Mergers and Acquisitions in Sub-Saharan Africa - Part 2

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Governments’ Focus on Improvement of Education

This is one of the major challenges that most of the foreign firms face when they are investing in Africa. This explains the main reasons why they want to acquire employees from their member countries. Through the current statistics indicate that the number of universities and colleges have been increasing, very little has changed in terms of providing quality education. The ministries of education should focus on ensuring that the courses taught within the universities are relevant for the students to become competitive. For instance, the governments should focus more on promoting the science and technology courses within the higher institutions of learning. This will be imperative in preventing the incidences where the employees have to be imported from other countries. In addition to that, the government should be focused on increased the ration of the lecturers to that of the students within the universities. This is to ensure that the needs of every student in addressed. Most of the students are concerned about passing in their examinations and not acquiring the knowledge itself. The higher institution of learning should therefore focus on ensuring that learning actually takes place.

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One of the main responsibilities of the government should be prevention of brain drain within the society. These are by addressing the issues that contribute to this type of movement of professions to other countries. For instance, most of Kenyan doctors are ether working in South Africa or Botswana. This is attributable to the fact that their services are appreciated in such countries. The reward is higher in such countries compared to that in Kenya. Low salaries are the major factors that explain the increased strikes within the African institutions (Singh 2002, 43). The mines in South Africa For instance went on strike demanding increased wages. On the other hand, the doctors and teachers of Kenya went on strike demanding the same thing. The governments should be in a position to address such things for preventing the brain drain that has left the African continent to lag behind in development.

Maintaining Peace Within the Region

Sub-Saharan Africa is known for increased conflicts. Most of the countries are unsafe for business practice. Some of the countries such as Nigeria, Somalia and Mali have been under the threat of attacks (Rothman 1999, 54). The Boko Haram in Nigeria for instance has been a major threat to the economy of the country. This is attributable to the fact that the increased insecurity makes it impossible for the investors to run their activities within these regions. For instance, the post election violence in Kenya in 2007/2008 scared many investors away. The violence led to destruction of private property and loss of life. The African countries should therefore focus on building peace in order to attract the foreign investors. As indicated above, mergers and acquisitions have been very vital in providing quality services to the society. Political stability should be enhanced in order to prevent any interference with the business. Leadership should ensure that the exploitation of African resources is achieved. This is attributable to the fact that most of the African resources still lie idle while the rest of the society languish in poverty (Marnus 2006, 65). It is therefore imperative to address these issues in order to empower the community of Sub-Saharan Africa.

Technological Advancements

The government should be focused on how to develop technology within the business environment. As noted earlier, one of the main challenges of most countries is that most of the activities are still carried out using the traditional means. Most of the countries have not embraced technology because it is feared that it may result in creating unemployment for the people. Most of these countries still focus on the labor intensive methods of productions. Lack of technological advancement is the main reason why most of the mergers and acquisitions have not ventured in some of these countries.

The perception that technology will necessarily lead to the creation of unemployment should be addressed. This is attributable to the fact that this is not an obvious issue (Amartya 1999,43). Most of the foreign investors are looking at how they can reduce the cost of operation and increase profits. One of the main ways through which this can be achieved is by ensuring technological advancement is ensured. Mass production is one of the ways in which most of those large businesses are able to reduce the cost of operation (Paugam. 1999, 34). This massive production on the other hand can only be possible where the government has allowed technological advancement.

Most of the countries in Africa have realized the advantage of focusing on technological development and this explains why they have benefited. For instance, countries such as Kenya, Ghana, South Africa and Nigeria have been putting more efforts to ensure that most of the businesses are automated. This explains the main reason why most of the foreign countries find these countries attractive for business opportunities. However, technology should create more opportunity to the people rather than leading to job losses.

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The contraction of the transport network is also imperative in order to ensure that the African nation also trade with each other. The construction of the major highways such as the Trans-African highway has been imperative in ensuring that these countries open way for trade. These highway runs from South Africa to Egypt. One of the main setbacks to trade within the African countries has been impassible roads and lack of railway lines. This is the main reasons why there are major plans with an aim of increasing competitiveness within the countries. For instance, Kenya and Uganda have embarked on a plan to reconstruct a modern railway line from the Kenyan coast. This is attributable to the fact that Uganda is a landlocked country that depends on the coast of Kenya to provide major services. In addition to that, the two countries benefit from each other immensely in terms of trade.

Reduction of the traffic jam is another factor that the countries should be focused on. This is a major issue in most countries within Sub-Saharan Africa owing to the fact that the population living in the urban areas is on the increase. The number of people owing vehicles is also on the increase. For that reason, these countries should be focused on the improvement of the transport network to avoid delays caused by the increased number of vehicles. For instance, the construction of the modern railway lines should be enhanced. This is a development that has been undertaken in countries such as South Africa, Nigeria and currently Kenya.

