The continent has become a favourite playing field for financier hyenas in search of dumb money.
Still a good investment? A little bit embarrassed he explained that this particular local market was well protected from the world, that the consumers would prefer local brands and that we had just to add a little effort for creating such a brand. Just a little effort for creating a brand strong enough for competing eventually global brands? It is not out of range, but in any case expensive and very very risky.nce, I met a consultant who wanted to build up a food processing factory in East Africa. The profits he promised were far above you can expect from such an investment in Europe. But a just superficial market research showed that the prices at which he would produce were pretty above the world market level.
Many investors hesitate investing in Africa. They are fearing unknown markets, uncertain political framework and unreliable local partners. But the biggest danger for investments in Africa are not Africans. The most important threat are European financiers searching for dumb money.
Many consultants and financiers are looking for investors willing to follow them on the African markets. Some of them have almost failed their business career in Europe and are looking for a second chance in Africa. These adventurers are known on the continent for a long time. In the past they hunted elephants and lions. Today they are pursuing Europeans with some money. But they act rather like hyenas than like lions.
How can Africa investors detect these unscrupulous rogues? Here are some questions you should ask them before even considering such an investment:
- What is their track record? Did they already succeed an investment in Africa that is still running well today? Check this track record and visit previous investments, if possible.
- Ask for a detailed CV and check it in detail. Are there any points that would prevent you from hiring them in your company?
- Ask for references you can contact. Meet or at least call them.
- What is the academic background of these financiers? If you want to do an investment in Africa, make sure that you have people on board with a profound financial expertise.
- Are risks and burdens equally shared? Rogues will try to pull as much money out of the investment without taking any risk. If the financiers do not take at least 40% of the investment volume, they will fro sure have a good reason for not investing in the project. And you should do the same.
These questions show you why it is so crucial to do an in-depth due diligence on the guys who want to take you to Africa. You have to make sure that the financiers are capable and motivated. If they are not able to give you clear and direct answers to these five simple questions – take your money and do the same a zebra does in front of a lion: Run away as fast as you can.
If the answers are quite okay, but you still have doubts, hire an independent consultant in Europe that will accompany
you through the due diligence process and represent your interests in the investment. This can be a lawyer or a business consultant. They are less expensive than you might think. And you will find throughout Europe reliable experts with a profound Africa experience.