Managing Partner, Exco Tunisie, Tunisia
Tarek Zouari is a seasoned chartered accountant with over 20 years of international experience in Finance and Audit, serving as the Regional Chair for Kreston’s Africa Steering Committee & Advisory Group. He is also the past President of Exco Africa, the first African network of independent accounting and auditing firms.
Investing in Africa: Trade Finance Global magazine
January 16, 2024
Recently, our Kreston Global expert in Tunisia Tarek Zouari, Managing Partner Exco Tunisie wrote a piece on the trend of investing in Africa for Trade Finance Global magazine. You can read the full article here or the summary below.
Investment boom in Africa
The United Nations Conference on Trade and Development’s World Investment Report 2023 highlights that foreign direct investment (FDI) flows to Africa reached $45 billion in 2022.
Factors driving Foreign Direct Investment in Africa
- Natural Resources: Africa, with 30% of the world’s mineral reserves, offers abundant opportunities for exploration, extraction, and export. The continent is also a hotspot for renewable energy investments, especially in solar and hydropower.
- Demographic Dynamics: Africa’s rapid population growth, with 1.4 billion people, 60% of whom are under 25, drives demand for infrastructure, agriculture, education, and healthcare.
Emerging trends and governmental policies
A significant trend is the insistence by African governments on local transformation of extracted resources, ensuring local value addition and potentially boosting FDI.
Diversity and cultural considerations
It’s crucial to understand the economic, legal, and cultural diversity across African regions for successful investment and engagement.
- Cultural Understanding: Approach investments with a deep understanding of cultural nuances.
- Local Support: Engaging the right local partners and professionals is key.
- Business Model Adaptation: Align your business model with local costs, especially in personnel expenses.
- Knowledge Transfer: Implement plans for knowledge transfer to integrate and be recognized as a responsible company.
Legal and tax frameworks
- OHADA: The Organisation for the Harmonization of Business Law in Africa aims to increase legal certainty in West and Central Africa.
- Local Expertise: Engage local advisors with international experience
Essential Steps Before Expanding into Africa
- Market Study: Conduct thorough research on local consumer behaviour and market opportunities.
- Tax and Legal Study: Understand local regulations, legal requirements, and international treaties.
- Solid Business Plan: Develop a detailed plan tailored to the African market.
Regulatory and Financial Aspects
- Investment Protection: Evaluate the legal framework for protecting investments.
- Dividend and Capital Transfer: Understand regulations concerning profit repatriation.
- Local Currency Trends: Analyse the stability and trends of the local currency.
- Financing Options: Explore local and international financing avenues.