My gemological consulting business brings me in contact with people in top levels of government, military, mining, shipping and exporting. It also has me dealing with country village people, hard working laborers, and a variety of nefarious characters who are out to scam the unwary and are very dangerous. These guys would not think twice about kidnapping and murder. I have had three close encounters in which I am lucky to be alive to tell my story.
This article is not about me or my adventures in Africa. This is an article to help American and other Western business people successfully conduct business in Africa. I give my background only to show that I am speaking as a seasoned veteran and not an arm-chair analyst who has never set foot on the continent.
To begin with, westerners have to let go of the idea that the African people are “just like us.” They are not. Their customs are different, their daily experiences are different, their way of conducting business is different and most importantly, their laws of business and redress of grievances are very different from ours.
We all know how the American business courts work in America, although, most of us would change that statement to how the American courts don’t work in America. In Africa, if your customer or vendor has cheated you, you are done. Do not waste good money after bad. No matter what you do, you are almost never going to see the money you lost again. Trying to transverse legal issues over trans-continental borders is beyond the ordinary man’s capacity and doesn’t make sense financially.
As I have written on the front page of my website; If the buyers you have tried to work with cannot perform. It is your fault! It is your fault if a buyer cannot perform because you do not know how to qualify a real buyer. If the vendors you have tried to work with cannot perform. It is your fault! It is your fault if a seller cannot perform because you do not know how to qualify a real seller. If you have been in-country and you paid taxes on the goods and did not get the goods out it is also your fault.
I have been in the diamond business as a gemologist since 1975. I have lost a lot of money over my initial years because as I said, I too was too stupid, too lazy, or too cheap and trusted the wrong people. I have worked in South Africa, Namibia, Tanzania, Guinea, Angola, Sierra Leone, DRC, Botswana, Kenya, Brazil, India, Hong Kong, Israel, Dubai, Antwerp, Belgium, Canada, London, England, Germany, Geneva and Zurich Switzerland, New York, Los Angeles, and many more locations around the world.
I have also embarrassed admitted to have nearly gotten myself kidnapped and killed. It took me a long time to learn how to work in Africa and I have paid dearly for my education, which, by the way, has taught me how to very quickly identify a true buyer and a true seller. I have also learned how to partner with governments, generals and ministers in these countries. I do so by engaging them through diplomacy that not only allows my customers and I to stay safe and ethical, but we also avoid becoming a victim of corruption.
If you are inexperienced regarding the African business environment in the diamond industry, including having to work in areas of abject poverty, corruption, lack of electricity, poor or non-existent internet, lousy roads and poor transportation, bad water and all the adversities, then you have two choices. The first is, forget Africa. The second choice; vet out someone who has worked in Africa in your industry extensively and knows how to be successful. You have little choice, you must hire someone who has the right connections, knows what must be done, and knows from experience who to trust. If he can protect you and bring you success in Africa, then whatever he is charging, it is well worth the money. This is the real secret for doing business in Africa and the rest of the world. It is not what you know, it is who you know.
The problems facing foreign business people in Africa are many, most can be overcome, some not. One of the expensive problems you can successfully overcome is shelling out hundreds or even thousands of dollars while conducting basic business meetings. There is a prevalent assumption that Americans and Westerners coming to buy diamonds must have a big budget to spend on business incidentals. Because of this belief, it is fair in their minds to make you pay for any, and all costs for meals, drinks, transportation, internet, telephone, gasoline, service on their cars, boat ferry, water, rental of their friend’s car, toll booth, snacks, taxis, parking, tips, baggage handling, “gifts” for the people who are needed to make the transactions happen, their transportation to the meeting, payment to use someone’s office, etc. etc. The list just goes on and on.
For those of us in the West, when you go out with a customer, the vendor nearly always picks up the check. There are times when the customer will pick up the costs, but most times the vendor sees the dinner costs as part of the expenses required to gain and maintain customers. If you’re going on a selling trip, it is not unreasonable for you to pick up the tabs as the cost of doing business. This is not the attitude in Africa. Their view is that you have come to Africa to buy and you need them in order to succeed. They have found that being an inexperienced westerner, you will put up with all the inconveniences, hassles and “incidental” costs because you have the possibility of making a successful buy, thus making a lot of money.
