The rise of Africa on the world economic map is nothing less than spectacular. About half the continent’s 1.4 billion people have been born over the last two decades. In country after country, enormous change is unfolding—and opportunities for education, work, and economic gain are all on the rise.
Yet, in many ways, Africa remains a tale of two continents. Despite monumental advances and growing prosperity, challenges remain. In many of the 54 countries across the continent, water quality and sanitation are inadequate, transportation is difficult, power is substandard, and digital infrastructure—including data centers—is lacking.
“Enormous opportunities exist for engineering firms,” says Tshaka Dennis, former senior infrastructure advisor at UNOPS for Anglophone West Africa and former deputy CEO of Millennium Challenge Account–Liberia, a legal, independent, and autonomous agency of the government of Liberia that administered the compact grant between the governments of Liberia and the U.S., acting through the Millennium Challenge Corporation. “There are huge needs in terms of physical infrastructure, including power, water, storm water, sanitation, transportation, housing, health care, and public works. Almost no sector remains untouched.”
For engineering firms looking to expand their global footprint and forge a better future for the continent, the business opportunities are impressive—and daunting. While Africa is rapidly shedding its colonial past and many ideas about the continent are obsolete, it remains a diverse place with varying cultures and ways of doing business. There can also be hurdles involving quality standards, corruption, and intense competition from global firms.
“It isn’t possible to simply drop in and do business in any new place. This is especially true in an enormous continent with diverse cultures, languages, and economies such as Africa,” says Bill Howard, former executive vice president of CDM Smith who also served as past chair of ACEC and past president of the International Federation of Consulting Engineers (FIDIC). “There’s a need to understand Africa and prepare before seeking work on the continent.”
The quality of work should always be the highest priority of a firm with ambitions to work in Africa, says Gregs Thomopulos, chair emeritus, past president and CEO of Stanley Consultants, past chair of ACEC, and past president of FIDIC. “There are many capable national firms in the various countries of Africa,” he says. “It is essential for a U.S. firm venturing overseas for the first time to identify and associate with a national firm with knowledge of local conditions and codes.”
Thomopulos also notes that building a strong relationship with a national firm is a requirement for success. “It is important to be aware that national firms have competent engineers, many of whom have been educated and trained overseas,” he says. “The foreign (American) firm usually brings expertise that may not be locally available, and it is essential that the projects are staffed by senior and experienced professionals. A firm with a reputation for high-quality work will always be in demand and help with capacity building in nations of Africa.”
The enormous growth of African countries isn’t something to take lightly, and for many Africans, quality of life is on the rise. Poverty rates have steadily declined from nearly 60 percent in the early 1990s to just over 40 percent today, according to The Economist. Meanwhile, literacy rates and access to education are improving, sanitation and health care are advancing, and economic activity is on the uptick. For example, the gross domestic product (GDP) for Kenya is now growing at an annual rate of 7.6 percent, while Niger is 6.9 percent, according to Statista.
While huge challenges persist—and some countries are advancing faster than others—engineering projects in Africa are in demand. “The continent is going through a massive urbanization phase,” says Manish Kothari, president and CEO of Sheladia Associates, past chair of ACEC, and current FIDIC board member. “There are needs in a wide range of areas. These projects are essential for countries achieving the desired economic growth.”
“There are huge needs in terms of physical infrastructure, including power, water, sanitation, transportation, housing, health care, and public works. Almost no sector remains untouched.”
FORMER SENIOR INFRASTRUCTURE ADVISOR
The vast majority of projects in Africa revolve around basic infrastructure, including water treatment facilities, transportation systems, and power grids. The World Bank notes that about half of the population in sub-Saharan Africa still lacks access to electricity, and the figure can rise as high as approximately 80 percent in rural areas. This affects the daily lives of Africans, but it also inhibits business and economic growth.
“It is essential for a U.S. firm venturing overseas for the first time to identify and associate with a national firm with knowledge of local conditions and codes.”
CHAIR EMERITUS, PAST PRESIDENT AND CEO OF
PAST CHAIR OF ACEC
PAST PRESIDENT OF FIDIC
Yet Kothari says that it’s unwise to draw highly detailed conclusions about the continent based on the needs of specific countries and regions. It’s crucial to view countries individually and consider projects in a broad way. These include transport, water and power, cyber-infrastructure such as more advanced internet backbones and data centers, and communication such as more advanced mobile networks. For now, only about onethird of the continent has a reliable internet connection. “In many countries, physical infrastructure is considerably constrained, and this impacts economic progress,” Kothari says.
