African governments and businesses are looking for American partners. U.S. Businesses can bring expertise, and capital to the continent. Through the Doing Business in Africa (DBIA) Campaign, the U.S. government is strengthening its commercial relationship with the continent of Africa, a diverse region that offers substantial trade and investment opportunities across national and regional markets.
Africa has rapidly gained attention as the next investment hotspot and is being called “the final frontier.” A decade ago, the worldwide boom in investing in emerging markets initially benefited Africa along with other regions, but today many African countries stand out on their own as highly attractive investment opportunities. The African continent is home to seven of the top 10 fastest-growing economies in the world, and foreign direct investment is rapidly increasing.
European and Chinese companies of all sizes recognized the African opportunity early on and have a head start. Today, American companies are increasingly discussing Africa as a business destination, yet many have not taken the leap. According to Josh Becker, cofounder and CEO of Impele Consulting Group, “We are seeing tremendous growth in interest in Africa [from the US], but not the same growth in action. Companies take their notebooks but not their checkbooks.”
As growth slows in more developed markets, geographic diversification is a logical next step for businesses of all sizes. Many African markets offer attractive opportunities for mid-sized companies, and as an early mover, a company stands to secure the most suitable options as well as the best talent, partnerships, and incentives.
While significant risks remain, we challenge those shying away from investing in Africa to consider the following arguments. First, many of the perceived risks are myths. Second, careful analysis will demonstrate that Africa is not a monolith, and an informed investor can find the right fit. Finally, this is not a journey that a mid-sized company has to take alone. Resources and expertise are increasingly available.
This paper offers a framework that we call the PAL Principles—Be Prepared, Be Adaptive, and Be Local— created from discussions with experts to assist mid-sized US companies in developing and implementing a winning strategy for expanding to Africa.
Mid-sized US companies should not ignore Africa’s transformation into a highly attractive business destination. To capitalize on the burgeoning opportunities, the time to act is now.
