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Business in Africa: 1.2B opportunities
- dmix 11y agoMy African friend tells me stories of how his mother runs a successful rose exporting business in Ethiopia and regularly pays off bank employees so none of her (personal) money gets stolen. 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.
- vezycash 11y agoThere are numerous opportunities there. But the deterrents may outnumber the opportunities. Examples, lack of electricity, trigger happy governments whose policies are far removed from reality, insane levies on small businesses... 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.
- clarkmoody 11y agoIt sounds like the problem is government.
- vezycash 11y agoIt's not just the government. It's also the: 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=I1bt-GyxiYI https://www.youtube.com/watch?v=kSddKH1ZO-U https://www.youtube.com/watch?v=kSddKH1ZO-U https://www.youtube.com/watch?v=ozxY6V-vx-0 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-on-culture-cockpit-communication-and-plane-crashes/ http://blogs.wsj.com/middleseat/2008/12/04/malcolm-gladwell-...
- prmph 11y ago> "In my experience, Africa metaphorically is a jungle. Only psychopath and predator minded individuals thrive there." I would think HN readers were a bit more enlightened that this, no? Such absolutist pronouncements remind me of Yahoo news
- jkot 11y ago> In western countries it's almost unimaginable to not be able to rely on banks to store your money safely 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.
- toyg 11y agoIn Italy the government helped itself to current accounts with overnight decrees "in times of crisis", even more than once.
- prmph 11y agoPardon my repeating what sounds like a cliche, but Africa is indeed a big place. 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.
- charlesdm 11y agoThis is one of the cases where using an "offshore" account to hold most of your money is probably justified.
- vezycash 11y agoIt doesn't work all the time. This is because the new government really spends a lot of time tracing looted funds. As I mentioned earlier, it could dominate the first year of a four year term. 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.
- afarrell 11y agoI wonder if this motivates some people to store their money in offshore accounts.
- yakshemash 11y agoYour friend is likely making stuff up. This is not to say that there isn't lot of corruption and nepotism that one needs to fight against in order to setup a business there, but this is the first time I hear about bank employees stealing money from private accounts. The situation down here is pretty bad, but not that bad.
- fiatmoney 11y ago4 billion by the end of the century, if current trends continue. It is however likely that Malthus will intervene before then. Depending on exactly what you're selling, you may or may not want to be anywhere nearby (including Europe, it looks like) when that happens. http://www.citylab.com/design/2014/09/africas-population-will-quadruple-by-2100-what-does-that-mean-for-its-cities/380507/ http://www.citylab.com/design/2014/09/africas-population-wil...
- clarkmoody 11y agoCertainly you're familiar with The Population Bomb from 1968[1], predicting mass starvation by the '80s. 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 ;-) [1] https://en.wikipedia.org/wiki/The_Population_Bomb https://en.wikipedia.org/wiki/The_Population_Bomb
- yakshemash 11y agoOnly if climate change doesn't render Malthus redundant by turning the planet unlivable well before the end of the century as it looks bound to happen. You at least won't be be able to put the blame for that on africans... Also current refugee crisis in Europe is caused to a large extent by people fleeing political crisis in the middle east, a significantly wealthier region than Africa. The trickle of african migrants that was reaching Europe illegally via the mediterranean has always been overly exaggerated numbers-wise. It's a sad reality for those who see no option but to risk their lives that way, but I doubt Europe will ever have anything to fear from boat immigrants from Africa like you seem to suggest.
- afarrell 11y ago> It is however likely that Malthus will intervene Malthus isn't an inevitability. Strong institutions that balance local-responsiveness and long-term-planning could have prevented things like the Irish Potato Famine.
- jkot 11y agoChina is massively investing in Africa, and there is a growing political tension for that :-(
- vijayr 11y agoMaybe they are more interested in African raw materials than Africa as a market?
- vezycash 11y agoIt's beyond that. I read about the origin of the world "third world countries." It so happened that the original meaning wasn't "poor countries" but countries that did not align themselves to the two great powers at the time. First world were the NATO group while the second world were the rusians and their alies... See https://en.wikipedia.org/wiki/First_World 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.
- steve19 11y agoIf you run a large business in Africa there is a very real chance you will need to bride people, including government officials. Also, many African countries have captial controls, so getting our money back out requires breaking the spirit of the law (such as importing good and services at heavily inflated prices from a company you own in the West). 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.