Now, I hear some of you saying, what’s the big deal? Don’t be so cheap. You too will begin to think it is a big deal when you add it all up. It will be an even bigger deal, if your trip is not successful. Let me give you an example; you set up an introduction meeting with the people you are about to engage in business. Because you do not know your way around, or transportation is not easy, they offer to meet at your hotel lobby or restaurant. They never come alone. If they reach there before you, they will not have ordered anything to drink or eat. Once you sit down with them, they will then ask you if you want to get something to drink or eat. Being polite, and understanding, that they actually want to get something, you say yes and order a drink. They will then order drinks and snacks. At the end of the meeting, after your second meeting has been arranged, they will stand up; shake your hand, and thank you for coming. They will smile and leave. The waiter will then give you the check and you will realize you just spent $50-$100. Not a big deal.
For the second meeting, they will ask you if you want to meet for dinner. Of course, you agree. You think they are inviting you for dinner and it is an opportunity to build the relationship. You show up to dinner at a very expensive restaurant they have chosen. At the table is your host and, what a surprise, two to four other people who will be joining you tonight. The food is good, the service is all smiles, your host assures you that you are going to make a killing on your deal with him, and, when dinner is over and the check is brought… No one reaches for it. That’s right, no one. You are sitting there wondering; when is this guy going to pick up the check? Only he doesn’t. It is now becoming uncomfortable. Your host is all smiles, his friends are all smiles and you most likely will feel embarrassed and pick up the check. If you don’t offer to pick up the check, once again, they will stand up, smile, and shake your hand. They will tell you how much they enjoyed the evening, and they will see you in the office in the morning. They will walk away without picking up the check. You will be too embarrassed to say anything. You will look down at the check and it will be for $200- $300 and you will now need that drink you decided not to have earlier.
When you go to Africa, expect to get nailed on some things. There will be no way out of it. Make sure you calculate these so called unexpected costs into your budget. Lest you think I have no suggestions to help you, then you have not been reading between the lines of this article. Actually, I have already given you some of the solutions by outlining where they will try to hit you.
Let us look at it together if you are not already clear and smiling. First, when you are making your arrival arrangements, tell your contacts that you want to be picked up at the airport right as you come out of customs. Ask them if they are going to charge you for picking you up and driving you to your hotel. No, I am not kidding. Observe what kind of car they drive. If you are dealing with people who have told you they are the vendors or buyers, then if they are successful in what they are doing, they should be picking you up in a nice vehicle. Yes, I know they could borrow a nice car from a friend. However, it has been my experience that they will not have any friends with nice cars unless they are also successful. If they pick you up in a crappy car, this is a big red flag. On exiting the parking lot at the airport, if they ask you to pay for the parking fee, this is another red flag.
When you go to your first informal meeting at your hotel, bring a large bottled water with you. When they ask you if you want anything else, decline and tell them you are fine with your water. If they order anything and when finished start to get up to leave, stand up and say politely and with a big smile on your face; “Oh, wait a minute please, let me call the waiter for your check.” Without hesitation, get the waiter immediately. Do not be shy. You drank nothing, you ate nothing. If they protest, or simply leave without paying you know these people were only out to nickel and dime you to death and your odds of closing a deal with them was most likely less than the odds of winning the lottery.
If they graciously pick up the check, that is a big thing. It means they value your business and want to close a deal with you. It is also your first clue on how to negotiate terms and prices for whatever it is you have come to buy or sell.
In most cases, to do business in Africa, you must set up your business properly. You will find that the only way to control the business and eliminate most scams is for you to open your own company in-country. You must get all licenses and business documentation, work visas, and fulfill any and all government requirements. Then, if you are buying or selling, find an importer or exporter with a proven track record and verifiable references. Unless, you are in the position to pay for an import/export license, you will initially be better off using an established importer/exporter. If your business is successful, it will pay for you to get your own license.
Once you have set up your company, you can now set up your banking. Having a local bank is important as it allows you take advantage of having ready cash on hand. Much of the business in Africa is done with cash. Not having a local bank means having to carry large quantities of cash or having to wait well funds are being transferred. This can lead to costly delays and often lost opportunities.
I have finally understood the wisdom of one of my father’s quips, “When a man with experience meets a man with money, the man with the experience gets the money, and the man with the money gets the experience”.
There is much, much more you have to know to be successful in Africa. It takes me about three hours to go over all that is involved in working successfully in Africa. If you would like to learn all that is involved, please contact my firm and I will be happy to give you an in-depth understanding.
Louis Pearl G.G.
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