AFKI Corporate: How African Organizations Can Deal With Negative Perceptions

AFKI Corporate: How African Organizations Can Deal With Negative Perceptions

This article was first published by IPRA Thought Leadership

What was once the inside business knowledge of a few, is now the global knowledge of many: Africa is open for business. African economies are booming and the region is second only to Asia in terms of economic growth.

The economic growth and opportunities across the continent are huge. According to the annual reference journal African Economic Outlook, Africa’s gross domestic product (GDP) growth is expected to strengthen to 4.5 percent this year and 5 percent in 2016. West Africa achieved high growth of 6 percent in 2014 despite its battles with the Ebola virus, and in the continent’s biggest economy Nigeria there was growth of 6.3 percent. This economic growth across the continent is fueled by a booming population, rapid urbanization and a growing middle-class.

The above heralds great opportunities for African companies and organizations. Facing lackluster prospects in other regions, many multinational (MNC) and international companies across the world are now considering the continent as part of their business development strategy. Partnerships, mergers and acquisitions, investment and ‘market intel’ are just a few of the ways in which MNC’s and international companies are considering working with African organizations when entering the African market.

Despite the abundance of data highlighting the opportunities, African organizations face a huge global communications challenge. The challenge is effectively counteracting the negative perception of conducting business on the continent. Perception is a critical component in the business decision-making process and the current overwhelming negative perception of Africa, is a challenge for African organizations that want to encourage more business in the region.

In order to fully address the negative perception of the continent, we have to look at some of the reasons for the negative perception that is pervasive within the global community:

  1. Corruption: Influential and widely circulated reports such as the2014 Corruption PerceptionIndex published by Transparency International, heighten the perception of corruption and therefore the risk. The report ranks anti-corruption on a scale of 0 – 100, and most African countries score in the 30 – 45 range, ranking as the most corrupt countries in the world. While the report is not without merit, it disproportionately focuses on the challenges and exacerbates the negative perceptions that hinder global business engagement.
  2. Africa perceived as a country: Many in the global community, often view Africa as a country and not as a region of 54 individual countries, each with their own government, identity, economy, language and culture. This perception can have a negative effect by exacerbating the notion of crisis or issues on the continent. An example of this is the recent Ebola epidemic. Ebola occurred in Liberia, Guinea and Sierra Leone, three countries in West Africa. Yet Africa as a whole was labeled as having a region-wide issue. This affected the image of the entire region.
  3. Volatile marketplace:The climate across the continent can be volatile. An example of this is the shift from Nigeria, the number one opportunity for several MNC’s in Africa, to Kenya when Nigeria experienced several cases of Ebola in 2014 alongside falling oil prices.  In March 2015, Nigeria experienced peaceful democratic elections, a first for a country plagued with a fragile democratic environment. Within a week of Nigeria’s historic election, Kenya then experienced a devastating terrorist attack. These volatile conditions can label the entire region as plagued with too much risk and danger.
  4. Slow return on investment: Reaping the rewards in Sub-Sahara Africa is a long-term goal. MNC’s have to enter the marketplace in the knowledge that bottom-line returns on investment could take several years to materialize. The lack of short-term returns can lend credence to the notion that the African market is a huge gamble that may not pay off.
  5. Lack of knowledge:The lack of quality data on market patterns and trends as well as product categories, leads to confusion for the global business community regarding the true potential of the African market. The current available macroeconomic data does not adequately measure the depth of market conditions, and this lack of data can discourage the global community.