- tim333 11y agoOne reason China does ok as they are fairly laid back on that stuff.
- vezycash 11y agoIt's not just because gift giving is an accepted practice in China. It's because they are very flexible. 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.
- jefe_ 11y agoI lived in Uganda a few years ago, and pirating movies, burning them to disc, and selling them from a brick and mortar storefront was considered a good job for young people, in the north at least. There are way more than 1.2B opportunities there. People setup power-strips in their neighborhood and charge people small fees to leave their phone for a charge. People walk around the streets hawking everything imaginable, you can buy toilet paper, fresh produce, posters and toys, all while sitting in a traffic jam. I had a guy who sold me eggs, and he was my egg guy, and every week I'd stop by and he'd sell me a carton of eggs wrapped in twine. It's just an overall interesting place with tons of opportunities and existing ingenuity.
- doktrin 11y agoAfrica has never been short of potential, but that doesn't mean it will live up to it in our lifetime.
- Snargorf 11y agoIt's a shame the West abandoned Africa to the warlords and tribal supremacists. 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.
- blacksmith_tb 11y agoClearly one way of looking at that is "abandoned after having extracted millions of Africans (as slaves) and significant amounts of raw materials". While plenty of guilt for the current state of affairs lies at the feet of Africans running corrupt governments and industries, most would agree that the West set the stage. That said, it's hard to know if the people who are suffering under the current conditions would or wouldn't be willing to consider outsourcing the running of things (or perhaps that's what China is offering, in fact).
- toyg 11y ago"Set" as in the present verb: "the West" is still very much meddling in African politics, France in particular routinely engages in direct military terms all over the continent.
- cb18 11y agoFrance in particular routinely engages in direct military terms 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?
- toyg 10y agoFrom wikipedia: "French forces returned to Côte d'Ivoire in 2011 to remove the Ivorian president. In the same year, France played a pivotal role in the 2011 military intervention in Libya against Muammar Gaddafi. The year after, France intervened in Mali during that country's civil war"...
- cb18 11y agoWhy did stable governmental structures evolve in the west that allow citizens in those countries to enjoy greater prosperity? 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?)
- johansch 11y ago> What makes singapore special? Competent mostly benevolent ~dictatorship for ~50 years? :)
- cb18 11y agoNot so long ago, Singapore was a swampy backwater with no natural resources while Zimbabwe/Rhodesia was an agricultural powerhouse rich in natural resources. Was Lee Kuan Yew just way more competent and benevolent than Robert Mugabe?
- tim333 11y agoIt took the west a long time to figure out the stable government structures. I saw one theory that civilisation started around the Med because it was easy to get about by boat and was slow in Africa because it was pretty hard to get about before jet aviation. I figure that now they've got internet they'll catch up. Hans Rosling's thing is interesting showing Africa catching a bit towards the end https://www.youtube.com/watch?v=jbkSRLYSojo https://www.youtube.com/watch?v=jbkSRLYSojo
- nicpottier 11y agoWhat in the world.. I would expect better.. 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/true-size-of-africa.jpg 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.
- cb18 11y agoSouth Africa seems to be having a lot of trouble lately, of a sort that doesn't comport with most people's understanding of 'first-world' country. https://www.google.com/search?q=south+africa+trouble https://www.google.com/search?q=south+africa+trouble https://www.google.com/search?q=is+south+africa+safe+for+white+people https://www.google.com/search?q=is+south+africa+safe+for+whi... https://www.google.com/search?q=south+africa+violence https://www.google.com/search?q=south+africa+violence Accounts of Johannesburg: http://imgur.com/BO5YwQl http://imgur.com/BO5YwQl https://www.youtube.com/watch?v=IuNYOwKlDIE https://www.youtube.com/watch?v=IuNYOwKlDIE
- toyg 11y agoRacist 4chan screenshots, really? 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.
- cb18 11y agoThat was just one striking on the ground account, the recounter didn't seem 'racist.' 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-day-we-realised-were-in-serious-trouble/ http://www.dailymaverick.co.za/opinionista/2015-12-09-the-da...
- Fundlab 11y agoNot much has been said about the IT industry. Until recently transaction processing was a huge impediment as Paypal and the likes were blocking transactions coming from most of Africa. Then there is an inherent problem of physical addressing, which also impedes delivery and a host of GPS dependent services from having a good traction. Much of what has been done recently is to improvise or innovate to suit existing systems eg Mpesa No recognition for developers or apps 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.