In today’s rapidly changing business landscape, international trade is a must to promote success. Companies with multinational footholds are the most likely to create new jobs. In Africa, a free trade agreement has recently been instituted which will cut down on the red tape needed to conduct business across national borders.
While the free trade agreement will certainly help to further the cause of Africa as a whole, there are only few companies that do business in a number of African countries. More African companies need to join the continental effort. Tribert Rujugiro Ayabatwa explains how his companies have been successful across Sub-Saharan Africa.
Barriers to Success
In the past, the public perception of Africa as a whole was that it was not very business friendly. According to the World Bank’s Doing Business Index, the business environment in many African countries is generally poor. The process of starting or closing a company is labyrinthine in many countries, and people in business are often discouraged by the process.
Some countries are beginning to build one-stop centers that help to pull together all of the regulatory needs when it comes to starting a business, but they are run on an ad-hoc basis and do not have the authority that they do in other parts of the world. It is hoped that these centers will be able to help more companies cut through the red tape that they need to begin doing business.
The Role of Foreign Corporations
To fill the void created by a lack of African firms, many companies from Europe, the Us and China have moved in. While foreign investments are welcome, it is vital that Africa’s own business sector plays a part in integrating the economy of the continent. African businesses need to take the lead in turning the African Continental Free Trade Area into reality. The companies need to be encouraged to grow, make larger investments across borders, employ and train more African workers, and expand tax bases of the host countries. That is how prosperity will take off. When African businesses create jobs, invest money, and pay taxes, their financial resources and profits stay on the continent, building stronger economies and stronger communities.
The African Continental Free Trade Agreement
One of the most important developments in African business over the past decade has been the African Continental Free Trade Agreement or the AfCFTA. The AfCFTA has begun to break down the regulatory barriers between countries, encouraging the free movement of people and goods between its member nations.
There are barriers to the AfCFTA’s success, namely the countries which will not ratify its various provisions. When all of the countries included in the agreement have agreed to its terms, it will be more successful in promoting African business.
Case Studies for Success
While Africa’s own business enterprises that do business across borders have been relatively slow to develop, a few companies that have succeeded provide a blueprint for other firms can follow. Ayabatwa’s company, PTG-HLD, has been in business since 1978. Starting as a small manufacturing firm in Burundi, the company soon grew past its borders. Gradually, the company established subsidiaries in other African countries and the Middle East. The basis of the success was due to Ayabatwa’s entrepreneurial spirit of doing business beyond his domestic market. He believed that if he succeeded in one economy, he could replicate his manufacturing of consumer goods in another African country. Over time, PTG-HLD was able to expand its operations to Uganda, Tanzania, South Sudan, Nigeria, the Democratic Republic of Congo, and Angola.
Ayababatwa’s success is partly explained by his approach to business. Businesses exist to create profits for their owners and stakeholders, but they also have a responsibility to the community as a whole. Companies have to put resources back into communities in every country where they operate. Ayabatwa believes that corporate social responsibility is as important as corporate profit. Creating partnerships with governments and communities in Africa to improve lives is fundamental.
Encouraging African Businesses to Expand Beyond their Borders
Emerging African companies need to be encouraged to work with stakeholders to take their businesses across national borders. Creating an African free trade zone is not enough without making sure that companies are able to take advantage of its provisions. When more African companies expand their businesses across borders, that is when the African Continental Free Trade will become a reality.