Africa has many entrepreneurial people with the capacity to be successful in business, but access to financing for small and medium enterprises (SMEs) remains a major challenge.
So said Nigerian-born Aliko Dangote, believed to be the continent’s richest man, today during a session titled ‘Africa’s Next Billion’, at the World Economic Forum in Davos, Switzerland.
He explained that while Africa offers a large enough market for SMEs, borrowing costs are generally too high. “If you are going to borrow money at 20% and above, it might be very, very tough for you to take a risk, because any mistake [and] you will just go under.”
Dangote is a self-made businessman and founder of the Dangote Group that has significant interests across the continent in a range of industries, from cement to sugar.
Commenting on foreign investment into Africa, Dangote said that many companies make the mistake of waiting for the results of the next election before entering a country. However, once the election is finished, they postpone their investment decision for another two years as they wait for the government to stabilise, by which time politicians are already gearing up for the next election.
“There is no government that will be against business, so you [can] go ahead and invest… The next government that will come in… they will also be pro business,” said Dangote.
He pointed out that any business venture with high potential rewards comes with an element of risk, but that many of Africa’s risks are perceived and not real. “Unfortunately for us in Africa we are not really very good at telling our own story. But things are changing and people are beginning to understand that things are going very, very well.”
Dangote said his vision is for the free movement of goods, services and people across the continent. “I need a visa in almost 38 countries, which means an American has more access into Africa than myself.”
He also called for the continent to process its mineral resources, instead of merely exporting it in raw form.