DOING BUSINESS IN AFRICA IN
DOING BUSINESS IN AFRICA INETHIOPIA, KENYA, SUDAN
ANTON DOKUCHAEVCONDITIONSSaudi businessman Wants to open business in agricultural sphereProximity to Saudi Arabia (wants to export goods there)Arabic/English are preferableEstablished economic ties with Saudi ArabiaIslam plays a role, but secondaryDOING BUSINESS (AFRICA)
GLOBAL COMPETITIVENESS INDEX (2014-15) IN AFRICA
ETHIOPIA
ETHIOPIAGOVERNMENT: Federal Parliamentary RepublicCAPITAL: Addis AbabaPOPULATION: 88.9 millionISLAM: 33,9%CURRENCY: Ethiopian birr (1 dollar = 20 birrs)LANGUAGES: Amharic + Arabic, Somali, Tigrinya, etc. (English is widely used in business)LITERACY: 43%GDP (PPP): $121.4 billion; 9.7% growth; $1,366 per capitaUNEMPLOYMENT: 5,7%FDI Inflow: $953 million
ECONOMYECONOMY:Industries (5%): Food proccesing, beverages, textiles, chemicals;Agriculture (85%): Cereals, pulses, coffee, oilseed, cattle, hides;MAIN EXPORTS: Coffee, gold, corn/maize, leather products, cattle, oilseeds; 60% exports agricultureMAIN IMPORT PARTNERS: China 15,3%; Saudi Arabia 8,1%; India 7,2%; USA 5,6%;MAIN EXPORT PARTNERS: China 13%; Saudi Arabia 8,3%; Germany 8,3%; USA 8,1%; Belgium 7,1%;IMPORTS $10,6 billion; EXPORTS $3,1 billion.TAXATIONCorporate income tax 30%;A 2% tax is payable from supplying of goods to the local market and rendering of construction, grain mill, tractor, combine harvesting services undertaken in the country;Customs duties payable on imports (range 0-35%);No export taxes.
VAT (above 500,000 birrs per year):
INDEX OF ECONOMIC FREEDOM
INDEX OF ECONOMIC FREEDOM
CORRUPTION
CORRUPTION GRAPH (YEARS)
GLOBAL COMPETITIVENESS INDEX (2014-15)
DOING BUSINESS IN ETHIOPIA
DOING BUSINESS IN ETHIOPIA
DOING BUSINESS IN ETHIOPIA
INTERESTING FACTS:Frequent droughts affect agriculture;13 months in a year;Sun rises at 6 a.m., eithiopians measure it to be 12 oclock;80 languages (children have to learn both tribal and official ones);One of 2 states never occupied;Rastafarian motherland;
ETHIOPIAN CUSTOMSFormal;Ato for men, Woizero & Woizrity married and unmarried women;Business meeting schedules are not rigid, like agendas;Relationships crucial, 30m 1h for tea/coffee;Meetings last till the success or when everybodys tired;Favours for favours;Conduct business with friends, mostly;They are hard to say no, though it doesnt mean anything
OTHER FACTSOffice Schedules: Mon-Fri 8:30 11:00 and 13:30 17:30;Government Schedules: Mon-Fri 8:30 11:00 and 13:30 15:30;Reliance on relief aid;Service and manufacturing miniscule players in economy, though Growth and Transformation Plan encourage FDI in agriculture and manufacturing;
KENYA
KENYAGOVERNMENT: Presidential RepublicCAPITAL: NairobiPOPULATION: 45 millionISLAM: 11,1%CURRENCY: Kenyan shilling (1 dollar = 97 shillings)LANGUAGES: English and SwahiliLITERACY: 87,4%GDP (PPP): $80,4 billion; 5.6% growth; $1,812 per capitaUNEMPLOYMENT: 9,2%FDI Inflow: $514,4 million
KENYAECONOMY:Industries (15%): small-scale consumer goods (plastic, furniture), agricultural products processing, oil refining;Agriculture (24%): tea, coffee, corn/maize, wheat, dairy products;MAIN EXPORTS: tea, horticultural products, coffee, petroleum products, fishMAIN IMPORT PARTNERS: India 20,7%; China 15,3%; UAE 9,5%; Saudi Arabia 6,7%;MAIN EXPORT PARTNERS: Uganda 10,5%; Tanzania 10,2%; Netherlands 7,1%; UK 6,7%; USA 5,8%;IMPORTS $14,39 billion; EXPORTS $5,9 billion.
