What to expect when doing business with African countries

“Africa, the continent of poverty, backwardness, violence, rampant poverty and zero prospects, that Africa, seen only in charity ads, does not exist.' Guikje Roethof wrote these words in the Groene Amsterdammer (in Dutch) 25 years ago, but the same image persists to this day. According to Roethof, this has everything to do with how the continent is framed by journalists and others, ‘who focus on disasters and social evils, rather than everyday life.’ .

In a 2019 interview, professor of Inclusive Development in Africa Marleen Dekker remarked that “The Netherlands is full of preconceived notions about Africa”, because, “we are blind to the continent’s dynamism and developments and therefore perpetuate the image of a ‘bottomless’ pit full of conflict.'

Framing expert and journalist Mirjam Vossen has observed similar tendencies, noting that there is much more to Africa than what the average Dutch person believes. ‘There are more university graduates in Africa than victims of famine’, she writes in a blog, before adding: ‘my gut feeling tells me this cannot be right, but it is probably the truth nonetheless. It just goes to show how persistent African stereotypes can be.’

Prejudice

And our prejudiced views of Africa live on unchecked and unchallenged. Try asking people around you: 'What obstacles do you think you would encounter if you started importing products from Sub-Saharan Africa?' People will list off all sorts of obstacles, and corruption will most likely be one of them.

Professor Chibuike Uche is not surprised. Uche researches "Finance and Integrity in Africa" at Leiden University and knows that the continent where he was born is notorious for poverty and corruption. Still, Uche finds prejudices about African people to be ill-founded.

“These preconceived notions are especially common in people who do not often run into people with a different background. They do not understand that people who live in Africa are people in their own right: not the embodiment of an entire continent. When they do come across an Africans person, they are likely to quickly link existing prejudices about the continent to the people they meet.” Besides, it is well known that many people in Europe see Africa as a monolith, but in reality, the continent consists of 54 countries that each have their own unique identity and can be as far apart as some European countries are.

Fear

Entrepreneur Joop van der Vinne experienced firsthand how prejudiced the Dutch can be. “When I left for Nigeria in 2008, some of my colleagues feared I would end up in a soup pan, warning me of how dangerous it would be.” In fact, the areas where Van der Vinne spends most of his time are anything but dangerous. “I live in a safe neighbourhood in Lagos. Boko Haram is 1,000 kilometers away and the pirates are somewhere else entirely.”

6 challenges when trading with countries in Africa

Van der Vinne acknowledges that working in Africa can be challenging at times, and Altagracia Kotzebue, Justus Bijlsma, Jaïr Zeegelaar, and Dick van Regteren can relate. These five entrepreneurs are experts by experience when it comes to trading with African countries and have run up against the entire gamut of cultural differences and challenges. Here are some of the issues they encountered.

1. Business arrangements
2. Working with governments
3. Cultural differences
4. Infrastructure challenges
5. Organisational and structural challenges
6. Dealing with poverty

1. Business arrangements

“Coming to an agreement in African countries is not difficult, but it is different”, Kotzebue begins. "We are used to living rushed, hurried lives, while Ghana is more easy-going, more relaxed. Honestly, it took me some time to adjust. I worried whether everything would get done in time, but my concerns were always unfounded. If the work is not done by nightfall, they will keep working until it is.”

“The main problem is that we anticipate all these obstacles, while things are actually a lot easier than they seem. African entrepreneurs usually speak English and are eager to do business,” Jaïr Zeegelaar explains.

“African attitudes to time are different than in the Netherlands”, Joop van der Vinne notes, and coffee importer Bijlsma confirms. “People here will honour any business agreement, but if you meet up for drinks with someone at 14:00, you should not be surprised if they show up at 15:30. People in Africa have a different attitude to time than in the Netherlands.”

Professor Uche explains: “It is very common in African cultures for all involved to show patience in social relationships.” Business agreements are different, he argues, noting that “African people tend to respect business agreements, both in Africa and beyond.”

