A business forum, the Katanga Business Meeting, was held last month in the city of Lubumbashi, in Haut-Katanga province, South Eastern D.R.C (link). The aim was to allow businesses to meet and form commercial links with each other. 130 companies attended, from sectors including agriculture, services, mining, and energy.
Such forums are a good idea. They can help companies to identify and assess the feasibility of business opportunities. They can help companies to access resources required to realise those opportunities, and to find potential partners, suppliers, and customers. They can help companies to assess demand and potential competitors, and to decide on the best strategy to enter a market. They can help companies to find goods and services that make their operations perform better.
Given all these potential advantages, how can an organiser prepare a forum to achieve them? A forum is more likely to bring advantages if it engages a large number of companies, and facilitates communication and opportunity identification between them. So an organiser would want to make detailed preparations that promote engagement and communication . Here’s what I’d do.
The first thing I’d do is contact as wide a cross-section of companies as possible and let them know about the forum. If more companies are involved, the forum’s impact is likely to be bigger. So I would use telephone directories, tax records, business organisations, business networks, and expert knowledge to identify and contact companies. Advertising in business publications would be useful. I’d also advertise in more general newspapers, both to contact those companies not reached by business publications, and to attract potential businesspeople who have not yet established a company – a nominal entry fee may ensure that forum participants are committed to business. A well-publicised forum website would also be useful, giving information about the forum. I would also encourage involvement by stating that the forum has support from prominent business associations, government, and international organisations. Stating that many other companies will be attending can influence companies to attend themselves. I’d also look at whether broadcasts or internet conferencing could be used to link to companies whose representatives cannot attend in person.
The next thing I’d do is hire people who are familiar with the companies and their business, or who can learn about them. Such people can act as “brokers” or “go-betweens”, connecting companies who may not be aware of each other. Their knowledge can be used to arrange group or bilateral meetings between companies with common features, or to provide information to participating companies, or to arrange communications whether in print or on the internet. The brokers may also be able to resolve any difficulties between companies, if the brokers have negotiating skills or can acquire them.
The third thing I’d do is explain before the forum what companies can do when they arrive. Letting companies know in advance allows them to prepare, and makes the interactions at the forum more effective. So I’d tell companies that they will meet other firms from their own and other industries, and that they can swap product samples, leaflets, and business cards. I’d also tell them that they can exhibit and present publicly.
The fourth thing I’d do is arrange the seating, spaces, and timetable in the forum so that company representatives can meet and move on quickly. The more meetings a company has during the forum, the more likely it is to identify business opportunities, partners, or suppliers. Company tables and stalls could be positioned close to each other, perhaps side-by-side so that representatives can move from company to company with few omissions. I’d suggest that initial meetings would be limited to a few minutes, with opportunities for further discussion in subsequent open meetings or at lunch. Sessions could be held for companies from different regions and industries, and on different topics of business interest. These sessions would increase the range of company interaction.
The next thing I’d do is distribute information about the region, industry, industrial specialisation, and product range of each company, together with contact information. A company will often be interested in opportunities where it can use its existing knowledge and skills, and such opportunities may arise from observing and cooperating with firms with which it shares some features. Recognising local suppliers and clients may allow companies to reduce costs, as business with local partners will have lower transport expenses, which can lead to large savings in a region where transportation is difficult. Indeed, without finding a local supply chain, a business may never get going. Additionally, if companies are aware of other firms with shared features, they can form lobby groups to protect their interests.
The sixth thing I’d do is encourage companies to talk about their work. Discussion of work can stimulate ideas and collaboration. I’d ask companies to give public presentations for five minutes about their products, organisation, and goals. Companies could provide samples of their work, and describe how they can assist other firms. Companies could also describe any problems that they have, so that potential partners or contractors can work to solve them. Open meetings could discuss topics of interest to some or most businesses, including electricity supply, regulation, taxation, and technology.
The seventh thing I’d do is promote contacts between companies after the forum ends. Companies could be encouraged to exchange business cards during the forum, and enter their names in a database available to other firms. Some of the forum employees who know about the companies and their business could continue to work temporarily after the forum ends, connecting companies who want to find partners, suppliers, or clients. The employees could also collate and summarise information given during the forum, which could help companies cooperate in future, and which could be a commercial product in itself.
1. Some academic studies have looked at preparations used in other forums and similar networks, including (in English)
Jack et al. (2013) An entrepreneurial network evolving (link)
Lockett et al. (2013) Motivations and challenges of network formation (link)
and (in French)
Chabaud et al. (2003) Les incubateurs d'entreprises innovantes (link)
There’s a new platform to promote investment in DR Congo from the United States, as well as import and export between the two countries. The platform is called Easy Commerce USA-RDC (website (still being built); facebook), and is run by the Association of D.R.C. Entrepreneurs, which has the objective of entrepreneurial promotion and development. One part of the platform is called Easy Profile, which was described by Ted Mvutu, the Association’s president, in a recent radio interview:
“We have planned the program called Easy Profile, which creates a virtual professional profile of a Congolese entrepreneur who is going to attract foreign investors who come to invest in the D.R.C.
