Middle East firms 'must tap Africa'
Manama, September 8, 2010
Middle East-based firms have been some of the key investors in Africa and despite a plethora of taxes and the global downturn, the continent continues to offer companies strong growth potential, said analysts.
Being the second largest and third most populous continent after Asia, with an estimated population of one billion, Africa has a large and untapped consumer base, according to PricewaterhouseCoopers (PwC), the leading international professional services organisation.
The growth opportunities and how to navigate the tax structures were some of the topics discussed at the PricewaterhouseCoopers 2010 African Tax and Business Symposium in Dubai.
"Africa offers a huge opportunity for GCC-based companies, due both to its proximity and demographics," said PwC Middle East tax leader Dean Rolfe.
"The continent has a plethora of tax systems that have to be navigated, making it a challenging destination for Middle East-based investors.
"The true opportunities can be realised by locally-based companies if they grasp the complexity of the African systems and ensure they navigate a path that supports their over-riding objectives," Mr Rolfe added.
"It's an exciting time for both Africa and companies looking for cultural yield as the opportunities to marry company growth with community investment are vast," he said.
Since 2008, five of the top eight equity acquisitions in Africa were conducted by Middle East companies, of which four were from the GCC.
Since 2005, foreign direct investment into the 10 largest African nations has almost doubled, from just over $200 billion to more than $400 billion in 2009.
The global financial crisis has impacted inflows, however it is still seen by many international organisations as key expansion destination.
"Africa is not an easy place in which to do business," PwC international tax services associate director Silke Mattern said.
"However, significant groundwork by those looking to invest or set up operations in the continent can assist with avoiding the various pitfalls that may lie ahead," the associate director said.
"The key to successfully investing in Africa is to do your homework, anticipate possible problems and work with experts to overcome the hurdles."
The symposium is an annual event, launched in 1996, and helps companies looking to invest understand the challenges that lie ahead and the solutions available to them. – TradeArabia News Service