Middle East based firms have traditionally been some of the key investors into Africa and despite a plethora of taxes, and the global downturn, the continent continues to offer companies strong growth potential, according to PricewaterhouseCoopers (PwC), the leading international professional services organisation.
Being the second largest and third most populous continent after Asia, with an estimated population of one billion, Africa has a large and untapped consumer base. The growth opportunities and how to navigate the tax structures were just some of the topics discussed at the PricewaterhouseCoopers 2010 African Tax and Business Symposium that is currently being held in Dubai.
"Africa offers a huge opportunity for GCC based companies, due both to its proximity and its demographics," commented Dean Rolfe, Middle East Tax Leader at PwC and keynote speaker at the symposium. "The continent has a plethora of tax systems that have to be navigated, making it a challenging destination for Middle East based investors. The true opportunities can be realised by locally based companies if they grasp the complexity of the African systems and ensure they navigate a path that supports their over-riding objectives. It's an exciting time for both Africa and companies looking for cultural yield as the opportunities to marry company growth with community investment are vast."
Since 2008, five of the top eight equity acquisitions in Africa were conducted by Middle East companies, of which four were from the GCC. Since 2005 inward FDI into the ten largest African nations has almost doubled, going from just over USD$200 billion to around USD$400 billion in 2009. The global financial crisis has impacted inflows, however it is still seen by many international organisations as key expansion destination.
"Africa is not an easy place in which to do business, however significant groundwork by those looking to invest in or set up operations on the continent can assist with avoiding the various pitfalls that may lie ahead," commented Silke Mattern, Associate Director, International Tax Services, PricewaterhouseCoopers. "The key to successfully investing in Africa is to do your homework, anticipate possible problems and work with experts to overcome the hurdles."
The PwC African Tax and Business Symposium is an annual event, launched in 1996, and helps companies looking to invest understand the challenges that lie ahead and the solutions available to them.
