Doing Business in West AfricaMay 2012

Heather ByrnesSenior Commercial Officer

Embassy of the United States

Accra, Ghana

Road Construction - Photo Courtesy of West Africa Trade Hub

Port of Tema- Photo Courtesy of West Africa Trade Hub

West Africa - Overview

• One of the world’s regions of highest intrinsic wealth: oil/gas, gold, bauxite, manganese, diamonds, cocoa and much of the land highly suitable for agriculture;

• Currently one of the poorest areas in the world – but almost all countries showing positive growth – best three performers 6-13% annual GDP growth;

• Legacy of colonialism: many countries encompass multiple ethnic groups and have had long-term internal conflicts. But, growing number of peaceful democracies;

• Infrastructure poor: power, water, telecommunications, roads, etc. But, this also = opportunities for infrastructure companies;

• Endemic health problems in region: malaria, water-borne illnesses, maternal/child mortality – but, progress on almost all fronts;

• Known for internet fraud. Check potential business partners with embassy. Payment in advance is highly recommended or other methods of limiting risk (letter of credit, etc.) Courts often slow and judgments difficult to enforce;

• Formal business culture (suits, use of titles, etc.) but relaxed sense of time (things take a long time and culturally people are not deadline conscious);

• Opportunities for infrastructure companies across the region – growing middle class in a few markets (ie consumer goods).

West Africa – Key Market StatisticsBenin Burkina

FasoCape Verde

Cote D’Ivoire

Gambia Ghana Guinee Guinee Bissau

Liberia Mali Niger Nigeria Senegal Sierra Leone

Togo

Pop’n millions 10 17 ½ 21 2 25 11 2 4 15 17 170 13 5 7WB Ease of Doing Business

Rank

175 150 119 167 149 63 179 176 151 146 173 133 154 141 162

GDP growth 2011

3.8% 4.9% 5.6% -5.8% 5.5% 13.5% 4% 4.8% 6.9% 5.3% 5.5% 6.9% 4% 5.1% 3.8%

Per capita GDP $ 1,500 1,500 4,000 1,600 2,100 3,100 1,100 1,100 400 1,300 800 2,600 1,900 800 900

LanguageFR FR POR FR ENG ENG FR POR ENG FR FR ENG FR ENG FR

Sources: www.cia.gov/library/publications/the-world-factbookhttp://data.worldbank.org/indicator/IC.BUS.EASE.XQ

WATRADEHUB.COMRoad Governance Report

Challenges

• Infrastructure: water, power, internet – both reliability and quality• Lack of business service providers (a handful of reliable providers, used by

almost all the companies)• High costs (hotel, car rental, commercial real estate – all expensive)• Difficulty sourcing qualified staff and high training costs• Lack of reliable ‘cold chain’, most goods are trans-shipped through Europe• Contract sanctity – contract seen by many as starting point, not end, of

negotiation. International arbitration clause is a must. Use qualified lawyers.• Check any potential business partner with the Commercial Service or Embassy.

A handful of fraudsters are very active. You would be amazed how legitimate some of them seem.

• Payment in advance is highly recommended or other methods of limiting risk (letter of credit, etc.) Just because one transaction was ok – don’t let down your guard.

• Culturally some West Africans have a very difficult time saying ‘no’. Actions speak louder than words when dealing with people from the region.

Photo by WA Trade Hub

Opportunities• Asian and European competitors already very aware of opportunities in the region –

but U.S. companies much less aware/experienced in this part of the world; • In many parts of West Africa, U.S. brands/goods are highly sought after/esteemed;• While risks higher in this part of the world, returns can also be higher;• Sectors of particular opportunity:

• Energy (Power and Oil/Gas – both will see sig. growth in next decade)• Transportation (Bridges, Rail, Ports, Aviation and Roads)• Heavy Equipment (Mining, Construction and Oil/Gas)• Telecommunications (high cell phone penetration, increasing use of

internet)• Agriculture (starting to transition from very small farms to larger-

scale commercial farming)• Healthcare – equipment, hospital construction in particular• Consumer – Limited for most of region but opportunities in some

markets (e.g. Nigeria and Ghana)

Traveling to West Africa

• Crime/security issues vary considerably from country to country. Ghana for example is similar to the United States while Nigeria is more dangerous. Check travel.state.gov before planning any trip.

• Malaria is big risk across region. We advise all travelers to take prophylaxis. Other vaccines etc. are important. Visit the CDC website for more information on health preparations: www.cdc.gov.

• Weather is HOT and air conditioning can be variable. Suits are a must for business but lighter fabrics are better.

• Bring any medicines you take regularly – not all pharmacies are reliable and some medicines available in the U.S. are not available here. (Also, counterfeit medicines are a problem.)

• Visa in advance is required for some countries. Allow 2-3 weeks for processing for each country.

• Lots of new flights coming and many airlines already here: Delta, United, BA, KLM, British Airways, Virgin Atlantic, Emirates, Lufthansa for example.

Photo by Tullow

Is West Africa for my company?

