Africa presents opportunity
It is vital that South African business leads the push into continent, say top business panellists
BUSINESS in South Africa should be leading the commercial charge into the rest of the continent. This was the conclusion of a panel discussion hosted by Exporters Eastern Cape at Nelson Mandela University’s Business School in Port Elizabeth early yesterday.
The discussion was the second in a two-part series of discussions around the theme “Doing Business Into Africa”.
It had panellists such as Thomas Schaefer, managing director of Volkswagen South Africa, Professor Kobus Jonker, of the Business School, Ian Moore, of Mend-A-Bath International, and Maria du Preez, of Bidvest Panalpina Logistics, deliver their insights and experiences around doing business on the continent.
The conversation, which was facilitated by KPMG’s Alan Barr, focused on obstacles faced by business expanding into the continent, with the first of the series having focused on opportunities in Africa.
Jumping straight into the discussion, Moore, whose company has been trading in several African countries over the past 25 years, immediately pointed to what he believes are excessively high import duties, which he said were also imposed by some SADC countries such as Zimbabwe.
“At one point, we were operating in Egypt. We were in that country for a year. The import duties there were increased to 40%. That killed it for us,” Moore, whose company supplies specialist coatings for baths, said.
Moore also listed the costs of travel, which he said were exorbitant in comparison with travelling in Europe, as another major obstacle to doing business on the continent.
Adding bad infrastructure to the list, Du Preez said this caused excessive delays and damage to vehicles, while businesses also had to contend with additional delays at often corrupt border posts on the continent.
“In the early 1900s, there was relatively good infrastructure on the continent. But after the colonialists left, much of this infrastructure fell into decay,” she said, also bemoaning border post delays, which, at the South Africa – Zimbabwe border at Beitbridge could be up to three days.
Jonker, citing a number of research papers, agreed, saying that logistics and general transport costs, along with red tape, were costly inhibitors for inter-Africa trade.
Acknowledging the hurdles and adding a lack of information about countries and their markets, Schaefer, however, took a practical approach, saying the opportunities should simply be unlocked one by one.
“We did not know what type of vehicle they [the market] were looking for in Kenya, so we just took our best selling Vivo there and they loved it,” Schaefer said.
“You just have to get started and have a long-term view. If we [Volkswagen Germany] did not get into China 30 years ago – when everyone said we were mad – where would we be today?
“With the European and other markets performing as they are now, we would be in trouble without China.”
Considering Africa in the context of it being the next mass market critical to growth for international companies, Schaefer quipped: “You’ve got to get Africa right, or goodnight.”
Collectively expressing positivity around the future of the continent, the panellists agreed it was prudent for local business to expand into Africa.
Moore said: “We must lead the push into Africa, or the rest of the world will.”