The Conundrum of Opening a Corporation in Africa as a Foreigner

We do indeed “live in exciting times.”

Globally, the centuries-old, geopolitical status quo is in a state of extreme flux as the North-South paradigm is being hastily abandoned as a new, multi-polar system evolves.

With respect to Africa, the continent has the capacity to become a global powerhouse if its leaders play their cards right (and the general population forces them to).

The parasitism of certain Western countries - AKA the “Global North” - has really been brought to light by the coup in Niger and then in Gabon.

Yes, Africans and foreign academicians have been aware of the negative aspects of neo-colonialistic, Western-state presence on the continent for decades (or centuries) – however now the commoners throughout the global community are getting a lesson in Geopolitics 101 – as referenced in my LinkedIn article entitled African Geopolitics: Symbiosis - Mutualism, Parasitism or Predation?

https://www.dhirubhai.net/feed/update/urn:li:linkedInArticle:7096180412451852288/

But the real question is, how can Africa move beyond economic models based on one-sided relationships with “The West” or “Global North?

My primary suggestion is for African states to reconsider their required amount for foreign investment in Africa.

African nations are rightfully claiming that mega-corporations are fleeing the country with profits and resources. I do not disagree with that sentiment – as it is the truth. No argument.

That being said, if Africa would like foreigners to remain on the continent to run a long-term business, in most cases the cost requirements are beyond prohibitive for the common Westerner as are the red-tape-loopholes to jump through.

If a common foreigner has their life invested in a business, they will fight to survive and won’t be sending their earnings outside of the country. They'll remain in Africa.

A mega-corporation has no such stakes in a developing country and (can and) will pull out at a moment’s notice, in addition to exploiting any resources which have been locally extracted and/or produced.

At this point in time the median income in the United States is approximately $58,000 before taxes. $58,000. Does that sound like a lot of money? It is a pittance.

That $58,000 salary will be taxed anywhere between 25-35%. Let us call it 30% to make the number round.

30% of $58,000 equates to $17,400.

$58,000 minus $17,400 equals $40,600 - post-taxes before any cost of living is applied.

Presently in the United States the national median rent price is approximately $2,038 per month (median!) and home mortgages are even more costly.

That equates to $24,456 of rental cost annually.

If one subtracts $24,456 from the post-tax earnings of $40,600 that equates to $16,144.

$16,144 dollars left over annually – and that does not include food, monthly health insurance, monthly vehicle payments or repair. Isn’t that fantastic for a 50 to 60 hour work-week?

And should you not be able to afford health insurance having a child will cost you approximately (median) $18,865. The cost of living in the West is out-of-control, which gives Africa another edge for foreign investment.

I have many friends in the Africa diaspora and they all suffer a similar phenomenon as Westerners when they go home (Africa). Most all of their friends and family assume that simply because they live in a Western Country, that money is plentiful and easy to earn.

“Money grows on trees in the West after all,” yet that could not be farther from the truth.

On paper, income in Western countries appears to be fantastic, but in reality – it is not.

The cost of living, rent, medical care, health insurance and fuel make it very hard to save anything if one is earning the median income (and even above) in the US.

Nothing is left over to invest in most cases and it is only getting worse economically.

Now how does this relate to Africa and investment?

How can Alkebu-Ian (“Africa” to the Westerners) benefit from this information? I speak from experience as I have opened and run several businesses in Africa and South America.

In most cases I am disappointed with the political and moral direction of the US, however I do see a few things that other countries can adapt from America’s system in order to be more effective in attaining foreign investment.

? Opening a Corporation in the United States as a Foreigner

In the United States, in most all cases one does not need to invest a minimum amount of money in order to open a company: an LLC, an Inc., or sole proprietorship and that includes individuals from almost any nation-state in the world.

The cost to open a corporation in the United States almost never exceeds several hundred dollars ($75 - $300).

Opening a company in the United States is done on a state level versus the federal level.

No state in America requires that a foreigner (African, etc.) utilize a local partner who needs to be designated as a 49% - 51% partner in order for the foreigner to open up a company – and without that said partnership, the investment amount in Africa could skyrocket to $250,000 US+ satisfying the local-powers-that-be in the different ministries.

The primary bureaucratic hurdle one needs to jump over to open a corporation in the US is getting a Social Security Number, Employer Identification Number (EIN) or Tax Identification Number (TIN), plus a physical address – and home offices may be utilized – such as a spare room (office) in your Auntie’s house.

Now if someone within the state government should be able to detect that you are not American-born, because you speak with an accent or for any other reason - and they attempt to charge you an excessive fee to open a company because you are a foreigner – that individual could be charged with a (federal) hate crime and subject to judicially-mandated penalties, including fines and imprisonment.

And at this point, the foreign investor would not even have to open a corporation in America, but rather call an American attorney to initiate a multi-million dollar lawsuit for discrimination (often “bundled” with the federal moniker “hate crime”).

It is prohibited to charge foreigners more than what locals pay. That is criminal – and also allows for civil lawsuits. If you go to a farmer’s market in the US and they charge you twice what they charge local Americans because you are a foreigner – that is a crime

So to open a corporation as a foreigner in the US, the costs on the state level are always financially parallel to what an American would pay. There is no difference in cost and to charge a foreigner more money to open a corporation is considered discrimination under federal law.

Africa definitely needs to rid itself of Neo-colonialistic forces but how do we bring in more investors as the continent awakens?

Answer: Lower the bar for small-business, foreign investors. In this case, less money is better. Many Western Nationals are dissatisfied with their home-countries and if they could relocate and start a new life – they would.

? Conclusion

I am currently looking to open my ValiCor Africa? branch office on the continent. The two least expensive countries I have encountered (still far more than the US cost) are Morocco ($1000) and Cote d’Ivoire ($2000). Those prices are at least palatable, but some African states require vast amounts of money to be deposited in a local bank – on occasion in excess of $200,000 US before a foreigner is allowed to commence any type of business.

To the average Westerner $200,000 US is a huge sum of money. Forget Hollywood, most Americans live paycheck to paycheck.

The average American earns $16,144 after taxes and housing costs – and again that does not include medical coverage, school for the kiddos, car payments, fuel and food.

If any of you have an easier route to open a non-NGO company on the continent, please connect and send me a DM – or respond to this article in the “comments” section. I would love to hear from you

Obviously America’s declining system is not a prototype that any nation-state should follow (Over-Extension of Empire), but that being said, if Africa lowered the bar for foreign investors they would get more family-oriented business investors who want to have a successful small-to-medium business, integrate with the locals and raise their families in a society where a simple root canal at the dentist’s office does not cost $2,500 (no joke).

Africa has all of the tools in the world to generate permanent foreign investment to its benefit. To date, the Fortune 500 Company, neocolonialist investment protocol in Africa has not benefitted the African populace.

It’s time to create incentives and opportunities for small to medium, foreign investors who would never dream of abandoning their hard work in Alkebu-Ian.

GodSpeed Africa

Dr. T.X. Montenegro