http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.69Change: -0.05
R/$ = 12.32Change: -0.01
Au 1168.78 $/ozChange: -0.02
Pt 1083.00 $/ozChange: 1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 10, 2012

Barriers to intra-African trade

Back
Africa|Development Bank|Environment|Gas|Mining|SECURITY|Sustainable|Africa|Nigeria|South Africa|Zimbabwe|Finance|Oil And Gas|Quate Infrastructure|Trade Finance|Infrastructure|Pamela Wadi
Africa|Environment|Gas|Mining|SECURITY|Sustainable|Africa||Oil And Gas||Infrastructure|
africa-company|development-bank|environment|gas|mining|security|sustainable|africa|nigeria|south-africa|zimbabwe|finance|oil-and-gas|quate-infrastructure|trade-finance|infrastructure|pamela-wadi
© Reuse this

By: Pamela Wadi

Africa’s economic outlook has positively transformed in recent years. Interna- tional organisations such as the African Development Bank are expecting the continent’s average rate of growth to exceed 5.8% in 2012 alone.

However, trade between countries in Africa has not seen a corresponding increase. As a result, there have been various calls by governments, trade organisations and international finance houses to address this issue, which is key to boosting and sustaining economic growth in the region.

A company looking to expand into the rest of Africa needs to adapt its business model to effectively mange the nuances that exist between the 54 differing markets. Some of the challenges to intracontinental trade are well known and include the complex bureaucratic processes in each jurisdiction, a lack of ade- quate infrastructure, regulatory issues and difficulty in accessing trade finance.

However, it is also critical that decision- makers consider important issues such as choos- ing the right route to market, ensuring security of tenure and the social licence to operate, as well as adhering to local-content requirements.

Accessing the right route to market in another African country often exposes companies to political risk issues that are unique to the host country. In many jurisdictions, governments and political actors maintain significant influence over the private business sector. This means that foreign companies often interact with and enter into joint venture partnerships with State-owned entities. At times, these joint venture partnerships are used as vehicles by members of the ruling elite for personal benefit. This can expose foreign companies to allegations of corruption and influence peddling and conflict of interest, which can have serious reputational and legal implications.

Understanding the political climate of the jurisdiction a company chooses to enter is important when a local company forms its strategy to do business in the rest of Africa. Changes in the political scene of the host country can have a dramatic impact on the operating environment for foreign companies. Laws and regulations can change suddenly in the more volatile jurisdictions, which can affect the security of assets on the ground. Concerns around security of tenure serve as a deterrent to investing in neighbouring companies by local companies, particularly in capital- intensive sectors like mining and oil and gas.

Calls for nationali- sation across the continent speak to the depth and breadth of African economic transformation. Increasing indigenisation across the continent, seen, for example, by South Africa’s broad-based black economic-empowerment initiatives, Zimbabwe’s empowerment policies, as well as Nigeria’s local-content requirements, means that foreign companies are increasingly obligated to take on local partners, and choosing the right one represents a further challenge to local companies keen to conduct business in other African jurisdictions.

In this increasingly complex and competitive investment climate, sustainable economic growth across Africa hinges on developing trade between countries in the region. Hence, a full understanding of new markets and the contexts of unfamiliar territories by companies looking to do business in the rest of Africa is invaluable if this is to come to fruition.

Wadi is a senior consultant for global risk consultancy Control Risks.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other News This Week News
NHLANHLA NENE The main constraints to economic growth are domestic
Finance Minister Nhlanhla Nene earlier this month stated that, while South Africa’s 2015 economic growth target of 2% was achievable, it was not enough to deliver the tax revenue needed to combat the country’s challenges.
The World Steel Association has published the 2015 edition of the World Steel in Figures report, which shows an increase in steel production as well as provides an overview of steel industry activities from crude steel production to apparent steel use.
The 25-year master plan for Gauteng’s Aerotropolis project will go through a process of approval and adoption during June and July, says Aerotroplis project manager Jack van der Merwe. “We are also in the process of putting together a special purpose vehicle (SPV) to...
More
 
 
Latest News
An end to wage negotiations within the local government sector could be in sight as a conciliator’s proposal, setting out a number of settlement suggestions to resolve the deadlock, was expected on Monday. The Independent Municipal and Allied Trade Union (Imatu)...
Development financier Eastern Cape Development Corporation (ECDC) executive Noludwe Ncokazi on Friday said the organisation had the “huge responsibility of ensuring business continuity”, following the resignation of ECDC subsidiary Automotive Industry Development...
South Africa’s second-largest oil refinery, Engen Refinery (Enref), is set to undergo a three-day planned maintenance outage from July 9 as part of an ongoing maintenance programme to ensure that the facility, which delivers a significant portion of South Africa’s...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
NHLANHLA NENE The main constraints to economic growth are domestic
Finance Minister Nhlanhla Nene earlier this month stated that, while South Africa’s 2015 economic growth target of 2% was achievable, it was not enough to deliver the tax revenue needed to combat the country’s challenges.
The World Steel Association has published the 2015 edition of the World Steel in Figures report, which shows an increase in steel production as well as provides an overview of steel industry activities from crude steel production to apparent steel use.
The 25-year master plan for Gauteng’s Aerotropolis project will go through a process of approval and adoption during June and July, says Aerotroplis project manager Jack van der Merwe. “We are also in the process of putting together a special purpose vehicle (SPV) to...
SOLAR PANELS The existing buildings in the Coega Industrial Development Zone lent themselves well to rooftop solar panel installations
The Coega Development Corporation (CDC) plans to fit 15 of its buildings, totalling 127 000 m2 of roof space, in the Coega Industrial Development Zone (IDZ), in the Eastern Cape, with solar panels.
The Supreme Court of Appeal’s (SCA’s) November 2014 judgment, ordering steel producer ArcelorMittal South Africa (AMSA) to hand over the 2003 Environmental Master Plan for its Vanderbijlpark steel plant to environmental pressure groups, confirmed the right of civil...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96