Mailing address:
Foreign Commercial Service
2020 Accra Place
Washington, DC 20521-2020
Nigeria
NIGERIA: MARKET OVERVIEW
Nigeria
More than twice the size of
California
Long-standing ethnic & religious
tensions but 2007 marked first
civilian-to-civilian transfer of
power in country’s history
Rich in natural gas, petroleum, tin, iron ore,
coal, limestone, lead, zinc and arable land
English
speaking,
former
British colony
170
million
people
Oil sector provides 80% of country’s
revenues but since 2008 government
attempting to diversify and instituting
economic reforms.
Growth in 2011 of 6.9% and 2010: 8.7%
Nigeria: Africa’s Largest Nation
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Nigeria has world’s 31st largest GDP at $414 billion in 2011 and aspires to be in
world’s 20 largest economies by 2020.
To reach that goal, government is liberalizing the economy and promoting publicprivate partnerships.
Nigeria accounts for 40%+ of all imports in West Africa and is the third largest
consumer market on the continent, after Egypt and South Africa. Africa’s most
populous country (one-sixth of the continent’s population lives in Nigeria).
One of the most diverse markets in the world
with 250 ethnic groups.
Diverse nationalities and cultures offer
opportunities for U.S. companies – but also
challenges. For example, sales/ad literature
with certain female portraits might work well in
majority-Christian areas, but could cause
problems in the Muslim-majority North.
Cashew Factory in Nigeria - Photo Courtesy of West Africa Trade Hub
Nigeria: Challenges
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Infrastructure inadequate = high costs for transport,
water, power;
• Less than 4,000 MW total so most businesses rely on
generators. Recent reforms to power sector, which
may result in increased power gen, but will take
several years. Pent-up demand estimated at 20,000
Photo Courtesy of West Africa Trade Hub
MW;
• Safety and security situation also creates cost for companies – both in terms of
direct costs and (for international companies) attracting retaining staff;
• Clearance of goods at ports can be slow, cumbersome and highly bureaucratic.
Reports from companies that corruption and congestion are significant issues;
• Cost and availability of credit are problems (interest rates are 20-35%);
• New local content laws for petroleum industry are higher than actual local content
seen in the industry globally – may be challenging for companies in the sector.
Nigeria: Opportunities
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Growing and increasingly sophisticated consumer base, coupled with strong affinity for
U.S. products and American culture;
Best prospects in these sectors:
• Oil and Gas Field Machinery/Equipment
• Safety and Security Equipment/Services
• Power Generation Equipment
• Health Care Equipment/Services
• Agriculture Equipment/Machinery/Supplies
• Education Services and Supplies
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Secondary best prospect sectors:
• Maritime Equipment, esp. workboats
• Construction Equipment/Supplies
• Financial & Insurance Services
• IT Equipment and Services
• Water/Wastewater Equipment
• Aviation Equipment and Supplies
Photo Courtesy of US Embassy Nigeria
Nigeria: Resources
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Check out any prospective local partner with the U.S.
Commercial Service in Lagos: www.buyusa.gov/nigeria.
Commercial Service in Nigeria can provide lists of prevetted companies as part of an International Partner
Search or Gold Key Service. They can also conduct
Photo Courtesy of US Embassy Nigeria
International Company Profile reports, useful as part
of due diligence.
U.S. companies interested in the Nigerian market are strongly advised to seek the
assistance of experienced commercial lawyers. For a list of legal firms, contact the
Commercial Service office in Lagos.
The Nigerian Embassy in the United States has information for U.S. businesses
considering exporting to/working in Nigeria: www.nigeriaembassyusa.org
If you are interested in
opportunities in Nigeria..
Rebecca Armand, Senior Commercial Officer
Email: [email protected]
Tel. +234-1-460-3581
OR
[email protected]
A list of specialists and their sectors can be found on the
website, buyusa.gov/nigeria at
http://www.buyusa.gov/nigeria/contactus/index.asp
SENEGAL : BUSINESS OPPORTUNITIES
US EMBASSY DAKAR
Senegal
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SENEGAL : LOCATED FOR SUCCESS
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E
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E
G
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SENEGAL : PROS AND CONS
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SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES
FOR INVESTMENT
ATTRACTIVE
INVESTMENT CODE
. Tax and Customs Exemptions for Specific Sectors
(agriculture, agroprocessing, fishing, tourism, mining)
. Significant Investment Incentives (> $200,000)
100% Tax Exemption on Profits for the first 5 years
INFRASTRUCTURE
PROJECTS
. New Airport 47 km from Dakar – Toll Road under
construction
. Plan Takkal
. Mineral Port
STABLE
DEMOCRACY
. No history of coups
. Free and fair elections
. Strong civil society
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SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES
FOR INVESTMENT
GATEWAY TO
ECOWAS
COUNTRIES
. Senegal as the hub for Ecowas countries – esp.
French-speaking
. Transportation hub
. Port of Dakar as a natural port of call
. Good telecommunications infrastructure
STABLE
MACRO
ECONOMIC
CLIMATE
INTEREST IN
DOING
BUSINESS WITH
THE U.S.
. A stable currency pegged to the Euro
. Low inflation rate
. Stable GDP Growth
. Diversification of international partners
. U.S. as the largest donor – MCC
. New entrants
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SENEGAL : BUSINESS OPPORTUNITIES
CONSTRUCTION EQUIPMENT
AND HEAVY MACHINERY
LOGISTICAL PLATFORM
SERVICES HUB
POWER GENERATION
TELECOMMUNICATIONS
VALUE-ADDED SERVICES
AUTOMOBILES
AGRICULTURAL
EQUIPMENT
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SENEGAL : POWER GENERATION
- Plan Takkal
Investment in new
power plants
- Rehabilitation of
old plants
By 2015 15% of
country’s energy
needs from
renewable sources
Rural electrification
Senegal’s Plan Takkal requires big investments and may result in
opportunites for U.S. Companies
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If you are interested in
opportunities in Senegal..
Youhanidou Wane Ba, Commercial Specialist
Email: [email protected]
Tel. +221-33-829-2231
OR
Steve Perry, Econ Counselor
Email: [email protected]
Tel. +221-33-829-2227
Thanks! Questions?
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