Business people across the continent have called on the governments and regional development institutions to join hands in fashioning out ways to help reduce the high business risk in the continent. This call was made against the backdrop of recent findings by global consultancy firm PwC Group which identifies among other things the growing socio-political and economic uncertainties are undermining efforts by African businesses to grow, and by extension contribute to the growth of the continent. Worst hit by this development are small to medium scale businesses and the conglomerates and multinationals have the financial muscle and political connection to push through without much hassles.
An executive of a Lagos based microfinance bank that funds small and medium scale businesses that service the sub region explained that some of the present policies put small businesses that rely on regional markets at a disadvantage whereas big multinationals survive because they have established outposts across the countries which help them to mitigate some of these challenges. He cited example with a very popular household manufacturing conglomerate Unilever Group which he said manufactures some of its products in either Ghana, Cote d’Ivoire of Nigeria— depending on which country provides comparative advantage in manufacturing a particular product–and distribute across the region using its well oiled logistics network. But smaller holdings that do not have such huge capacity are left out in the cold, he said.
The Report captures some of the stumbling blocks businesses face in the face of bureaucratic redtapes across the continent. For example, the Economic Community of West African States (ECOWAS) Protocol mandates free movement of goods and services across the 15 member countries, but this exists only on paper as businesses are made to go through untold hardships at various border posts incurring high demurrage and in some instances, loss due to border thefts and other hazards. Another challenge being faced by businesses is exchange rate volatility between the three major currencies in the region—naira, CFA Franc, and cedi— this has remained a detriment to regional business transactions in the region.
For example a Nigerian businessman who spoke with this Correspondent pointed out that it has become extremely difficult to make estimates of cost of logistics and successfully build it into a business plan because of policy changes along the West African coast. He said that sometimes, between the time it takes to load his goods in Lagos, and offload in Accra Ghana, he may be shocked with three to four different policy changes affecting excise and duties on the goods. He lamented that it is becoming increasingly difficult to operate in the region, doubting the rhetoric of economic integration being parroted by African leaders on a daily basis.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.