Africa

4 December 2019

Challenges Of Doing Business In East Africa And How To Overcome Them

As much as there has been an investor goldrush to East Africa as a commerce destination, the region still poses certain challenges. Doing business has its fair share of challenges regardless of the location. If you, however, know the kind of challenges to anticipate and how to overcome them, then you are set to go sky high. You will enjoy the rich resources the region has to offer and have great returns on your investment. Stay with me as I discuss some of the challenges of doing business in East Africa and explain how to overcome them.

Corruption

This is one of the major challenges of doing business in the region and Africa as a whole. The occurrence takes the form of bribery, extortion, influence, fraud, and embezzlement of funds. Investors and startups come in contact with corruption when they wish to speed up a process or need a favor.

Corruption can be fought when you know all the relevant rules and regulations. It’s also important to plan everything in advance and use the right channels. At Sulma & Sulma, we give companies all the relevant information they need and help them with the foreign expansion process to make sure they are successful without being dragged down by corruption.

Countries in the region are trying to fight corruption by all means possible. For example, the Kenyan government does this through the anti-corruption commission. In Rwanda, Tanzania, and Uganda, there are stringent measures in place to tackle corruption. This creates some hope for the region to trim down the corruption levels in the near future.

High cost of energy

It’s rather ironic that despite being rich in energy sources, the cost of energy in the region is still high. This is mainly due to the high demand which surpasses supply, as well as some political reasons. The main industry affected by energy costs is the manufacturing sector. 

Energia w Afryce

The high cost of energy can be overcome by using alternative sources such as renewable energy. Having considerable experience in the region, Sulma & Sulma can advise you on the best source of energy, depending on the project you wish to run. We pride in helping companies be as energy-efficient as possible.

Culture

Arguably one of the most underrated factors, culture may be a challenge when it comes to doing business in a foreign land. Cultural differences such as language, social values, decision making, ethical standards, attitudes towards time, and ideas of status, among many other factors, can have a major impact on the performance of a business. One is therefore obliged to study the customs of the target market before being able to integrate seamlessly with the culture there. 

Lokalna kultura

Luckily, Sulma & Sulma has a group of dedicated experts in the respective region, who will make your fit with the culture of your destination market a breeze.

As much as the East has been at the forefront of fueling development in the region, the process has come with a downside. The cost of production in the East is generally lower than in Africa and this has flooded the market with cheaper produce leading to competition with locally manufactured goods. 

Even though there’s not much that can be done about this rivalry, what’s up to you is knowing the products you’re bringing to the table inside out and being aware of what makes you stand out. Sulma & Sulma will help you segment your niche market and come up with the right offer. We’ll help you develop the right strategy to beat the competition.

High cost of doing business

Many factors drive the cost of doing business in the region up. As much as you may get a cheaper labor force than in developed countries, there are still other major expenses. Corruption is the main reason making the cost of doing business in the region high. There are high tax rates too. Sulma & Sulma will help you get a tax relief or advise how to lower your tax levels. Access to capital is another challenge that can be addressed by exploring the different financing options and having a good financial plan.

Koszty biznesu

Conclusion

There are many more challenges in doing business in East Africa. The good news is that all these challenges can be tackled. At the end of the day, they’re not that different from challenges you can expect when doing business in other parts of the world. At Sulma & Sulma, we take pride in making sure that companies are successful in the region. We’ve gathered expertise in multiple sectors and are thus able to advise you accordingly. Together, we can make your move a success.

For more on why you should invest in East Africa see the post below.

Reasons Why East Africa is The Preferred Investment Destination in The Region



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