Africa: Planning amid instability

By B.J. Richards

When we talk to consultants in Africa, one of the fundamental things they always want us to understand is that it is really a tough place to do business.  Depending on where you are, inadequate transport links may mean you can’t always get where you’re going; the lights may be unreliable and the internet even more so; and a good deal of your work could depend on donor money that may or may not be there tomorrow.

But these are mere annoyances compared to the instability, violence, and epidemics that frequently plague large swaths of the continent and that many consultants tell us constitute their #1 challenge in doing business here.  Not only are there many threats to contend with, but they always seem to be changing, both in nature and in location.  Consider that just a few years ago, most of north Africa was a safe bet with a rapidly maturing consulting market.  But when the Arab Spring began, it suddenly seemed a risky place to be, and numerous once-entrenched businesses fled the region.  It was a turn of events few could have imagined.

And while west Africa has never felt as predictable as parts of north Africa once did, just a year ago it seemed stable enough for many Western consultants to be newly serious about the stunning growth it offers.  This year, the growth continues, and consultants are still excited to talk about it, but they are also spending a disconcerting amount of time talking about Ebola and Boko Haram and how both are making it a lot harder to operate here.  These horrors didn’t even warrant mention in last year’s conversations, and now they’re threatening serious disruption.

So before getting carried away by all of Africa’s opportunities, consultants must first ask how they can best approach such volatile environments.  How do you expect the unexpected?

The consultants we talked to were of two schools.  The first school tries to avoid trouble upfront, shunning opportunities that would lead them to Africa’s less stable regions.  Though a cautious approach, it is not without its own risks.  First and most obvious are the opportunity costs:  if you came to Africa for the rapid growth (and, let’s be honest, everyone did), can you really afford to steer clear of its highest-risk, highest-reward opportunities? And anyone opting for this ‘safe’ approach has to remember that it might not work anyway:  as discussed above, stable areas are not guaranteed to remain so, and surely the cautious consultants who set up shop in Egypt a few years ago were in for quite the shock when they suddenly found themselves caught in the middle of historic events.

Adherents to the second school of thought say that while they avoid the most dangerous areas, they try to develop a model flexible enough to allow them to pursue opportunities as they arise – even if that means going into more volatile places – while still leaving room to pull back if necessary.  This approach has the potential for a big payoff, but there are obvious pitfalls: no one wants to bite off more than they can chew and suddenly find themselves and their staff in a dangerous situation.  And speaking of staff, you may not be able to convince them to follow you, anyway – a serious problem in a market where making local hires can be incredibly difficult.

There’s no sure bet when it comes to approaching Africa’s riskier quarters, and any firm planning to operate on the continent will have to develop a plan of action based on its own particular circumstances, resources, and risk tolerance.   But whether they decide to be cautious or devil-may-care, one thing remains clear: the African opportunity is not for the faint of heart.