ARtIcLE

Corporate partnerships as your key to Success in the rising continent

By Charlotte Rosalie - Project Manager at EMSA Emerging Markets Africa

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A consumer market of almost one billion people, rich in resources, a young labour force and steady economic growth: Africa truly is the next great frontier. At the same time, establishing a presence in the worlds secondlargest continent is not without challenges. Solid business partnerships have proven to be an effective instrument to overcome these hurdles by easing access to local markets, sourcing and distribution in Africa. This concise guide offers some practical tools for Dutch companies to do business through partnerships in the rising continent. business candidates. Another way is to engage a professional consultant that has matchmaking experience and is familiar with Africa in general and your relevant eld in particular. A professional consultant will go out of his or her way to produce a list of relevant, carefully selected companies and assist in establishing contact rather than supplying the names of already existing contacts or the usual suspects. The indispensability of due diligence is not to be underestimated in checking and selecting one or multiple suitable partners. Again, there are few reliable local auditors and Western accounting rms charge steep fees to perform nancial assessments of African companies. Verifying references and statements of experience will cover some of the risks. Furthermore, combining networking with resourcefulness can yield valuable pieces of information. For example, African diaspora typically maintain close ties with their country of origin and represent a unique source of information on the ground. How to: optimise mutual benets and understanding? Partnerships pave the way for Dutch and African companies to diversify their revenues. While African partners open the door for sourcing African products for export to Europe and distribution opportunities for Dutch products and services, Dutch partners can provide access to export markets and new and modern technologies. Furthermore, partnerships enable companies to qualify for grants, credits or other nancing, many of which require the participation of a local and Western company. Overall, both sides have much to gain from business partnerships in terms of markets, means and money. Africans often have a different business approach than the Dutch. First, the virtual absence of competition allows African entrepreneurs to take their time in following up on opportunities. Second, the fragile and ckle business climate in Africa causes many entrepreneurs to reinvest their revenues in unrelated cross-sectorial

Africa Works!
21st Century Trends
By Heleen Keijer & Boukje van Turenhout - NABC

The Africa Works! conference which took place on the 29th and 30th of October 2012 was both an inspiring and very successful event! In the months leading up to it, the Netherlands-African Business Council worked closely with the African Studies Centre, The Netherlands Ministry of Foreign Affairs, and NL Agency. Through this dynamic partnership we ensured that the participants who were still unfamiliar with Africas opportunities were made aware of its potential and those who already proted from Africa gained new insights. Present at the conference were, a wide variety of delegates from the private sector as well as from NGOs, knowledge institutes and several governmental departments. The conference drew together more than 500 unique participants! We were honoured by the presence of Her Royal Highness Queen Mxima of the Netherlands, and in addition many high-end guests from Africa including ambassadors. One of the keynote addresses was given by Ms Rosa Whitaker on the latest dynamics in trade and investments made in Africa. Her message was in line with the conclusion of Professor Ellis who said that it makes no sense to regard Africa as a continent in permanent need of help, [] but as a full member of the world. His colleague from the Erasmus University Professor Tulder approved and pointed out that there is a shift going on currently from international trade to inclusive business.

All participants were offered a wide range of seminars and workshops covering the latest developments in topics such as Africas ICT revolution, African-Asian relationships, water issues, metropolitan food supply, infrastructure & transportation and many more. In the workshops new business opportunities were explored and shared. For those interested in investing in new markets, it appeared that private equity and the food sector are especially good to bear in mind. Moreover, the conference offered a variety of side events, including several networking possibilities and an information market for the African Embassies in the Netherlands. A second edition of Africa Works! is planned and will offer a new range of inspiring talks and networking opportunities for those interested in Africas possibilities. We believe that the energy, ideas, dynamism, and cooperation that emerged during Africa Works! 2012 are stepping stones towards improved and genuine partnerships across all sectors with a unique focus on Africa. Join us during the next Africa Works! conference and get inspired!

How to: navigate Africa? Attracting a business partner should always be part of a larger strategy development and implementation exercise. Determining product-market combinations, target markets and distribution channels are just as important as nding a reliable business partner. Dutch companies that were lured into an ad-hoc partnership without a sound strategy have frequently found themselves losing time, funds and energy in the end. Companies will discover that the process of forming a strategy is necessary to get a sense of what an African business partner should be able to offer. How to: link to the right business partner? Finding a business partner usually starts with orientation and information collection. While fundamental company information is easily accessible in the Netherlands, this is not the case in Africa. In addition to poor corporate web presence, there are few (if any) information sources or public databases where you can retrieve information on African companies. Furthermore, business information services like Graydons are hardly available or simply unaffordable for the African market. Luckily, there are ways to compensate for this information gap. Trade missions, networking events and international trade fairs are excellent opportunities for meeting African

