Opening a business in Africa
The African continent is home to an estimate population of 1.111 billion people (2013) and consists of 54 countries including the African islands. Africa is made up of a great and divers population, with several languages being spoken, multiple cultures and religions are practiced. It is also a destination that offers fantastic climate compared to the colder European countries and is ever growing in business investments and tourism. There are several good countries that make opening a business in Africa feasible and in this article we will look at four excellent country choices that offer good investment opportunity.
There are a variety of countries in the African continent that offer great ease of business and promising prospects for investments over long periods of time. Not only do these countries offer peaceful governance for business owners and their families to enjoy but also other great aspects.
Here are the 5 top African countries with feasible investment opportunities and ease of business, rankings according to World Bank statistics.
Top 5 African countries to open a business:
1. Mauritius (ranked 32 in ease of business within the Sub-Saharan 2016)
The country is rated as an upper middle income. It takes an approximate 2 days to register the company with associated fees of MUR 3.000 registration fees + MUR 200 certificate of incorporation + for summary of file. Inspection by local authorities takes an estimate 4 days.
2. Rwanda (ranked 62 in ease of doing business in Sub-Saharan 2016)
Rwanda is rated a low income country. There are several procedures involved when starting up business and the estimate time is around 5 days to complete depending on the nature of business. Fees associated can vary depending on the type of business ± RWF 240.000.
3. Botswana (ranked 72 ease of doing business in Sub-Saharan 2016)
Botswana is ranked an upper middle income country by the World Bank. Estimate times for registration of company name are 5 to 8 days plus reserving a unique name for the company another 3 days. Estimate time for Inspection of company by Botswana authorities 7 days, obtaining a tax number from Botswana United Revenue Services 7 days; register employees for workplace injuries insurance 2 days.
4. South Africa (ranked 73 for ease of business in Sub-Saharan 2016)
South Africa is ranked as an upper middle income country. The estimate time to register a company is 2 weeks, registration for VAT at the South African Revenue Service 7 days, registration with Commissioner in deference to the Compensation of Occupational Injuries and Diseases Act 30 days.
Benefits for investing in Africa
When opening a business in Africa, foreign investors can enjoy various benefits to this; some may include but are not limited to the following:
• Lots of potential for development in major sectors (mining, agriculture, infrastructure, telecommunications, transportation, accommodation, tourism) just to name a few
• Cost of living is low (accommodation, travel, groceries, utilities)
• There are several international schooling facilities for expatriate families
• Need for rare skills and various skills in different sectors such as education, health industries, aviation, IT
• Many countries offer peaceful governance and living standards
• Enjoy beautiful natural aspects of nature, from landscapes, majestic mountain ranges, breathtaking waterfalls and forests as well as an abundance of indigenous animal and plant species.
Opening a business in Africa also has its challenges despite having many attractive advantages. Some countries in Africa may not enjoy peaceful living situations due to crime and other interferences. Medical facilities are also not on par with that of western countries. Businesses may need to deal with different aspects related to starting up their business within a country such as permits for construction, electricity, taxes, challenges of trading across certain boarders, resolving insolvency and enforcing contracts. Hiring, employing and paying staff is also a difficulty that Visafrican can help with (see our payroll services).
Other challenges for opening a business in Africa
• Lacking skilled labour force – even though there are many people available to do the labour required, finding personnel with actual skills and qualifications are rare.
• Finding a space to set up business – many African countries may offer great prospects for business, however, many may lack the infrastructure and buildings as well as transportation needed to setup business in a possibly feasible location. Often time’s business owners will have to supplement their own means of generating electricity, transportation and infrastructure.
• Local regulations – business owners must familiarise themselves with local regulations such as standards for producing products as well as other regulations that may not be the same in Africa as it would be in the business investor’s home country.
• Transportation and logistics – getting goods moved from one point to another can prove to be challenging as some African countries may not have properly developed roads to do so, which will mean business owners will have to improvise and provide their own means of transportation.
It is clear to assume that opening a business in Africa can be a “love-hate” venture, but once the challenges and hurdles are overcome it can go a long way at being profitable for many years to come.
To ensure that you and your business gets a good start and that you are guided on the right track to launching your new investment within an African country, it is important to seek the advice and assistance from component professional immigrations service providers.