Van Regteren does have a particular pet peeve when it comes to agreements: “The payment behaviour of my Kenyan customers is a big problem for me. Business partners will not hesitate to make you wait for your funds, almost using you as a bank, as it were. If you ask them about it, they tell you not to worry, and it does always work out in the end. My partner once had dealings with a counterparty who actually could not pay, so they accepted two Land Rovers in lieu of payment.”

2. Working with governments

Professor Uche confirms that some African countries have untrustworthy governments, adding 2 important observations: “I am basing this on the few countries I know, not all 54 countries in Africa. Besides, there is a clear cause. Colonialism erased traditional African cultures, religions and ways of life. Traditional African societies did not have courts and prisons. Strong social values ensured that crime was punished, if it was committed at all, but African customs were replaced by Western customs that did not fit into African society. Western institutions and social structures were developed within the Western context and cannot simply be copy-pasted into the African world. Unfortunately, African leaders are not sufficiently aware of this, which is why it remains difficult to fight corruption in African companies and bring about real change.”

Van Regteren has experienced firsthand how big a problem corruption is in Kenya (in Dutch): “It is especially common in the ports, where documents are checked and goods are inspected. Our containers often take a long time to clear, and clearing agents regularly will come asking for a bribe. Once you pay, your container is cleared. It is not something I have to deal with myself, because my partner is responsible for our operations in Kenya, but I do know that it happens. I will admit that it means I indirectly contribute to corruption, but there just isn’t another option. We could switch to a new clearing agent every now and again, but that would not solve the problem. The source of the corruption? More and more money is entering and leaving the country, and the people witnessing this boom probably don’t get paid too well. This approach means that they go home with a bit more in their pocket at the end of the day.”

'No choice'

According to Van der Vinne, Nigeria (in Dutch) is also rife with corruption, “but I have no piece of it”, he assures us. “Naivety can hurt you. I avoid middlemen and always negotiate with the owner; they will never steal from themselves, after all."

Zeegelaar's Nigerian trading partner does not mince words: “As she sees it, everyone is corrupt. If you refuse to take part, your business will not survive.” I have seen the same happen in Suriname (in Dutch). It breaks my heart to see that even shipments of food will get stolen at times. It is worth noting, though, that the Dutch government is hardly a paragon of virtue itself: just look at the tax authorities and the benefits scandal.”

Kotzebue feels the same way: “We just had the face mask scandal in the Netherlands and we have an arsenal of watchdogs checking banks and monitoring compliance with privacy legislation. Why? Because we need them. Many African countries do not have the same supervisory infrastructure we do. Africa tends to be singled out as a hotbed of corruption, but dishonesty and deceit are global phenomena.”

A glance at the Transparency Index, which measures whether a country’s government is functioning properly and is successfully combating corruption, will tell you that Rwanda is performing well, Justus Bijlsma notes. He has first-hand experience of how easy it is to do business there. “Rwanda (in Dutch) has a great business environment, even if you are dealing with small-hold farmers.”

Burundi (in Dutch) is another story altogether, according to Bijlsma. “The Burundi government is less effective and small-scale corruption is very widespread. We really have to go looking for larger, reliable partners.” Even then, Bijlsma stresses that business owners can find themselves in tricky situations. “A driver we know told us that he had to pay a toll for white passengers whenever he passed a police checkpoint. I always refuse to pay and I have gotten away with it so far, but there will come a point at which I have to comply. When it comes to business relationships, however, we will never help foster corruption. We travel with locals whenever we hit the road, which I think is helpful.”

3. Cultural Differences

“Cultural barriers should never be a reason for stagnation”, Kotzebue argues. In her eyes, the differences with Asia - a major trade partner - are bigger. “Africans are all too eager to do business and will welcome you with open arms.”

Kotzebue stresses the importance of putting in the effort: “Immerse yourself in a company, country, or culture and you will find the differences become a boon rather than a barrier.”

However, professor Uche has seen how the differences can be disruptive: “There are fundamental differences between African and Western cultures, which can lead to misunderstandings.”