• Business is West Africa is very relationship driven. Business relationships take time to develop. (Any process takes time in West Africa.) Do you need an immediate sale? Or are you willing to wait a year or two?

• Business in West Africa is personal. You may need to travel to West Africa on a somewhat frequent basis – even if you have a partner on the ground. Are you prepared to travel to West Africa?

• To develop in West Africa long term, you will need a local partner. Are you prepared to work through a distributor, reseller or other partner?

• West Africa can be challenging for new-to-export companies. Do you have experience in other export markets?

• After-sales service/repair/support can be a challenge in West Africa. Does your product or service depend on on-the-ground after-sales service or support?

• Infrastructure can be unreliable (power, water, internet, etc.) Does your product depend one or more infrastructural aspects?

• Are you a flexible, patient person with a sense of adventure?

Photo by Tullow

Spotlight on Three Markets:Ghana, Nigeria and Senegal

GHANA

12th fastest growing economy in the world last year. Steady

growth over last decade.

English speaking,

former British colony

Ghana one of the fastest growing economies in the world in 2011 at 13.5 %.

Lots of real opportunities for U.S. companies – U.S. exports grew more than 30% in 2010 vs. 2009

24 million people

Growth from low base, just moving into bottom of middle

income status. High debt to income ratio.

Growing popularity as regional HQ for U.S. companies: stable, good quality of life, easy to attract ex-pat employees,

ease of travel.

GHANA: MARKET OVERVIEWGHANA: MARKET OVERVIEW

Your Gateway to West Africa

• Sub-regional market of 250 million people.

• Immediate access to all markets of the Economic Community of West African States (ECOWAS). Although, not completely free trade.

• Many companies moving regional HQ’s from other countries in region to Ghana.

A Vibrant DemocracyJuly 2009 – President Obama visited Ghana, first visit by President Obama to sub-Saharan Africa.

Third sitting U.S. president in a row to visit Ghana, Presidents Bush and Clinton also visited.

WHY GHANA?

•Two peaceful handovers of power between parties in a row – best track record on the continent and by far in the West African region.

Two main parties: NDC (National Democratic Congress) and NPP (New Patriotic Party). Each have over 40% of the vote.

•Last election was roughly 8 million voters, decided by 40k votes. No sig. violence.

•Free and active media (albeit sometimes rather colorful).

Akwaaba (‘Welcome’)• Ghana is sometimes called the Ireland of Africa. Ghanaians known everywhere as

friendly, welcoming and fun-loving.

• Relaxed mode of life, and business. Can be enjoyable (when you want to relax) and frustrating (when you want to get something done).

• Although pace is relaxed, aspects of society very traditional, formal: Ghanaians dress formally and modestly. Greetings and titles very important.

• Traditional rulers still important feature of power structure.

• U.S. companies setting up presence in Ghana encouraged toestablish and maintain good relations with both electedgovernment and traditional rulers.

Opportunities• Steady growth of 5-7% for past decade. Oil find in 2007 (and further oil finds since)

have created further economic momentum. 13% last year.• Number of inquiries to Embassy Ghana has more than tripled in last three years.

Companies already in Ghana have increased footprint (e.g. GE, IBM, etc.).

OIL AND GAS

Consumer Goods Franchising

If you are interested in opportunities in Ghana..

Heather Byrnes, Senior Commercial OfficerEmail: byrnesh@state.gov Direct tel. +233-21-741-086

Cell: +233-244-331-244OR

Abdul-Aziz Anyang, Commercial ClerkEmail: abdul-aziz.anyang@trade.gov

Direct tel. +233-21-741-498Cell: +233-244-331-245

Mailing address:Foreign Commercial Service

2020 Accra PlaceWashington, DC 20521-2020

GHANA

Nigeria

More than twice the size of California

English speaking,

former British colony

Rich in natural gas, petroleum, tin, iron ore, coal, limestone, lead, zinc and arable land

Growth in 2011 of 6.9% and 2010: 8.7%

170 million people

Long-standing ethnic & religious tensions but 2007 marked first civilian-to-civilian transfer of

power in country’s history

Oil sector provides 80% of country’s revenues but since 2008 government attempting to diversify and instituting

economic reforms.

NIGERIA: MARKET OVERVIEWNIGERIA: MARKET OVERVIEW

Nigeria

Nigeria: Africa’s Largest Nation• Nigeria has world’s 31st largest GDP at $414 billion in 2011 and aspires to be in

world’s 20 largest economies by 2020. • To reach that goal, government is liberalizing the economy and promoting public-

private partnerships. • Nigeria accounts for 40%+ of all imports in West Africa and is the third largest

consumer market on the continent, after Egypt and South Africa. Africa’s most populous country (one-sixth of the continent’s population lives in Nigeria).

Cashew Factory in Nigeria - Photo Courtesy of West Africa Trade Hub

• One of the most diverse markets in the world with 250 ethnic groups.

• Diverse nationalities and cultures offer opportunities for U.S. companies – but also challenges. For example, sales/ad literature with certain female portraits might work well in majority-Christian areas, but could cause problems in the Muslim-majority North.