For more information visit www.africaworks.nl

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businesses. While some interpret this as a lack of focus, others recognise the innate entrepreneurial drive to survive and spread risks. Third, entrepreneurship gives Africans a sense of pride that is not necessarily mirrored in the Netherlands. Having had to overcome barriers like bureaucracy, corruption and lack of nancing, Africans gain a societal status that Dutch entrepreneurs need to bear in mind in their interactions. Finally, the process of making deals and establishing partnerships requires patience, perseverance and willingness to (re-)take the initiative on the part of the Dutch entrepreneur. Africans are known as masters of the art of negotiation. They will always see and grab opportunities to discuss the terms of the deal, even well after a contract is signed. Although setting strict terms and penalties at the outset is standard practice, relaxing these terms in the long run is inevitable to maintain a healthy relationship. The key is to stay exible, accept it as part of the game and simultaneously introduce alternative guarantees to protect your interests. How to: deal with corruption? The grey area between the private and public sector in Africa is where corruption thrives. It is not uncommon for public ofcials to wield their inuence to facilitate a business deal in return for favours, for example nancial

compensation (xes) or securing positions for acquaintances (nepotism). Conversely, there are public ofcials that thwart business deals to protect vested interests of the elite. The business-to-business market is not free from corruption either. It does happen that a commission that seems rightfully paid to a third party actually disappears into the wrong pockets. Except for persistent pleas made on the part of the broker, spotting a shifty kickback remains difcult and it is therefore best to steer clear from such payments altogether. In conclusion, professional networking can open many doors to African business opportunities that would otherwise remain closed. The intervention of third parties like NABC, business consultants and other professionals can have added value in focusing your efforts. While intercultural differences are present, simple appreciation thereof and conscious communication will help you to form lasting partnerships. With its economic and demographic growth, Africa is slowly but surely leaving the rest of the world behind and smart entrepreneurs ensure that they are well equipped for the future.

ARtIcLE

Are local content requirements just a hype or a long term trend?

By Frans Weerkamp NABC

According to The Economist the global market lost USD 93 billion due to local content requirements in 2010 alone. be local); while others require the inclusion of local companies, materials and sources into the production process or strategy. Protectionism in a global age Though it is formally forbidden to discriminate between foreign and domestic companies by the GATT (1947) and WTO (1995) agreements, governments are seeking to protect their emerging industries in less transparent ways. By putting requirements in place these governments trying to reap the benets of FDI without the burden of globalised competition. As the European Commission notes, nowadays, in times of economic slowdown, countries prefer to protect their economies and impose such policies. Therefore a vast increase of protective policies can be observed globally in recent years; in just one year, from June 2012 to May 2013, 431 new local content requirements were imposed. Local content or local discontent? For African countries these measures could improve the trade balance. Local content requirements limit the outow of capital since investments are made in local businesses and employees instead of foreign ones. Moreover the number of domestic

EMSA Emerging Markets Africa is a consultancy rm in The Hague that specialises in business in Africa.

The talk of the town in international trade is all about local content these days. The term pops up more and more in the strategies and policies of international organisations and governments of developing countries. Is this a temporary fashion statement or have African governments succeeded in developing a fruitful way of ensuring inclusive growth over the next decades? It does not take a pessimist to note that levels of employment have not risen proportionally to economic growth in Africa. Indeed, unemployment rose from 7.4% in 1998 to 12.8% 2008 in sub-Saharan Africa. Therefore, multiple African governments wish to embed the production process locally. This wish can often become a reality through the installation of local content requirements (LCRs). LCRs include adding value to the host countries through the obligated procurement of goods, services and employment at a local level. Such policies come in different shapes and sizes: some, for example, require a particular number of local employees (e.g. 75% of workers and contracts in the Nigerian oil industry should

(skilled) workers increases which could bolster the African middle class. In some cases vulnerable green industries are protected in order to make them competitive in the long run (e.g. solar energy in Morocco). On the other hand, companies are likely to purchase a bigger proportion of their inputs locally than they would if unconstrained. These extra costs are likely to be passed on to consumers. This makes the host country less attractive and leads to a potential decrease in FDI. Protecting local markets can be a risky strategy, involving the danger of nepotism and corruption. So, it seems that local content is denitely more than just an empty phrase; a growing number of requirements are issued and these measures could create long-term engagements between foreign investors and local partners. Whether the formal requirements succeed in doing so depends on an effective and transparent implementation. Either way, a sustainable cooperation between the local supply chain and investors is in the interest of Dutch companies. The NABC is happy to facilitate these contacts.

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Going Local in the Global Village