“Companies that successfully enter the market are positioned for enormous growth for many years.”
PRESIDENT AND CEO
FIDIC BOARD MEMBER
Translating opportunity into tangible results isn’t a simple proposition. “It’s important to thoroughly understand how things work in a country before moving forward,” says Christopher Campbell, CEO of Consulting Engineers South Africa (CESA), an organization that advocates for the industry and promotes standards in that country.
To be sure, Libya isn’t South Africa, and Nigeria isn’t Kenya. The diversity of Africa is part of its appeal and its challenge. “There are many aspects to address, ranging from politics and business practices to quality standards and labor,” Campbell says. “In some cases, processes don’t take place the same way they might in the U.S. or Europe. It isn’t enough to have a high level of technical expertise.”
In fact, U.S. firms often encounter a steep learning curve in Africa. Europe’s colonial history, while detrimental in many ways, offers EU firms a baseline for knowledge about local politics, language, and culture, Dennis explains. Engineering companies from other places, such as Asia, often take a longer-term view of projects and relationships. Chinese firms—operating under their country’s Belt and Road Initiative, a vast global infrastructure development framework—have taken an aggressive business stance. This includes low interest rate loans underwritten by development banks in China. As a result, Chinese firms have claimed about 30 percent of Africa’s internationally linked construction market, according to the World Bank. Among larger projects, the figure rises to about 50 percent, McKinsey & Company reports.
Peter Macy, president of RockBlue, a nonprofit organization dedicated to improvements in urban water and sanitation in Africa and other developing regions, says that engineering firms shouldn’t view the growing Chinese presence in Africa as a reason to avoid entering the market. In many cases, U.S. firms have a significant advantage for complex projects. “You won’t be as competitive going after less sophisticated and smaller projects. There’s typically a different level of expertise and a different sense of quality standards on those types of projects,” he says.
“If you are already a successful company, you have to ask not what you can gain, but what you can give.”
FORMER EXECUTIVE VICE PRESIDENT
OF CDM SMITH
One way to address cost-competitive challenges is to emphasize the importance of quality engineering and construction work, including Qualifications-Based Selection (QBS) standards, Macy explains. The first choice would be for the client to be convinced to go the QBS route. If this is not possible then you should still focus on quality. Quality distinguishes you from other offerors by stressing the long-term/life cycle benefits of high-quality infrastructure. If you can, try and reinforce that QBS uses quality, along with experience, education, approach, offeror strength and stability, and team composition, to select the most qualified offeror and leaves negotiating final scope and fair and reasonable cost of work with that offeror after selection, before finalizing a contract.
Another issue, experts say, is a tendency for Western firms to adopt a somewhat paternalistic approach and even talk down to government officials and business leaders in Africa. Not surprisingly, this attitude introduces friction and resentment. One reason Chinese companies have enjoyed enormous success in Africa, observers say, is their willingness to adopt a highly collaborative approach—and focus on debt relief and other financial issues that are an imperative to cash-strapped developing nations.
A tougher issue can be dealing with corruption, including bribes and kickbacks. Although illegal and unethical activities aren’t nearly as common as they once were—for example, some countries, such as Liberia, have introduced transparency frameworks and laws, while the Millennium Challenge Corporation, created by the U.S. Congress in 2004 to deliver smart U.S. foreign assistance by focusing on good policies, country ownership, and results, and CESA have developed standards and codes of conduct—U.S. firms must be prepared to face an occasional problem.
“It’s important to thoroughly understand how things work in a country before moving forward.”
CONSULTING ENGINEERS SOUTH AFRICA
One way to address the issue is to take a proactive stance, Dennis says. This means stating upfront that a firm abides to widely adopted ethical standards. And when there’s funding from an entity such as the U.S. or the World Bank, it’s advisable to contact an embassy so that a commercial officer can emphasize to governments the importance of legal and transparent work taking place during a project life cycle. “This can make people think twice about acting inappropriately,” Dennis explains.
Yet, in some cases, walking away from projects is the only viable option, Kothari says. Adds Macy: “You must be willing to decline any further discussion—even if it’s an attractive and potentially lucrative project. It isn’t worth destroying your or your organization’s professional reputation. That said, it is possible to successfully do business in Africa without succumbing to any corrupt requests or demands.”
Corruption takes place in many forms, including direct payments to officials of the national governments, use of a third party such as an agent to facilitate payments or the local associates to secure contracts, says Thomopulos. “This is a mine field that American companies can be caught in which could result in violation of the Foreign Corrupt Practices Act,” Thomopulos says. “It is most important that firms working internationally in the developing countries have strict ethical and integrity policies that are driven down from the top leadership of the firms.”
