A Business Management graduate from Moi University and holder of an MBA degree from Copenhagen Business School, Edward Mungai heads up the East African office for Danish International Investment Funds (IFU). IFU acts as an investor and project partner for private sector enterprises in developing countries. Previously Investment Manager in Copenhagen and East Africa, Mungai has worked in Africa, Asia, Europe and Russia for over ten years. Prior to working for IFU, he was employed by KPMG. Below, Mungai gives us his five business tips for success in Africa.
Budget for time and cost overruns
Africa is a dynamic market and there are a lot of factors which will result in cost and time overruns. Generally projects will require more money than initially thought and take longer to implement. It is therefore important for any manager to provide for such unforeseeable overruns. Normally I would recommend for 25 percent be set aside and included in the project costs to cover for such overruns.
Value chain considerations
Think through the full value chain requirements of your project – often the suppliers and business partners are not there and it is necessary to ensure that before you kick off your project all the value chain participants (various suppliers) are in place. It is not uncommon to find out that you have set up a factory only to realise that one of the supplier of some sort of component is not available.
Pay attention to legal issues
It is critical that any investor in Africa should consider all the legal issues relating to the business/investment. There are a number of legal issues that will have an influence on investors in Africa including those that are common to investments in most international ventures such as company structures, taxation, and competition law and employment aspects. More recent developments in the areas of Corporate Governance, Money Laundering and Environmental law have been introduced in Africa and should considered by any investor interested in Africa. It is recommendable that before an investment a legal due diligence be carried out to ensure that all the legal issues are addressed before an investor commits money on projects.
Maintain a strong work ethic
Today’s business environment is a competitive one and companies that have a low focus on good ethical policy are likely to find themselves in financial trouble over the long term. This is very relevant in Africa and if you aim at succeeding, you must ensure that all involved in the business are of high ethical standards. When investors act with strong moral conduct they establish a great reputation for themselves which also reflects on their companies as well. Once you’ve become known as someone who is ethical, people will want to do business or work with you. When you act with strong moral fibre you establish trust and credibility with other investors, suppliers, colleagues, and customers of which the benefit will accrue to your business.
Be flexible, except with core values
It’s a given that your plans and strategies will change as time goes on. There is a need to be flexible to changes. Investors should be aware that plans keep on changing in Africa and there is need for the investors to accommodate those changes. It is however important that no matter the pressure for immediate profits and other requirements, do not compromise on core values of the business.