Growing Trade Opportunities In Africa
Given its 1.1 billion people that make up 15% of the world’s population, Africa’s huge, yet young population, growing economies and expanding trade links, presents many opportunities for lucrative business.
For some investors, the continent may seem to be a daunting place to trade in. Reports of high trade costs, double-digit interest rates, the lacklustre electricity supply and political unrest, can cause some businesses to divert their interests.
However, according to the World Bank’s Ease of Doing Business report, many improvements have been observed in African countries since 2014. For instance, several African countries have been implementing reforms to make it easier to do business, which means better credit for the businesses and more lucrative deals. The report states that Sub-Saharan Africa alone, accounted for about 30% of world’s regulatory reforms that are making it easier to do business, followed by Europe and Central Asia in 2015.1
In addition, until recently, many African countries exclusively depended on agriculture and tourism. Recently however, a growing interest in technology and renewable energy has led to new business opportunities in different countries in the region. The expansion through innovation and the lowering of stringent requirements encourage new lucrative business development.
Three Top African Business Destinations
When expanding into other countries, it’s important to consider markets that show positive economic growth. Dealing with foreign buyers could be risky and lead to profit loss or even a non-payment that might cause your company to shut its doors. You need to mitigate your risks today, protect your bottom line and get cover against loss of proceeds by foreign debtors with international trade credit insurance.
Here are a few African countries that have recently been identified as possessing the potential for strong trade partnerships.
1. Mauritius
Historically, Mauritius has been renowned as a top international tourist destination and a sugar producer. Recently however, the country – backed by substantial government initiatives, is concentrating on improving resources for the expansion of information technology and renewable energy, thus making it one of the top African countries for business in 2017.2
According to the World Bank’s Ease of Doing Business report, Mauritius ranks 49th overall and first in Africa.3 This business platform, transforms the country from a low-income, agricultural-based economy into a diverse, upper-middle-class economy with thriving prospects for business owners. Entrepreneurs in these growing sectors now have plenty of opportunities to grow in the developing country. If you’re interested in leveraging business opportunities and developing new markets in different countries like Mauritius, contact us at Credit Guarantee.
2. Botswana
Neighbouring South Africa and having successfully acquired independence in 1966, Botswana has one of the fastest growing economy rates per capita in the world. Forbes lists the country as 68th on the list of Best Countries for Business Overall and as the 3rd country in Africa, with a positive trade balance of 6.6% over GDP.4
Well-known for experiencing the largest success in diamond and precious metal mining, the government is strategically diversifying the economy and pushing resources to different industries.
The government has also made doing business in the country easier, by making the importing and exporting process faster, shortening it to just one week. Their stringent stance surrounding anti-corruption makes the country a good place to trade in and this has seen the country increase their ranking on the Ease of Doing Business report.
3. Kenya
Kenya has been making vast inroads and large investments into its transportation, energy and telecommunications sectors. With high-speed internet, a knowledgeable workforce and a time zone compatible with Europe and Asia, it makes it a highly attractive destination.
Google recently invested $700 million in Kenya’s Lake Turkana Wind Power Project and is it’s largest on the African continent to date. According to Google, this investment paves the way for a grid infrastructure project to improve renewable energy in the African country. They’re invested in clean energy projects to accelerate the deployment of renewable energy in Africa as a whole.5
Kenya is a great region for start-ups and according to Forbes is reported to have a positive 5.6% GDP growth. Companies in the country also have an easier time starting operations thanks to eliminated stamp duty fees and the reduced regulatory requirements of signing the compliance declaration before a commissioner of oaths, as according to the Ease of Doing Business report. In addition, the report shows that Kenya’s ranking has improved in terms of trading across border and overall, remarkably 21.6
How To Take On Business Opportunities In Global Markets
If you’re looking to expand your operations in Africa, we can help. A heightened sense of vulnerability comes from dealing with global markets, foreign debtors and ever-changing exchange rates. The politics, policies and other complexities of the unknown can hamper the success of your business. So why not take out the guess work and eliminate the uncertainties?
At Credit Guarantee we believe our clients have the future of South Africa’s economic growth in their hands. We will provide you with the ability to develop new markets in different countries by sharing our expert assessments of the country and its risks. Our international trade credit insurance enables you to take on new global markets with confidence whilst safeguarding your bottom-line against financial risk.
Our team of international experts has plenty of experience in the region and can advise you on the best cover you need to trade successfully in Africa.
If you’re considering trading in Africa contact Credit Guarantee. We are international trade credit experts already underwriting several billion Rand exposure through exports from South Africa into the rest of Africa. Take advantage of our African footprint and vast wealth of intelligence to help you expertly assess the credit and risks of any country you intend to trade in and protect against non-payment.
