Setting Up New Ventures in West Africa

Abstract The main application for this paper is for businesses looking to locate in the region to gain a basic understanding of the general requirements to be successful in West Africa, primarily in Angola. The secondary application is for various businesses to use the paper as a framework for evaluating whether suppliers in the region are indeed, well established and thus able to successfully operate and fulfill contracts. It will, in particular, address the challenges of building an organization where the political, economic and social cultures are quite different than that of the United States. The paper will review the necessary skill set of key personnel within the organization, which is needed to operate successfully in a diverse environment. We will also examine the challenges of lack of infrastructure with regard to conducting daily business and maintaining operations as well as winning contracts. New Discoveries in West Africa The latest figures for West Africa indicate a bounty of deepwater opportunities. Nigeria currently produces two million barrels per day and recent discoveries will push the figures even higher. The Congo Basin is also proving to be quite impressive. With the Chevron, Elf, BP/Amoco and Exxon deep water discoveries in Angola, the region has never looked so promising as noted in the Financial Times newspaper earlier this year. The paper cited Angola as "one of the world's most exciting oil frontiers and two-thirds of deep water exploration wells have struck oil, compared to a historical world average of closer to 15 percent." Consultants have predicted that Angola's current production of 800,000 bpd will increase to 1.4 million bpd by the 2005. Others have predicted that production could rise to 2.5 million bpd by 2015 surpassing Nigeria to become Africa's largest oil producer. Even with the lure of the huge potential in West Africa, many companies still shy away from the region. It is not without good cause that companies are reticent about starting up operations in West Africa. Despite the trepidation, companies can and do thrive in the region. The aim of this paper is to provide sound advice for you and your company to succeed in this exciting region of the world. The Pioneers and the Emerging Market In the beginning, there are always those brave souls willing to venture forth to set-up shop in the far corners of the world. The first task for the pioneer is to verify market information available through various commercial sources. Testing the market is the primary mission for the pioneer. If the products or services do not add value to the market, there is no point in going any further. Testing the market is not a simple procedure in Angola. One must take time talking with national oil company managers, potential clients and suppliers. Flying in for a week and flying out will not render the needed information.