For small-business owners, sub-Saharan Africa (SSA)
presents the classic capitalist proposition: If
you're willing to take huge risks, you could reap huge
rewards.
According to the U.S. Department of Commerce, direct
investment in this region by U.S. companies generated a 31 percent
return in 1996. That compares to a 12 percent return in both Latin
America and Europe.
According to Aquatics Unlimited Inc. president Thomas J. McNabb,
those numbers are right on target. The Martinez, California,
company, which restores natural aquatic habitats throughout the
world, is working on a project that McNabb expects will produce $5
million in annual sales for the next 10 years.
Content Continues Below
McNabb isn't the only person who sees big dollar signs in
the region. President Clinton visited the area in March, and since
then, the administration and Congress have pushed for new
legislation to promote the business growth and self-reliance of
sub-Saharan nations committed to economic and political reform.
Why the sudden attention on the region? The 40-plus countries of
SSA feature numerous dynamic and developing markets. In the export
category alone, U.S. businesses pulled in $6.2 billion last year,
according to U.S. Census data. About 30 of this region's
countries have implemented economic reform in the past decade to
replace state-centralized systems, meaning their free markets are
ripe for the picking.
Getting in on the action, however, isn't easy. "Africa
is a very tough place to do business," warns Jerry Feldman,
deputy director of the African office of the Department of
Commerce's International Trade Administration. "It's
easy to get sucked into something you can't handle."
Experts say the companies most likely to succeed are ones that
concentrate on niche markets. Aquatics Unlimited, for example, is
developing an environmentally safe plan to eradicate a menacing
weed that's clogging up Lake Victoria.
Feldman says another key strategy is to take a regional
approach. Companies should try to focus on a group of neighboring
nations because only a relatively small percentage of the various
populations are located in cash economies. The exception is South
Africa, which accounts for nearly half of all U.S. exports to
SSA.
What are the hottest sectors? U.S. trade officials say these
fields offer strong growth potential: telecommunications,
information technology, software, agribusiness, power
generation, health care, financial services, environmental
technologies and general infrastructure.
Despite the cornucopia of opportunities, Africa isn't a
region entrepreneurs should pick for their first attempts at going
global, says Judy Carson, a coordinator for Africa and the Near
East at the Department of Commerce's Trade Information Center.
"To be successful there," she says, "you have to
already be viable and have a serious plan."
Nor is it a region for entrepreneurs who are afraid to bet big.
"There are a lot of opportunities for large returns," she
says, "but Africa definitely isn't for the weak of
heart."
Christopher D. Lancette is a freelance journalist in Atlanta
who specializes in international topics.
Page 1 |
2 