As it is often homogenized into monolithic, generic terms, it can be easy to forget that Africa actually consists of more than 70 nations, multiple markets and economies, hundreds of cultures, and thousands of commercial challenges.
African markets are perceived to have excessive risk. In 2013, EY conducted an attractiveness survey for Africa. Perceptions from the survey found Africa to be a country of disease, poverty, corruption, and ongoing conflict.
While the vein of corruption was a tributary shared among nearly all corners of the continents, the perceived risks are overstated, and Africa is in fact a surging, growing economy rife with economic possibility.
Perceptions versus reality
The survey results show overwhelmingly positive metrics regarding Africa’s opportunity and sustainability as a key market for international businesses. The data highlights that Africa has become a commercially significant market for the last two decades.
Since 2000, seven of the 11 countries that make up Africa’s business core have grown by seven percent annually, and in that time six of the 10 fastest growing economies in the world have come from Africa.
There is a wide gap between the perception and reality concerning corruption within the continent. “The reality is that a diverse range of African countries have now experienced consistent and robust growth for over a decade.”
Still, the impression that doing business in Africa is risky has limited the flow of foreign direct investments in Africa, despite the fact that Africa’s relative attractiveness to foreign direct investment has continued to rise.
Despite an increase in growth, challenges still persist. The risks identified as key investment hurdles are political instability, bribery and corruption, and weak security infrastructure.
EY’s annual Global Fraud Survey reinforced the perception that bribery and corruption is a significant risk. Across all the geographies surveyed, African respondents are the most likely to have experienced a significant fraud in the last two years. Obtaining permits, licenses or even basic utilities can sometimes lead to a solicitation of a bribe.