Discuss the external environment of Africa as a setting for doing business.

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Most of sub-Saharan Africa falls into the category of emerging or frontier markets. While many external factors make it a promising long-term environment for business, many external environmental factors also limit ways of doing business in the region.

The first external issue is lack of infrastructure. Many areas of Africa lack reliable power, transportation, and communication. This means businesses in Africa either must create their own infrastructure (e.g. by buying generators to supply power) or create workarounds to deal with lack of infrastructure. This means cost reduction procedures such as just-in-time manufacturing are not possible; instead, inventories need to be maintained at high levels due to erratic supply chains. Political instability and corruption are also external factors that affect one's ability to conduct business in the region.

On a more positive note, Africa is richly supplied with natural resources and is reaping a demographic dividend due to a youthful and growing population.

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