By Russell Hotten
Alima Atta tells a story about recruiting staff when she was setting up her business in Nigeria’s fledging communications and marketing sector.
She employed a young man – university-educated, articulate, presentable – seemingly an ideal choice. Alima asked him to draft a press release, and then left for a business meeting.
On her return to the office, the man was sitting in front of a laptop, eyes fixed to a blank screen. “What’s wrong?” she asked. He admitted to never having used a computer.
Alima hadn’t thought of checking that her new well-spoken, middle-class employee had basic computer skills.
She recalled the anecdote to illustrate some of the day-to-day frustrations that would-be entrepreneurs in emerging nations can face.
Things that business people in western economies might take for granted, must be checked, and double-checked.
But talk to start-up owners in Nigeria, or Kenya, or South Africa, and you get a sense of the huge opportunities available.
Many economies in sub-Saharan Africa are racing ahead, and an emerging middle class is developing a thirst for products and services that were previously out of reach.
Alima set up Sesema Public Relations in 2002. As with many entrepreneurs around the world, the motivation to go-it-alone was dissatisfaction with an existing job.
“Yes, it’s been tough,” she said. Any regrets? “Certainly not”.
Her company now employs 12 people, and clients include British American Tobacco, Hewlett Packard, and Hennessy Cognac.
Alima has worked in the UK and US, and believes that starting a business outside of Nigeria would have been “faster and smoother”.
But she also says that she “would have struggled to get to the same level I’m at now (if in the UK) because there’s so much more competition”.
South Africa-based entrepreneur Nicholas Maweni believes the conditions point to a small business community ready for expansion. “There is a huge entrepreneurial culture. It is what is driving these countries.”
He acknowledges that small enterprises are often created out of necessity, to put food on the table. “But that is a starting point. The challenge is to take it to the next level,” he said
The claim that Africa is full of entrepreneurial potential is frequently heard. “Everyone wants to own their own business; do their own thing,” said Nawakaego Boyo, a former Nigerian actress who now runs a film and TV company, Temple Productions.
When she started her company in 1996 there was very little film infrastructure in Nigeria, and even less government help.
“I think that it is tougher running a business in Nigeria. In my particular industry there is not a lot of assistance.
“I’ve got friends in other countries who can apply for government grants and can go to the banks for finance.
“But I would say that things are getting better; definitely moving in the right direction,” she said.
An important change that Nicholas Maweni has noticed in recent years is the number of large international companies prepared to help the small business sector to develop.
“It’s almost become like corporate social responsibility,” he said. “It is happening in countries that are going through a second wave of economic transformation. It’s happening in Ghana, Kenya and Uganda for example.”
But it is governments that must provide the lead, he said, especially removing the bureaucracy in many government departments.
That said, Mr Maweni believes that common complaints about red tape, even corruption, are overplayed.
“They are exaggerated. There is unethical behaviour. But you find plenty of that in first world countries as well,” he said.
Kenya-based Ann McCreath says that starting her business could not have been easier.
“I just registered the company, and started operating it out of my garage. I honestly can’t remember it being difficult or bureaucratic,” said the Scotland-born businesswoman.
That was in 1996. Ann had been working in the fashion industry in Barcelona, but decided to do charity work in Africa for Medecins Sans Frontieres.
However, a desire to get back to trade instead of aid led her to launch a fashion label, KikoRomeo.
“I wanted to get back into the fashion business to help create employment in Kenya.
“I love the colour and the textiles of the clothes in Kenya, but at the time what was coming out of the country wasn’t cut well,” she said.
KikoRomeo employs 13 people. There is a shop in Nairobi and an online sales operation, plus a corporate arm selling uniforms to Kenyan businesses, such as hotels.
The tax situation is relatively straightforward. Income tax and the corporate rate are both 30%, and VAT is 15%
Ann says, jokingly, that she should know more about the tax on profits – “but I’m afraid I am more of a break-even business”.
She settled in Kenya as a foreigner, but a common assumption that people from overseas dominate the business sector is wrong.
“We (foreigners) are only a very small proportion. The vast majority of business people here are Kenyan.
“Most people in Kenya are, in fact, entrepreneurs, whether in the formal or informal sector,” she said.
The challenges for all are the same, however. Getting finance, inflation, and interest rates are big hurdles, she said.
“These are reasons I am looking at exports. But, in this day and age, no company can just rely on their local market,” she said.
The internet has opened a world of possibilities. She said: “We have finally got fibre optic internet here, and it makes doing local and international business online really seamless.
“Plus, we can transfer money by phone, which has transformed doing business in the country. And Facebook is enormous in Kenya; a very quick way of advertising to your clients.”
Social media is increasingly important in countries where networks of business lobby groups and government advice centres are under-developed.
Sesema’s Alima Atta said: “There is little in the way of a business support network (in Nigeria). People set up their own network of contacts.”
Alima regards herself as lucky to have set up in a sector with low start-up costs. “I began in a room in my mother’s office. There are still plenty of PRs here who just have a phone and a laptop.”
There were big up-front costs, two year’s rent and service charges in advance. She also bought an electricity generator because of Nigeria’s unreliable power supplies.
Starting a business requiring a lot of capital would have been far more difficult, she said. “It’s hard to get a loan for anything, although it’s certainly easier than it was.”
Nicholas Maweni says that anyone starting a business in Africa must weigh up four ‘Ps’. Assessing Political stability is vital. “One must also be Patient, because Africa is not for the faint-hearted,” he said.
And Perseverance is essential, because there are many hurdles.
Finally, there is the P that makes it all worthwhile. “There are lots of Profits to be made in this continent,” he said.