Changing the Attitude Towards Foreigners

One of the major challenges for the establishment of the mergers and acquisitions in Sub-Saharan Africa is the perception that the people have on foreigners or people carrying out this activity. One of the main beliefs amongst the people is that these foreign firms only come to exploit the society while at the same time creating unemployment. This kind of attitude has contributed to denying the investors a chance to venture in most countries. These attitudes are sometimes used by the politicians to get favor from the people. The government for instance may fail to allow the entry of the foreign industries in order to maintain the current status. However, it is imperative to note that Sub-Saharan Africa needs increased production of goods and services and surpass what the government can be able to produce. This may call upon the government to surrender some of the state owned industries to the foreign firms for the sake of increasing effectiveness and quality of goods and services. This may explain the main reason why most of the industries which were owned by the government are now controlled by the foreigners. This is especially in Kenya where the state owned mobile provide was taken over by the French firm. This was advantageous in the sense that the community was able to get more reliable services. It is therefore imperative to change the attitude about the motive of the foreign investors and support them fully. This is because apart from the creation of employment, the services provided by these companies have been fundamental in improving the services.

Encouraging More Competition in Local Industries

One of the main challenges within the African countries is that the nations have not opened their borders for each other. This therefore has only served to increase the cost of doing business amongst the African nations. It is imperative that the countries focus on elimination of barriers that may lead to lack of competitiveness and business between these nations. For instance, the east African countries have embarked on a plan to eliminate the trade barriers. This includes allowing the free movement of people from one country to another. Import duties for instance are been removed so that the acquisition of goods and services become cheaper. In addition to that, Sub-Saharan Africa is in the process of striking a deal that will see these countries benefit from each other. This has begun bearing fruits as observed from the fact that most of the companies from Kenya and South Africa have been investing in other foreign countries. For instance, the Equity Bank of Kenya has expanded its services in countries such as Uganda, Sudan and currently in Somalia. Apart from that, other group of companies such as Nakumatt Kenya has been able to open branches all over the Eastern African countries. This has been imperative for the growth and expansion of these industries. This is the main reason why Sub-Saharan Africa should focus on building relations with each other for the purpose of promoting each other. This exchange of goods and service will however be possible where members ensure that there is security and political stability. In addition to that, removing trade barriers is imperative to ensure that there is increased competition and reduction of goods and services.

Conclusion

In conclusion, mergers and acquisitions have been imperative in the growth of economy within Sub-Saharan Africa. There is increased venture within the African market owing to the increased number of consumers within the continent. It is currently estimated that the population of this region is almost hitting a billion. Majority of the population are young and this offers a good ground for the investors. One of the major acquisition that has shook this region is that involving Bharti company and Zain. While the income from the mergers and acquisition remained high in 2010 within Sub-Saharan Africa, 2011 saw the plummeting of the same. It is indicated that the income fell by about 53% due to a number of factors within the region. Mergers and acquisitions have been imperative in playing major roles within the education, security and creation of employment. For instance, the Bharti Company has created employment to thousands of people within the 17 countries in Sub-Saharan Africa. Bharti Company has contributed immensely to the economic development of these nations. This is especially though increasing the government revenue.

For instance, statistics indicate that mergers and acquisitions were able to contribute more than 44 billion dollars in these regions. This was in 2010 when most of the companies saw the need to establish their businesses within Sub-Saharan Africa. Bharti companies have been making increased revenue within countries where there is no increased competition. This is especially in countries of central Africa. In such countries, the revenue authorities have been able to increase their total income and this has been imperative in ensuring that the lives of the people improve The main aim of these business practices is to ensure that there is increased competitive advantage over the rivals. One of the main purposes of the mergers and acquisitions is to control the sales and marketing shares within the market. This is achieved through the reduction of prices through which the customers acquire the services. However, it is impossible to achieve this goal of price reduction unless there is mass production of goods and services. Mergers and acquisitions however assist the companies in achieving such targets of becoming price leaders within the market. Secondly, this business activity leads to increased technological advancement due to more capital. This leads to automation of business activities providing both quality and efficiency within the organization. Though the technology is blamed for the creation of unemployment, it is however the best method especially when the company is aiming at integrating it activities with other subsidiaries in different parts. Thirdly, mergers and acquisitions enhance the expansion of the business network. The increased capital gives the mergers a competitive advantage over their rivals.

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This development has not been without major challenges to the African nations. The main challenges include the creation of unemployment within the region as well as suppressing the local industries. The establishment of these firms may, among other things, create unemployment due to the establishment of technologies that eliminate workforce. This has been the major factor that has left thousands of people jobless within this region. Apart from that, most of the firms establish themselves as monopolies. This has two main effects to the community. Firstly, the price of acquiring the services is likely to increase. Secondly, most of these companies do not produce quality goods and services due to lack of competition from other main competitors.

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