Business Climate

Africa offers plenty of unexploited investment opportunities which remain un attractive to investors because of lack of attractive investment climate. The business climate is made up of a package of economic, financial and other conditions that a country offers to attract prospective investors. The business climate is affected by many conditions   including infrastructure, security, governance, rule of law, property rights and among others. The summary of the key investment conditions include the following;

Business licensing procedures
Many of the African countries have embarked on faster domestic economic, financial and other reforms with the aim of attracting investments into the country. The reforms include streamlining and simplifying the business licensing procedures. It now takes less time to register a business in Africa when compared to about 10 years ago. Many countries have established what is popularly known as one stop centre for business registration.  

Integration process
African countries have started the process aimed at achieving regional integration and promoting intraregional trade. The process of regional integration is creating bigger regional markets. The integration will reduce the various trade and nontrade barriers among countries resulting in enhanced   trade and service flows within the regions and the continent. The regional  blocks at various staged of integration  include East African Community, COMESA, South Africa Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), West African Economic and Monetary Union.

Tax Reforms
Investors tend favor investment destinations which have clear fiscal policies. African countries have embarked on fiscal reforms aimed at encouraging the expansion of the small businesses and also attracting more new business into the countries. The fiscal reforms are aimed at increasing trade, revenue and transparency. The tax structures in a number of countries have been reformed in order to make doing business more business friendly Most of the countries are faced with the challenge of narrow tax bases and of the many players in the informal sector who do not pay taxes.

Public sector reforms
Most of the countries are implementing various measures in the public sector aimed at strengthening economic governance and efficient utilization of government resources. The aim is to reduce operating costs of the public sector in order to free up some resources to other areas.  The reforms are focused at reducing bureaucracy within the public sector which has tended drive away investments from Africa. The procedures in the various public sector departments have been or are in the process of being streamlined.

Availability of information
Africa has many investment opportunities which are not generally known within and outside Africa. Governments have of recent embarked on deliberate efforts to make Africa and its business potential known with Africa and outside Africa.  A number of countries have already country and sector profiles which give useful information on the country in place. Investment promotion departments with a mandate to attract investments have been set up. Africa is becoming more visible on the international business forums.

Role of private sector
The private sector has been recognised by the governments in Africa as an engine of growth and economic development.  The public-private dialogue has been enhanced and the private sector is now seen as a key partner in the economic development of the country. The governments in Africa have or are in the process of divesting their interests in government owned business enterprises.

Public Private Partnerships
The public sector has recognised the need to partner with the private sector in the development of the public infrastructure in the area of rail, road and energy projects. A number of projects have already been funded through PPPs arrangements in a number of countries across Africa.

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