Personal Finance

Formula for expanding business within Africa

business

When looking at legal implications, make sure you get right what the supreme law of the targeted host country says about foreigners. PHOTO | FILE

Africa is a frontier market and has attracted a lot of global attention this decade. Kenya is East Africa’s largest economy and is receiving a lot of attention from foreign investors as is the rest of the region. Perhaps this is an opportunity for your business to expand.

In recent days, a number of large businesses from South Africa and Nigeria, Africa’s leading economies, have set up in Kenya. It is now easier to expand within the continent than it was a few decades ago thanks to improved political and regulatory environments.

This is a simple guideline on what you need to look out for if you decide to expand your business within Africa.

You could still opt to expand by forming an alliance or distributorship agreements. Expert advice of a financial analyst, lawyer and other experts will be required for detailed advice on sector by sector expansion.

It is important to have an expansion plan detailing the need to spread wings. Some reasons include a hostile domestic market, taking advantage of opportunities, growth and stagnation in domestic market and brand visibility.

If goals and objectives are sound, it is easier to determine which countries are ideal after conducting detailed due diligence. Once you identify the potential host country, run a proper market research and move this way.

One, understand the host country’s political environment and also analyse its policy towards foreign businesses. While you would rarely find a country legislating against foreigners, the attitude of the country ought to be considered.

There are countries whose general culture is hostile and xenophobic. Last week, the Government of South Sudan issued an order expelling foreign workers but beat a hasty retreat.

This is tied to analysing the risk of doing business in a selected host. The risks could be political, cultural, competition-based or regulatory. If the risk outweighs the benefits then it might be safer to avoid such a host or wait for the environment to improve.

A legal analysis of the selected host should be guided by the supreme law of the land. You must also understand sector laws and ensure that your business is able to meet these requirements.

Look at the ease of business formation in the host country and its policies on foreign companies. For example, what is the cost of doing business, what is the tax payable and what are other liabilities.

Make sure you have work permits for the entire team leaving the parent country. In some places, those found without these documents are taken to jail.

It has become easier to do business due to a number of regional treaties that provide for cost reduction and harmonisation of business procedures.

For example, the ARIPO treaty enables your business to secure some types of intellectual property in member states by originating a Kenyan filing. The Ministry of Trade should be a good resource on the treaties.

Mputhia owns a law firm. [email protected].