TAXATIONCorporate income tax 30%;Non-resident companies 37,5%;Resident companies 30%;VAT 16%;Unprocessed agricultural products exempt;No export taxes;No special deals with Saudi Arabia.INDEX OF ECONOMIC FREEDOM
INDEX OF ECONOMIC FREEDOM
CORRUPTION
CORRUPTION GRAPH (YEARS):
GLOBAL COMPETITIVENESS INDEX (2014-15)
DOING BUSINESS IN KENYA
DOING BUSINESS IN KENYA
INTERESTING FACTSKenya animal horn in Hebrew (some say, in Russian it means innocent or harmless - ?);Despite coffee is #1 income generator, Kenyans prefer tea or beer (prefer it hot);Only 2 seasons rainy and dry;Before marriage some Kenyans still pay a dowry to the brides family, which starts at 10 cows.
KENYAN CUSTOMSFormal;Harambee concept mutual responsibility, assistance and community;Group-oriented;Address people with their titles and full names;Dont jump straight into business talks;Business success depends on relations (though they might take quite a time);Gifts are good (dont DARE to give them with LEFT hand);If you are mzungu (white) dont talk about tribes or Kenyan politics;Try to be punctual (though they are likely to be late);Treat elders with ultra-respect (dont start eating if the eldest person didnt);
OTHER FACTSHours of business: Mon-Fri 9:00 17:00;Showing anger a sign for mental instability;
SUDAN
SUDANGOVERNMENT: Dominant-party Federal Presidential RepublicCAPITAL: KhartoumPOPULATION: 37,2 millionISLAM: 97%CURRENCY: Sudanese pound (1 dollar = 5,9 pounds)LANGUAGES: English and ArabicLITERACY: 60%GDP (PPP): $90,5 billion; 3,4% growth; $2,631 per capitaUNEMPLOYMENT: 15,3%FDI Inflow: $3,1 billion
SUDANECONOMY:Industries (45,3%): oil, cotton, textiles, cement, edible oils, sugar, soap distilling, shoes, petroleum refining;Agriculture (44,5%): cotton, groundnuts, sorghum, millet, wheat, sheep;MAIN EXPORTS: oil and petroleum products, cotton, sesame, livestock, groundnuts;MAIN IMPORT PARTNERS: Macau 18%; India 8,8%; Saudi Arabia 7,9%;MAIN EXPORT PARTNERS: UAE 63,2%; Saudi Arabia 9,2%; Ethiopia 5,3%;IMPORTS $6,823 billion; EXPORTS $8,464 billion.
DOING BUSINESS IN SUDAN
DOING BUSINESS IN SUDAN
NO FURTHER INFO AVAILABLE (since 2000)BECAUSE OFSOUTH SUDAN
WHY NOT DOING BUSINESS IN SUDAN?Possible further fragmentation of the country (Darfur, tensions with South Sudan, Eastern Front, South Kurdufan and Blue Nile states, etc.);Possible Islamist uprising;160th out of 189 countries in Doing Business!Males/Females eat separately (possibly, not bad for Saudi businessperson);Zar Sudanese women are frequently possessed by evil spirits, so they call an exorcist;
GLOBAL COMPETITIVENESS INDEX (2014-15)
DOING BUSINESS COMPARISON
STARTING A BUSINESS COMPARISON
HOFSTEDE CENTRE RANKS
KENYA vs. ETHIOPIADoing Business: 136th Opening business: 30 daysIslam: 11,1%Transparency Index: 145Global Competitiveness: World 90; Sub-Saharan 6;Doing Business: 132th Opening business: 15 daysIslam: 33,9%Transparency Index: 110Global Competitiveness: World 118; Sub-Saharan 16;
KENYA vs. ETHIOPIAEthiopia has got a better ranking than Kenya in five indicators: Dealing with Construction Permits, Getting Electricity, Registering Property, Enforcing Contracts and Resolving Insolvency;Kenya ranks better in five indicators: Starting a Business, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading across Borders;ETHIOPIAPROS:High proximity to Saudi Arabia;Well established economic relations (Saudi Arabia is 2nd both in exports and imports); 15 days on average to open business;Tackling corruption (acc. to Transparency);Growth and Transformation Plan;Special agreements with Saudis;Arabic + English;Agriculture 85%;
CONS:High level of corruption (110 out of 175 states);Fighting corruption stalled since 2012;Highly uncompetitive (118 of 144);Losing even weak position in Doing Business;Droughts;Low literacy;Eritrea and Somali made Ethiopia landlocked;Proximity to a potential hot spot;Rather high taxes.KENYAPROS:Slowly climbing in Doing Business;English;One of the most economically booming African states;Nairobi is pretty developed city;CONS:Rather high taxes;Weather;No special deals with Saudis;Agriculture is not that important comparing to other states;30 days for opening business;Cautious relations to white people.
CONCLUSIONEthiopia is likely to fir requirementsMore agriculture-orientedStronger ties with Saudi ArabiaGeographically closePresence of Arabic (and English as well)Better in some ranksCertain percentage of MuslimsBetter to start a Flour/Maize milling plant (many investments in this sphere)THANK YOU!