Africa's Economic Advantages
Africa is blessed with a lot of economic advantages, which have been benefiting both the countries within the continent as well as those from other continents. One of the significant advantages economically is the large population creating a large market for products within and outside the continent (Visser & Tolhurst, 2017). Due to this large market, outside countries such as Germany finds it essential to venture into businesses in Africa, a good example being German businesses in Sub-Saharan African nations. The market results in extensive sales, which in turn leads to more profits from the ventures. However, the country has strengths, weaknesses, opportunities, and threats concerning the trade activities in Africa.
Opportunities
Africa is a place of great opportunities that concern not only the market but also the availability of resources needed to produce goods and services. Germany has invested a lump sum amount by establishing various industries that are aimed at utilizing the available raw materials in African for the benefit of German and African economy. The large capital base of Germany is also an opportunity that would promote its economic endeavors in Africa.
Strengths
Since Germany is a foreign country carrying out business activities in Africa, there is a need to maintain a good social relation, which it has achieved through signing investment protection treaties with five nations namely Nigeria, Ghana, Ivory Coast, Kenya, and Angola. On the other hand, protection laws have been introduced to prevent termination of the contracts by countries, just as South Africa did in the year 2013. The treaties have ensured a favorable environment for carrying out business activities and at the same time boosted the economic gain among the nations involved.
Another strength that has significantly advanced the German operations in Sub-Saharan countries is the automotive industries introduced in these nations. Bearing in mind that there is no automotive industry in any African nation, the introduction of these German industries is a great achievement as the countries do not have to import vehicles as they used to in the past. On the same note, this has increased profits for both the states and Germany.
Weaknesses
Germany is unable to supply all of the African countries with their products because Sub-Saharan countries are highly populated. Lack of market experts from Germany also causes sales problems since sales have been left in the hands of Africans. Lack of a proper speculative plan that would cater for any risk is also a weakness.
Threats
German products in Sub-Saharan states are highly being taxed compared to local products in the countries. Also, there is a lot of competition from other developed countries trying to invest in Africa (Tchamyou, 2017). The cost of production compared to the volume of goods sold shows the chances of making losses since; most African nations have low GDP and per capita income. There are also possibilities that the raw materials in these African countries may become exhausted.
Statistics: Growth Rates of Sub-Saharan Countries
Sub-Saharan nations are associated with high population growth rates because the states have not embraced various methods of controlling or managing small families. The large population is also resulting from different traditional African beliefs supporting siring of many children. The population increase rate in these countries is high, and this has posted both negative and positive effects on trade in general. High population is advantageous in that; it provides a large market base for market products. Germany has always enjoyed this advantage since; its products are highly demanded and readily bought by Africans (Fosu, 2015). Contrary, the large population in these countries may adversely affect business activities if not well managed since; high population in developing nations may result in unemployment issues. The unemployment usually results in low per capita income in these nations, implying a reduction in the demand for German products. The argument is based on the fact that German produces high-quality products, which are expensive, compared to local products in the countries. As a result, a reduction in the per capita income would divert the demand from the German products to locally made products.
Geopolitical Landscape
The geopolitical landscape includes all the area studies, climate changes, the terrain of these lands, population, natural resources, as well as the applied sciences of the Sub-Saharan countries. Considering the above sentiments, it is true the Sub-Saharan nations are blessed with a pleasant climate, good topography, natural resources, and high population, all of which are important in supporting the production of commodities for sales (Newell & Bulkeley, 2017). The advantages associated with these countries form most of the strengths and opportunities enjoyed by Germany in their business activities in the nations. The excellent climate in Africa has always resulted in high production of raw materials needed for the German industries. Also, the atmosphere is favorable for the existence of German experts who are working in the industries situated in the Sub-Saharan countries.
Aim and Approach of the Assignment
The main aim of the assignment was to identify various factors favoring or undermining German business activities in the Sub-Saharan countries. In the process, we used an approach where we compared the GDP of each Sub-Saharan nation to determine the rate of profits realized by German factories in these countries. We also found that Africa has a lot of favorable factors that usually boost business activities of European counties. The technique used by German industries to meet their vast profits in Africa were also discussed. For example, an approach that has seriously boosted the German activities in Sub-Saharan countries the automotive introduced industries in these nations. Also, the treaties have ensured a favorable environment for carrying out business activities and at the same time, have boosted the economic gain among the countries involved.
References
Fosu, A. K. (2015). Growth, inequality and poverty in Sub-Saharan Africa: recent progress in a global context. Oxford Development Studies, 43(1), 44-59.
Newell, P., " Bulkeley, H. (2017). Landscape for change? International climate policy and energy transitions: evidence from sub-Saharan Africa. Climate Policy, 17(5), 650-663.
Tchamyou, V. S. (2017). The role of knowledge economy in African business. Journal of the Knowledge Economy, 8(4), 1189-1228.
Visser, W., " Tolhurst, N. (2017). The world guide to CSR: A country-by-country analysis of corporate sustainability and responsibility. Abingdon, OX: Routledge.