Nigeria: Challenges

• Safety and security situation also creates cost for companies – both in terms of direct costs and (for international companies) attracting retaining staff;

• Clearance of goods at ports can be slow, cumbersome and highly bureaucratic. Reports from companies that corruption and congestion are significant issues;

• Cost and availability of credit are problems (interest rates are 20-35%);• New local content laws for petroleum industry are higher than actual local content

seen in the industry globally – may be challenging for companies in the sector.

Photo Courtesy of West Africa Trade Hub

• Infrastructure inadequate = high costs for transport, water, power;

• Less than 4,000 MW total so most businesses rely on generators. Recent reforms to power sector, which may result in increased power gen, but will take several years. Pent-up demand estimated at 20,000 MW;

Nigeria: Opportunities• Growing and increasingly sophisticated consumer base, coupled with strong affinity for U.S.

products and American culture;• Best prospects in these sectors:

• Oil and Gas Field Machinery/Equipment• Safety and Security Equipment/Services• Power Generation Equipment• Health Care Equipment/Services• Agriculture Equipment/Machinery/Supplies• Education Services and Supplies

• Secondary best prospect sectors:• Maritime Equipment, esp. workboats• Construction Equipment/Supplies• Financial & Insurance Services• IT Equipment and Services• Water/Wastewater Equipment• Aviation Equipment and Supplies

Photo Courtesy of US Embassy Nigeria

Nigeria: Resources

• U.S. companies interested in the Nigerian market are strongly advised to seek the assistance of experienced commercial lawyers. For a list of legal firms, contact the Commercial Service office in Lagos.

• The Nigerian Embassy in the United States has information for U.S. businesses considering exporting to/working in Nigeria: www.nigeriaembassyusa.org

Photo Courtesy of US Embassy Nigeria

• Check out any prospective local partner with the U.S. Commercial Service in Lagos: www.buyusa.gov/nigeria.

• Commercial Service in Nigeria can provide lists of pre-vetted companies as part of an International Partner Search or Gold Key Service. They can also conduct International Company Profile reports, useful as part of due diligence.

If you are interested in opportunities in Nigeria..

Rebecca Armand, Senior Commercial OfficerEmail: rebecca.armand@trade.gov

Tel. +234-1-460-3581OR

LagosOfficeBox@trade.gov

A list of specialists and their sectors can be found on the website, buyusa.gov/nigeria at

http://www.buyusa.gov/nigeria/contactus/index.asp

SENEGAL : BUSINESS OPPORTUNITIESUS EMBASSY DAKAR

Senegal

24

SENEGAL : LOCATED FOR SUCCESS

NORTH AMERICA

EUROPE

SOUTH AMERICA

AFRICA

SENEGAL

25

SENEGAL : PROS AND CONS

- +

STABLE DEMOCRACY

EAGERNESS FOR AMERICAN BRANDS – INTEREST IN DOING BUSINESS WITH THE U.S.

MAJOR INFRASTRUCTURE PROJECTS

ATTRACTIVE INVESTMENT CODE

SMALL MARKET

A CONSERVATIVE BANKING SYSTEM

HIGH FACTOR COSTS RIGID LABOR MARKET

GATEWAY TO ECOWAS, MARKET OF 255 MILLION

STABLE MACRO ECONOMIC CLIMATE

NON-TRANSPARENT JUDICIARY. FRENCH LEGAL SYSTEM

CORRUPTION

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SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES FOR INVESTMENT

ATTRACTIVEINVESTMENT CODE

INFRASTRUCTURE PROJECTS

STABLE DEMOCRACY

27

SENEGAL : COMPETITIVE ADVANTAGES AND OPPORTUNITIES FOR INVESTMENT

GATEWAY TO ECOWAS

COUNTRIES

STABLE MACRO

ECONOMIC CLIMATE

INTEREST IN DOING

BUSINESS WITH THE U.S.

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SENEGAL : BUSINESS OPPORTUNITIES

POWER GENERATIONPOWER GENERATION

CONSTRUCTION EQUIPMENT AND HEAVY MACHINERY

CONSTRUCTION EQUIPMENT AND HEAVY MACHINERY

AUTOMOBILESAUTOMOBILESTELECOMMUNICATIONSVALUE-ADDED SERVICESTELECOMMUNICATIONSVALUE-ADDED SERVICES

AGRICULTURAL EQUIPMENT

AGRICULTURAL EQUIPMENT

LOGISTICAL PLATFORMSERVICES HUB

LOGISTICAL PLATFORMSERVICES HUB

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SENEGAL : POWER GENERATION

30

Senegal’s Plan Takkal requires big investments and may result in opportunites for U.S. Companies

If you are interested in opportunities in Senegal..

Youhanidou Wane Ba, Commercial SpecialistEmail: wanebay@state.gov

Tel. +221-33-829-2231OR

Steve Perry, Econ CounselorEmail: perrysj@state.gov

Tel. +221-33-829-2227

Thanks! Questions?