Bijlsma illustrates a cultural difference between the Netherlands and Rwanda with a practical example: “We run a coffee shop in Rwanda with three local partners and decided to start selling our coffee in supermarkets too. It was a challenging move for our partners, because they were forced to try their hand at something new. It took a long time before things even got started, and when they finally got the ball rolling, the bickering started: they couldn’t agree on pricing and packaging. In the Netherlands, these issues would be dealt with quickly and pragmatically. You find a compromise that you can all live with and move forward. That is not what happened here. Our partners weren’t as interested in finding a solution together as they were in emerging victorious. Their pride got in the way.”

Respect

Van der Vinne acknowledges that pride is important in Africa, but adds that he has seen plenty of Western people make a meal of things, too: “Some Westerners seem to be under the misapprehension that African people are stupid, which is a big mistake. Many Nigerians have almost nothing, they have to fight their hardest to survive and can be very hard on themselves. They deserve respect.” Van der Vinne has found that asking questions and keeping an open mind often helps. “Finding out more about this country and its people is absolutely fascinating to me. I visit them at home and go to the occasional wedding, which fosters trust and mutual respect.”

Zeegelaar sees things differently. “There are big differences, but culture has little bearing on business if you ask me, as long as you are both on the same page. I am still shocked by how down-to-business my trading partners can be. The urgency is palpable.”

None of the five business owners have ever had to deal with an African business partner who failed to honour an agreement or employees who suddenly stop showing up after they have been paid. “I’ve heard of the stories, but it has never happened to me”, Van der Vinne stresses. “The unemployment rate is high here, so people are generally quite eager to work and always show up.”

Van Regteren affirms that African employees are incredibly loyal. “We have zero employee churn. We have been working with the same people from the get-go: our team has only grown.” And do employees in African countries go by the book? “My Kenyan employees could start working in my Dutch branch tomorrow if need be, and they wouldn’t miss a beat.”

4. Infrastructure challenges

Uche gets straight to the point: “there is no denying that the infrastructure can be problematic.” Van der Vinne has also had bad experiences. “I was working on a hangar construction project for which I had a 35 km commute. In the morning, it took me 45 minutes to get there, but the trip back to Lagos took me 6 hours. And there is no such thing as public transport.”

The countries where Bijlsma buys his coffee are particularly hilly. Transportation takes a long time, but the main roads are “just about okay”. The journey from the plantation to the 'washing station', however, does present a problem. “The berries in which the coffee beans grow come in 80 kg bags and they are transported on a bike rack, which takes a long time. If it takes too long, the berries will begin to ferment and the beans will end up tasting like dishwashing liquid.”

Accra, the capital of Ghana, has good infrastructure, but the city is overwhelmingly crowded, Kotzebue explains. “The rural areas, however, are a patchwork of dirt roads and jungle, I love the contrast. A lot of shea butter comes from the north of the country, and although the nighttime trip to the south - where the shea butter is loaded onto boats - can take 12 to 14 hours, it does let you avoid the traffic jams around Accra.”

“The roads in Kenya are pretty good”, Van Regteren remarks, “especially if you stick to the main roads. There are occasional potholes, but you can get everywhere just fine. You can easily get from Nairobi to Mombasa and Uganda, although Nairobi itself can get very busy.”

Digital motorway

“You can reach everyone online. In fact, it is better in Africa than at home”, Zeegelaar claims. “In the Netherlands, people stop responding once the clock strikes six. My African partners always reply, day and night.” Van Regteren also raves about digital traffic in the continent: “Every Kenyan person I know has a mobile phone. I have even seen members of the nomadic Masai tribe with a phone. And there is WiFi, 3G, or 4G wherever you go.”

Van der Vinne and Bijlsma also have no real complaints about mobile Internet either and remark how common it is to pay by phone and text message from Kenya to Burundi. Bijlsma: “It is entirely normal here to pay by phone and forget about debit cards.”

5. Organisational and structural challenges

“Farmers spend their days working the fields and are mainly concerned with good yields. Organisation is just not one of their priorities”, Kotzebue explains, who has seen corporations in the Netherlands create highly detailed organisational structures in the past decades. “Good organisation does improve operations, so Ghanaian methods are often less efficient.” At the same time, she stresses, a sense of respect is in order. “It does not mean that what Ghanaian farmers are doing is wrong. We tend to be overly hands-on and overbearing: This is better, this is quicker, this produces tastier results. Stop it, they do not need your input.”

