Doing Business in 3rd World Countries: The way it should be.

Developing countries are well known to be rich in natural resources. This is however contradictory to the poor economy of these countries given the fact that availability of natural resources is a key facilitator in economy building.

Running a business in a third world country can be coupled up with a lot of hurdles. As an investor it is important to be conversant with these hurdles so as to know how to approach them.

Some of the present hurdles that entrepreneurs face include;

Lack of effective regulatory policies

Effective regulatory policy which projects economic development favoring investors lacks in most of these developing countries. This has been a major discouragement to most investors who have opted not to take the risk.

Cumbersome license acquisition process

Acquisition of necessary licenses in a majority of these countries to set up a business is complicated and costly making the starting capital required quite high. This can be discouraging and most investors tend to shy away due to this.

Unhealthy competition

Competition by already established companies has been reported to be unfavorable. This has resulted from lack of proper regulations which allows huge corporates to dominate multiple industries, assuming a monopoly power thus fighting off entry of other companies.

Contrary to the hurdles, there are a number of favorable conditions. Some of these conditions include;

Availability of factors of production

Factors of production are readily available at low cost.

Unemployment is a major problem in 3^rd world countries. Creating a job in these countries would therefore attract many individuals who would be ready to work for affordable remuneration.

The natural resources available also offer a variety of raw materials which are sold at relatively low prices.

Readily available market

There is ready market characterized by a growing middle class population.

The population is largely made up of poor people who would be ready to purchase various goods and services but at affordable prices.

Access to cheap credit facilities

These countries also have better access to cheap credit and funding by NGO’s and government institutions.

3^rd world countries are still in the stage of establishing a stable economy. An investor would be keen to take advantage of this as there are many available businesses to venture into.

Of key interest to you as an investor should be creating a client base that believes in your product. This can lead to introduction of new clients who will result from positive feedback from satisfied existing customers.

You also need to take into consideration the low income earners living in poverty who make up the most percentage of the population in these countries. In line to this, affordable goods and services should be produced to avail to a wider scope of the available market.

Customer loyalty can also favor sales of a product. To achieve this, companies can take part in community development activities. Setting up of schools and hospitals and construction of dams which lacks in most areas of this countries, will create a familiarity of the company with the locals who will be inclined to buying products from your company.

Doing business in a 3^rd world country may and will be a challenge especially in the starting period.  A lot of resilience will be required. Risks, just like in any other business have to be taken. The bigger the risk, the bigger the return. Business opportunities are available, it only needs a determined and resilient individual.