“The investors who are coming to the D.R.C. have to find a platform of entrepreneurs organised so that they contact directly operators corresponding to their projects. In this profile, we put the identity, the sector of entrepreneurial activities, and we are going to connect these factors to the U.S. Department of Commerce to facilitate the task of American investors who want to come to the D.R.C.”
(Ted Mvutu. The text is my translation from the French)
A business directory of “Easy Profiles” could bring in two types of investors. One type of investor could bring foreign direct investment (where a business is established in the D.R.C. and (at least partially) owned and run by the U.S. company), while the other type of investors could bring finance investment (where a business run by Congolese entrepreneurs is financed by U.S. money). The encouragement of each type of investment would require a different emphasis on information provided by Easy Profile, and I hope that the Association specifies their own plans in more detail prior to starting the activities. As the President of the Association says that U.S. investors can contact local entrepreneurs, instead of being contacted, it seems more likely that they will be bringing foreign direct investment rather than finance investment.
Foreign direct investment could benefit from the Easy Profile business directory in at least two stages: the search for new business ideas, and the acquisition of resources to realise an idea. When considering whether to set up a new business, an entrepreneur will typically search for business opportunities from numerous sources, and show some flexibility in the opportunities that they will pursue. Under foreign direct investment, the flexibility will typically be reduced, as the investor will be likely to have clearly identified production aims coordinated with other companies owned by the investor. However, it is possible that local ideas and expertise may influence the details of the investment, for example if resources used in other countries are not readily available in the D.R.C., or if the best human resource management practices differ in the country. Within a directory format, it may be helpful to include a section where each company could write freely about anything it considers important. For example, it could describe the products it offers, or why it could offer something unusual, or any ideas it has for new products and services. It could also give opinions on current Congolese business conditions and markets. Easy Profile could translate into English.
The Easy Profile business directory could also benefit foreign direct investment by aiding the acquisition of resources to realise an idea. The D.R.C. is unfamiliar for most potential U.S. investors, and they will want to find local companies which help them to realise their aims, by providing relevant and suitable goods and services. Easy Profile could help them to find such partners, suppliers, and subcontractors. The presentation and ease of access would be important – I would copy the design of leading websites in the area, and allow data to be sorted, collected, and extracted easily. The website should be in English and French, so that it can be used by both U.S. and D.R.C. entrepreneurs.
To help investors to identify opportunities and D.R.C. companies, it would be helpful if the Easy Profiles contained the following information:
Further information would help to build the trust between investors and local companies. Trust can be a major issue in any business relationship, and during investment in a foreign country it is of particular importance. Helpful information may include:
There is speculation among the press and aid agencies that DR Congo may be close to returning to widespread conflict. I've written before that earlier war in the country was an economic disaster. To recap, a war can lead to incomes which are lower by around US$1000 per person per year than they would have been. Over ten years, that's $10,000. For a population of 80 million, that's $800 billion.
One of the reasons that war is economically disastrous is that business operations are badly hit. With a very few exceptions, such as arms smugglers, it is hard for business to prosper during war time. Of course, there are wider economic consequences to consumers and government, and effects in the long term through changes in labour, education, and investment, but let's stay on business for the moment.
War can affect business operations by interfering with a firm's ability to identify new opportunities. Familiarity with, and knowledge of, an environment is an important way for business people to find such opportunities. When an environment changes radically under war, then business people's ability to identify opportunities is diminished. Any search procedures to identify opportunities - for example, by touring local markets, or surveys - may become dangerous or impossible. Further, the number of opportunities is likely to fall as well, as markets are disrupted. While the changing environment due to conflict will bring some new opportunities, the disruption of markets established over a much longer period seems almost certain to lead to large net loss of opportunities.
Additionally, formerly attractive opportunities may not be worth the risk after conflict starts. Capital is likely to be in short supply during wartime, driving up its cost. Extra risk, such as that brought by war, is usually compensated by higher returns as well. If an opportunity's expected return is the same or lower when conflict starts as before, then it may no longer meet the required investor return, and so not happen.
Another reason for war's effect on business operations is that it interferes with the ability of businesses to plan. War brings increased uncertainty about the future - the actions of the combatants are unknown, and future events that were previously likely may be disrupted. A planner would have to guess about the future to a greater extent, and additionally have to include the actions of the combatants. The number of future events the planner would have to consider would be much wider, and costlier to examine in full if that is even possible.
The ability to find solutions to any opportunities is also hampered by conflict. Earlier ways of formulating ideas may no longer be readily possible or suitable. For example, a company which previously examined the practices of other companies may find that those practices are no longer as visible, or the practices are no longer applicable in the wartime economy. If solutions are proposed, then testing their viability may be difficult, with methods such as surveys or limited launches likely to be more expensive during war.
What's more, war can interfere with a company's ability to implement any proposed solutions. Finance may be not accessible even if required returns can be met, and the available workforce is likely to smaller. Fixed capital stock would be a target for looting. Networks of potential business collaborators may be reduced in size.
Overall, then: war is bad news for business operations.