“I always get the information I need in the end, but it can take a little patience at times.” Van Regteren downplays the occasional hiccup, while acknowledging that it often takes a long time to get things done. “And if you speak up, people will tell you: ‘Hey, TIA’. In other words, This Is Africa."

“Dutch people are incredibly good organisers”, Van der Vinne explains, “but our approach does not work in Nigeria. Starting up a new business here will take at least a year. My advice: make sure you spend a lot of time in the country. Go looking, talk to people, build a network. Show that you mean business and that you really want to follow through. People are less trusting here, so take the time to prove that you are credible.”

6. Dealing with poverty

Would it not be better to provide aid in countries with high levels of poverty than to go there for trade? “Aid? That sounds like people in Africa do not have an identity of their own, as if they desperately need our help. That is not what we believe”, coffee importer Bijlsma says firmly.

Van der Vinne concurs. “We should be less hands-on and let African people do their thing. Africa has vast reserves of natural resources and Western multinationals, countries, and governments have been robbing the continent blind for almost 50 years.”

“The world depends on Africa. Just imagine where we would be without essential resources like oil, coffee, cocoa, gold, and coltan, says Kotzebue.”

Van der Vinne continues: “True, there is a lot of poverty in African countries, but we have to move on from this aid mentality, which produces more problems. We need to do business with African countries and create jobs so that people there can earn enough money.”

Zeegelaar concurs: “They do not need us to tell them how to do business. That is exactly the paternalistic attitude that causes most problems. We impose our rules, our prices, and our quality marks in Africa. But when we trade with China or the Emirates, we allow them to decide. It is high time that we treat African entrepreneurs with the same respect.”

Van der Vinne cites the oil industry as an example. “There are 4 refineries in Nigeria, none of which are operational. Do you know why not? Because the big producers do not want to work in Nigeria. They take the raw materials, export them, and make bucket loads of money.”

Bijlsma also believes that fair trade is key. “You have to pay fair prices that enable businesses to turn a profit, so that they can invest and work towards a better future.”

Kotzebue also believes that sweeping changes are needed to turn the tide. "African governments have to crack down on lousy deals and stop giving away land in exchange for roads. The continent is being pillaged.”

Professor Uche highlights how African countries have failed to gain a larger share of the value chain of African commodities, citing cocoa and coltan, an ore used in the production of cell phones and electric cars, as examples.

Uche also points out a study that shows that Africa does not benefit from financial aid. “The study shows that Western aid is at best a way to mask the exploitation perpetrated by foreign companies in Africa.”

The study states that “while $160 billion goes to Africa annually in the form of loans and donations, over $200 billion is taken from the continent every year through tax evasion, appropriation of resources, and debt and interest collection, with multinationals being a particularly harmful culprit.”

Opportunities in Africa

Laurens Kuipers is a KVK business adviser who focuses on business opportunities for Dutch entrepreneurs in Africa. Population growth is an important factor, he says. “In the west and east the population is growing rapidly. Especially in Nigeria and Ethiopia. People move to the cities to find work. That is where the economic opportunities are.”

Not everybody manages to find a job. Companies working with many employees on the production floor can benefit from this. "In the textile industry for example."

Employers' organisation VNO-NCW also keeps an eye out for opportunities for Dutch entrepreneurs. The income of the locals plays a role. According to VNO-NCW, South Africa, Nigeria, and Egypt offer the best opportunities for Dutch companies. It also mentions Ivory Coast, Kenya, Algeria, Ethiopia, and Morocco as 'highly interesting'. 

Kuipers sees there are many chances in Africa. "Investments and knowledge are needed, not just in agriculture and industry." Import or export on a small scale can also be interesting, according to the adviser. “Think of local processing and enrichment of raw materials for export purposes. Or supplying Dutch technology. For example in the field of energy or reusing waste materials."