As people around the world look to Africa for potential investments and South Africans head north, there is encouraging news to fuel those ambitions, troubling reports to temper our enthusiasm, and some mistakes to learn from.

Accra, the capital of Ghana, is teeming with well-dressed and educated up-and-coming young people who drive high-end cars and live in fancy houses. It is indicative of Ghana’s economic growth, 14.4% last year. According to the World Bank, many African economies are forecast to be among the world’s fastest growing in 2012. Topping the list are the Democratic Republic of the Congo, Nigeria, Ghana, Liberia and Ethiopia.

The US business consulting firm Ernst & Young reports: “A new story is emerging in Africa – a story of growth, progress, potential and profitability.” The US Secretary of State for African Affairs, Johnnie Carson, is quoted as saying that Africa represents the next world economic frontier. China’s trade with Africa reached $ 160 billion in 2011, making the continent one of its largest trading partners.

London magazine The Economist reported last month: “Since The Economist regrettably labeled Africa ‘the hopeless continent’ a decade ago, there has been profound change.” Today “the sun is shining brightly … the impressive growth of the continent is likely to continue.”

Africa’s trade with the rest of the world has exploded by more than 200% and annual inflation averages just 8%. External debt was reduced by 25% and foreign direct investment (FDI) grew by 27% in 2011 alone.

Although growth projections in 2012 have been revised downwards due to the so-called Arab Spring, Africa’s economy is expected to expand by 4.2%, according to a UN report earlier in the year. The International Monetary Fund (IMF) expects the economies of Sub-Saharan Africa to grow above 5%. On top of that, there are currently more than 500 million mobile phone users in Africa, while improved skills and increased literacy are attributed to a 3% growth in productivity.

According to a UN report, the think tank McKinsey Global Institute writes: “The rate of return on foreign investment is higher in Africa than in any other developing region.”

The end of numerous military conflicts, the availability of abundant natural resources, and economic reforms have promoted a better business climate and helped fuel Africa’s economic growth. Greater political stability is lubricating the economic engine of the continent. The United Nations Economic Commission for Africa (ECA) in 2005 linked democracy with economic growth.

All this growth and urbanization is putting pressure on social services in cities, it has also led to an increase in urban consumers. More than 40% of Africa’s population now lives in cities, and by 2030, the top 18 cities in Africa will have a combined purchasing power of $ 1.3 trillion. The Wall Street Journal reports that the African middle class, currently estimated at 60 million, will reach 100 million in 2015.

Then there is the more sobering news. “A sustained slowdown in advanced countries will curb demand for African exports,” writes Christine Lagarde, managing director of the IMF. Europe accounts for more than half of Africa’s foreign trade. Tourism could also be affected by the arrival of fewer Europeans in Africa, affecting tourism-dependent economies such as Kenya, Tanzania and Egypt.

The Reserve Bank of South Africa warned in May that the financial crisis in Europe, which consumes 25% of South Africa’s exports, poses great risks. The adverse effects in South Africa could have serious consequences for neighboring economies.

Another concern is the resurgence of political crises. Due to the so-called Arab Spring, economic growth in North Africa plummeted to just 0.5% in 2011. Recent coups in Mali and Guinea-Bissau could have broader economic repercussions. “Mali was doing very well, now we are back to where we started,” says Mthuli Ncube, chief economist at the AfDB. Ethiopia, Kenya, Uganda and other countries have become militarily involved in Somalia, which can slow down their economies. And Nigeria is dealing with Boko Haram, a terrorist cult in the north of that country.

A cause for concern in what many refer to as Africa’s “jobless recovery”. Investors are concentrating on the extractive sector, specifically gold and diamonds, as well as oil, which creates fewer job opportunities. 60% of the unemployed in Africa are between the ages of 15 and 24 and about half are women. In May, UNDP raised the alarm about food insecurity in sub-Saharan Africa, a quarter of whose 860 million people are undernourished.

But none of this is deterring South African commercial interest north of the border. One may wonder why? South Africa’s domestic market is not providing local businesses with enough growth opportunities, prompting many of them to look to the rest of the continent. According to Ernst & Young’s Africa Business Center leader Michael Lalor in an online press conference recently: “While South Africa is still growing well compared to advanced economies, it certainly falls short of some of the other markets. fast growing. ” Lalor says.

Analysts note that many of the other emerging markets, such as China and South America, are difficult to access, making the rest of Africa the obvious choice. Asia is considered almost excessively competitive. Latin American ventures mean dealing with a very strong and always present Brazil. Therefore, Africa, given its history of sustainable growth and its potential, is an obvious region for South African companies to grow.

Quoted by howemadeitinafica.com, Lalor says that most of the companies listed on the Johannesburg Stock Exchange are developing strategies for the rest of the continent. Ernst & Young is experiencing great interest from foreign companies to invest in the continent. “The response from our clients and potential investors is overwhelmingly positive, to the extent that we simply cannot keep up. So there is no question that we are seeing significant interest, so much talk, interest in the spirit, but also people who put their money where their mouths are, “he said.

These sentiments are confirmed by a survey conducted last year by Price Waterhouse Coopers. A survey of CEOs published by PwC found that 94% of directors of South African companies expect their business in Africa to grow in the next 12 months. PwC interviewed 32 South African CEOs from the ICT sector, financial services, and industrial and consumer products and services.

With this in mind, it is worth turning to Raymond Booyse, founder of consultancy Expand into Africa, who identified four mistakes that South African companies that venture to the rest of the continent often make.

The first was: Not doing homework. South African companies are often not prepared to spend money on market research. “Go and see if there is a market for your products or services. Once you have established that there is indeed a market, find out who your competitors will be,” says Booyse.

Booyse notes that South African companies underestimate transportation costs and ignore how local laws and regulations influence business.

Second: ignorance. Many South African entrepreneurs are ignorant of local cultures and attitudes, according to Booyse. As an example, ignorance does not realize that just because they are both former Portuguese colonies, what works in Angola’s capital Luanda does not necessarily mean that it will work in northern Mozambique. In a recent report, research firm Nielsen noted that African consumers’ attitudes toward technology, fashion, and how to spend their free time vary wildly. There are no prizes for that one.

Third: arrogance. Booyse says South Africans sometimes think they know what people on the rest of the continent need. “In the rest of Africa, South Africans are often seen as arrogant.”

Finally: Be unprepared for the high costs of doing business in Africa. Many South African companies are unaware of the high costs of doing business on the rest of the continent. “If you want to spend two weeks in Angola, it will cost you 40,000 rand (US $ 4,700),” says Booyse. “It is not cheap and easy.” Flights, for example, from South Africa to Kinshasa or Lubumbashi can be expensive and hotel rates are also very high.

Africa is clearly a fertile place to plant seeds. But Africa is not for the faint-hearted, as business is done in a very different way than in other parts of the world, with all kinds of social and political obstacles to overcome. South African companies have a potentially bright future and definite advantages if they are prepared to take risks, be humble and do their homework.