It is important for foreign companies to find a strategic local partner when doing business in Africa, says Foluso Phillips, head of the Nigeria-based Phillips Consulting Group.
Speaking at an event organised by the University of Stellenbosch Business School, Phillips outlined a number of key issues to consider when choosing a local partner.
1. Vision It is important to determine the vision of the organisation or person you are partnering with. “Some people are [only] in it for the money. Yes, we are all in it for the money, but a lot of us are in it for the value we are going to create to generate the money,” Phillips explained. He said that business partners solely focused on money are more inclined to take shortcuts, which can become a business risk. It is also essential to establish if your potential partner is in it for the long haul, or just to make a quick buck.
2. Financial capacity Does your business partner have the financial capacity to do business with you? Your partner should have the financial muscle to respond to the things you would like to do.
3. Market position Phillips said that the ideal situation is to partner with someone who is very strong in a particular sector.
4. Making it happen According to Phillips, you should ask yourself the following questions: Can your partner really make things happen? Does he know where to go to for things that you need? Does he truly understand your business the way you have defined it? What is the standing of that person in the business community?
5. Credibility One should only deal with people that operate in a transparent and honest way. Avoid those involved in bribery and corruption. “If the person does have the financial clout . . . try to find out how he made his money,” Phillips said.