If an engineering firm is pondering the possibilities, opportunities, and challenges of doing business in Africa, a few factors stand out. First, identify your firm’s motivation for doing work on the continent, Howard advises. While revenues and profits are primary considerations, determine whether your firm is willing and equipped to broaden its geographic footprint. “If you are already a successful company, you have to ask not what you can gain, but what you can give,” he says.
It’s also vital to approach a particular market or country strategically, Howard adds. Rather than tossing a wide net and attempting to deliver services across the African continent, “identify specific countries that are an excellent fit with your firm’s knowledge and skills,” he says.
“It can be a very rewarding experience both culturally and professionally.”
There’s also a need to conduct detailed research and due diligence. This includes identifying a local partner that’s equipped to navigate a country’s business, social, and legal frameworks.
In fact, local expertise can make or break projects, Dennis says. Macy notes that a knowledgeable business partner, carefully vetted, can open doors to government officials, identify topquality engineering and construction firms in the region, and aid in identifying specialized local expertise as well as labor for projects. “They can keep their ear to the ground and keep you posted about how things are unfolding,” Macy adds.
And shed stereotypical thinking. “There is a remarkable pool of talent available in many African countries,” Campbell says. “Many engineers have studied in the U.S. and have a high level of proficiency. The only thing they are often lacking is experience—and that’s something that Western firms can aid with.”
What’s more, “as these engineers gain experience in the real world, they can take on greater responsibility in the future. This benefits both the individual and the engineering firm doing business in Africa,” Campbell adds.
Finally, it’s essential to vet contracts and clauses carefully, says Richard Stump, vice president at RS&H, member of ACEC’s International Committee, and current chair of FIDIC’s Integrity Management Committee. He has seen government officials and other clients try to incorporate objectionable and sometimes illegal clauses into contracts. For example, when Stump was with a previous firm, his company received a proposed contract that stipulated his firm would honor a secondary boycott of Israel. “This violated U.S. policy and the company’s policy,” Stump says. “We promptly reported it to the U.S. Department of Justice, as we were required to do by law at that time. We then had to navigate some very sensitive issues with the client.”
Africa isn’t an ideal choice for every firm. Yet it’s an option that U.S. firms should at least consider. “High risk and high reward” is how Macy describes Africa. “It can be a tough environment, but if you get things right, the opportunities are enormous—and the profit margins can be extremely high,” he says.
In addition, there’s often less competition for the larger, more sophisticated projects in the developing world, and most importantly, there’s an opportunity to make a significant impact—and improve the quality of life for people. “It can be a very rewarding experience both culturally and professionally,” Macy says.
Success lies in moving beyond myths, misconceptions, and stereotypes, Kothari says. The economic growth of Africa—and the resulting demand for major engineering projects—is unmatched in nearly every other corner of the world. “In many ways, Africa represents the future of engineering and infrastructure,” he says. “Companies that successfully enter the market are positioned for enormous growth for many years. A young population, greater wealth, and more stable governments are fueling enormous advances.”
Samuel Greengard is a technology writer based in West Linn, Oregon.
1 Understand your motivations. It’s unwise to enter any market strictly for revenue and profit. Your firm has the opportunity to improve the quality of life in a country.
2 Avoid stereotypes. Africa is not the place depicted in numerous books and movies. In many cases, cities are modern, and the colonial vestiges of the past are vanishing. Enter Africa with an open mind.
3 Prepare and do the necessary due diligence. You can’t parachute in; you need to understand the country, the people, and the business opportunities.
4 Develop trusted partners. It’s arrogant to think that you can set up shop in a country and achieve instant success. You need local and knowledgeable partners who can speak the language, negotiate the culture, and facilitate business there. Networking through organizations like ACEC and FIDIC is invaluable.
5 Respect the culture. Not everything happens on U.S. time or with U.S. sensibilities. While this may be frustrating, it’s vital to accept the way another culture operates and adjust business practices and social interactions accordingly.
6 Avoid any hint of corruption. Don’t risk bad press and prison time. There are effective ways to steer clear of problems—and it may sometimes be necessary to walk away from a project, if a bribe or kickback is involved.
7 Vet contracts closely. It isn’t unusual for a contract to contain objectionable—and sometimes illegal—clauses. Ensure that attorneys read the fine print before you sign on the dotted line.