Article by: Nancy Lynn
Venturing into Africa can seem daunting for some Canadian exporters who worry about doing business on a continent that’s often characterized by poverty, corruption and political unrest.
But for Peter Kieran, president and CEO of Ottawa-based international consulting firm CPCS Transcom Limited(formerly Canadian Pacific Consulting Services), the rewards of doing business in Africa are worth the risks.
For the past 25 years, Kieran has carved out a specialized niche by providing infrastructure management consulting services in the power, urban development and transportation sectors across the continent. About half of CPCS’s consulting business is in Africa, with public-private partnership transactions there to date worth over US$22 billion.
Kieran typically spends four months of the year on the continent drumming up business for CPCS. He’s confronted cultural barriers, political corruption and has even battled bouts of malaria. “It’s a risky business,” he says, “but there are tremendous opportunities in so many sectors.”
CPCS has capitalized on those opportunities, most recently leading negotiations for an $8.4-billion privatization deal in which the Nigerian government sold 27 power companies to local and international investors. The lucrative transaction spun off hundreds of millions of dollars in technical services contracts, says Kieran.
Nigeria’s burgeoning middle class
Nigeria can be “a seller’s dream” for Canadian exporters, says Kieran. With the largest population on the continent, the highest Gross National Product and a burgeoning middle-class with a shortage of manufactured goods, the country needs to import everything from food and clothing to infrastructure.
“Africa has massive opportunities and Canada has the capability to compete,” says Kieran. “There are advantages to working with organizations like Export Development Canada (EDC) which is strongly motivated to help Canadian exporters like us with market intelligence, local connections and flexible capital financing solutions.”
Rob Pelletier, EDC Chief Representative for Africa, is enthusiastic about the trade potential that key African markets like Nigeria, Ghana, Morocco and South Africa hold for Canadian companies. For now, EDC is focusing on markets which offer the best opportunities for small- and medium-sized Canadian businesses, companies that might find the region to be intimidating.
“EDC can help demystify Africa so it doesn’t seem as daunting to smaller exporters,” says Pelletier. “We’re also working to promote Canadian capabilities within Africa,” he adds. “Overall, Canada’s reputation is solid, but we need to do a better job of selling our expertise, so EDC is working to promote Canada as a solution provider to African countries with vast needs.”
Here’s his advice for exporters who are considering venturing into Africa:
Package it right … bring your own financing
Securing contracts is easier if you’ve got a competitive product and a package of financing, insurance, bonding and or risk mitigation support to help fund projects. “Canada has the capability, technical know-how and expertise to compete in Africa. Canadian industries just need to offer their services competitively with a good product, a decent price and the financing to support it.”
Having a presence on the ground is key to building relationships with local banks, public institutions and businesses. “You can start by partnering with organizations such as the Trade Commissioner’s Service, EDC and by getting involved in the Canada-Africa Power Alliance, the Canadian Council for Africa and other corporate networks.”
Seek market intelligence
There are places in Africa where political and economic instability may pose a risk. You want to be mindful of that and ensure that the contract or opportunity fits into your business plan. EDC tracks political risk and provides guidance and specialized political risk insurance coverage to help exporters secure deals.
Sell Canada’s Capabilities
Canada carries reputational clout in the market, and is very well regarded for its sustainable approach to doing business and its CSR approach to skills development, training, and community investment. “But one of the biggest challenges Canada has is that we’re not yet known for our capabilities.”
July 21, 2014