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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
•   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   Burkina   Cape     Cote    Gambia Ghana Guinee Guinee Liberia    Mali    Niger   Nigeria Senegal   Sierra   Togo
                    Faso     Verde   D’Ivoire                     Bissau                                              Leone
 Pop’n
millions     10      17       ½        21      2      25      11      2       4      15      17      170      13        5       7
 WB Ease
 of Doing   175     150      119      167     149     63     179     176     151    146     173      133     154       141     162
 Business
   Rank
   GDP
  growth   3.8%     4.9%     5.6%    -5.8%   5.5%    13.5%    4%     4.8%    6.9%   5.3%    5.5%    6.9%      4%      5.1%     3.8%
   2011
Per capita
  GDP $    1,500   1,500     4,000   1,600   2,100   3,100   1,100   1,100   400    1,300   800     2,600   1,900      800     900
Language
            FR       FR      POR       FR     ENG    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                                                     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
•   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:
       •   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 larger-
           scale 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                                                    Photo by
                                                                                Tullow



• 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.
          Is West Africa for my
               company?
                                                                                        Photo by
                                                                                        Tullow


•   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     Ghana one of the fastest growing economies          24
in the world last year. Steady         in the world in 2011 at 13.5 %.             million
  growth over last decade.                                                         people
 Growth from low base, just             English      Growing popularity as regional HQ for
moving into bottom of middle          speaking,      U.S. companies: stable, good quality of
 income status. High debt to            former       life, easy to attract ex-pat employees,
        income ratio.               British colony                 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

•   Sub-regional market of 250
    million people.

•   Immediate access to all markets
    of the Economic Community of
    West African States (ECOWAS).
    Although, not completely free
    trade.

•   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’)
•   Ghana is sometimes called the Ireland of Africa. Ghanaians known everywhere as
    friendly, welcoming and fun-loving.

•   Relaxed mode of life, and business. Can be enjoyable (when you want to relax) and
    frustrating (when you want to get something done).

•   Although pace is relaxed, aspects of society very traditional, formal: Ghanaians
    dress formally and modestly. Greetings and titles very important.

•   Traditional rulers still important feature of power structure.

•   U.S. companies setting up presence in Ghana encouraged to
    establish and maintain good relations with both elected
    government and traditional rulers.
                             Opportunities
•   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
     OIL AND GAS                        GENERATION &                 PORT/MARINE
                                        TRANSMISSION                 DEVELOPMENT


                       Consumer Goods                  Franchising


       HEAVY
     EQUIPMENT                          AUTOMOTIVE                   HEALTHCARE
     E.G. MINING AND
      CONSTRUCTION
         If you are interested in
        opportunities in Ghana..
GHANA
         Heather Byrnes, Senior Commercial Officer
                 Email: byrnesh@state.gov
                Direct tel. +233-21-741-086
                   Cell: +233-244-331-244
                              OR
           Abdul-Aziz Anyang, Commercial Clerk
            Email: abdul-aziz.anyang@trade.gov
                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         Rich in natural gas, petroleum, tin, iron ore,     170
         California                   coal, limestone, lead, zinc and arable land      million
                                                                                       people
Long-standing ethnic & religious          English        Oil sector provides 80% of country’s
 tensions but 2007 marked first         speaking,       revenues but since 2008 government
  civilian-to-civilian transfer of        former        attempting to diversify and instituting
   power in country’s history         British colony              economic reforms.


                        Growth in 2011 of 6.9% and 2010: 8.7%
      Nigeria: Africa’s Largest Nation
•   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 public-
    private 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
 •  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
    MW;                                                           Photo Courtesy of West Africa Trade Hub


• 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
•       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
    •   Secondary best prospect sectors:
         • Maritime Equipment, esp. workboats
         • Construction Equipment/Supplies
         • Financial & Insurance Services
         • IT Equipment and Services
         • Water/Wastewater Equipment                                  Photo Courtesy of US Embassy Nigeria
         • Aviation Equipment and Supplies
                        Nigeria: Resources
•   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 pre-
    vetted companies as part of an International Partner
    Search or Gold Key Service. They can also conduct
    International Company Profile reports, useful as part         Photo Courtesy of US Embassy Nigeria


    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: rebecca.armand@trade.gov
              Tel. +234-1-460-3581
                       OR
           LagosOfficeBox@trade.gov

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

                                   24
SENEGAL : LOCATED FOR SUCCESS




           S
           E
           N
           E
           G
           A
           L




                                25
SENEGAL : PROS AND CONS
       -              +




                          26
   SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES
                     FOR INVESTMENT



                  . Tax and Customs Exemptions for Specific Sectors
   ATTRACTIVE     (agriculture, agroprocessing, fishing, tourism, mining)
INVESTMENT CODE   . Significant Investment Incentives (> $200,000)
                  100% Tax Exemption on Profits for the first 5 years


                  . New Airport 47 km from Dakar – Toll Road under
                  construction
 INFRASTRUCTURE
     PROJECTS     . Plan Takkal
                  . Mineral Port


                  . No history of coups
    STABLE
  DEMOCRACY       . Free and fair elections
                  . Strong civil society

                                                                            27
SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES
                  FOR INVESTMENT



    GATEWAY TO
     ECOWAS
    COUNTRIES




      STABLE
     MACRO
    ECONOMIC
     CLIMATE


    INTEREST IN
       DOING
   BUSINESS WITH
      THE U.S.




                                                     28
   SENEGAL : BUSINESS OPPORTUNITIES



           CONSTRUCTION EQUIPMENT
             AND HEAVY MACHINERY



 LOGISTICAL PLATFORM        POWER GENERATION
    SERVICES HUB


TELECOMMUNICATIONS               AUTOMOBILES
VALUE-ADDED SERVICES

                  AGRICULTURAL
                   EQUIPMENT



                                               29
        SENEGAL : POWER GENERATION




  - Plan Takkal
                             By 2015 15% of
Investment in new
                            country’s energy
   power plants                                          Rural electrification
                               needs from
- Rehabilitation of        renewable sources
    old plants
        Senegal’s Plan Takkal requires big investments and may result in
                        opportunites for U.S. Companies




                                                                                 30
 If you are interested in
opportunities in Senegal..


   Youhanidou Wane Ba, Commercial Specialist
           Email: wanebay@state.gov
             Tel. +221-33-829-2231
                       OR
          Steve Perry, Econ Counselor
            Email: perrysj@state.gov
             Tel. +221-33-829-2227
Thanks! Questions?

				
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