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STRATEGY

Into Africa
 

Yes, you can do business there.
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Most entrepreneurs don't need State Department escorts to get their work done. But Peter Hansen, co-founder and chief scientist of PointCare Technologies, manufacturer of a device aimed at the African market that helps public health agencies combat AIDS, found himself in exactly that position. Earlier this year, he sent an engineer on a multicountry trip, starting in Burkina Faso. As the engineer was heading off to visit clients in neighboring Ivory Coast, he ran afoul of an airport official unhappy that someone might be visiting Burkina Faso's intermittent enemy. The official threw the engineer out of a chair and started screaming at him. Eventually, he left the engineer alone long enough to call Hansen for help.

"He had to get out under an emergency request to the embassy," Hansen says. Now, PointCare employees fly between several West African nations via Europe. It substantially increases travel time but is much safer.

Nine of the world's 10 worst places to do business are in Africa, according to the World Bank's annual Doing Business report, which looks at issues such as starting a business, dealing with licenses, employing workers, and registering property. The worst? In the 2006 survey, that dubious honor went to the Democratic Republic of Congo; Burkina Faso ranked 163rd out of the 175 countries listed, alongside places like Sierra Leone, Eritrea, and Burundi--a kind of ninth circle of hell for entrepreneurs.

So what are Hansen and his co-founder, CEO, and wife, Petra Krauledat, doing there? The continent has the world's largest population of people with AIDS. PointCare's product, a device called the Aurica flow cytometer, is used to measure CD4 levels in HIV patients. CD4 cells are the blood cells most directly affected by HIV and monitoring them on a regular basis is currently the most effective way to know when someone with HIV is developing full-blown AIDS and needs treatment. The Aurica is one of the few portable, easy-to-use monitoring tools available. The device--which resembles a midsize laser printer and costs about $20,000--requires no advanced medical training to operate.

When officials from Burkina Faso approached PointCare about importing the Aurica, Hansen and Krauledat figured the business environment would be similar to that of the other African nations in which they already were selling their product. Early meetings were encouraging. The officials they met were polite and attentive, and PointCare gave the country's version of the FDA two Auricas to test.

But they learned that some Burkinabe people are not great about answering or returning phone calls. That included Aurica users who were having trouble with the machines and called the company's help desk with questions. "We could get no one to call us back to find out what the problem was," says Hansen. After six weeks of trying, they finally connected. The problem was that the testers had been trying to use a French-language keyboard with the machine (the official language of Burkina Faso is French) instead of the English-language one it is equipped with.

This setback and other delays meant two of the Auricas, scarce at the time, were locked up for months, while PointCare had other African clients urgently seeking its machines. Eventually, Hansen and Krauledat pulled the plug on Burkina Faso and sent in their logistics provider, DHL, to get the machines out of Burkina Faso and deliver them to other African nations.

While this story might sound like a good reason to avoid places like Africa, Hansen and Krauledat say that would be a mistake. Africa is not a single place; countries like South Africa, Namibia, Botswana, Mauritius, and Kenya have relatively stable economies. Hansen and Krauledat say the U.S. is rife with misperceptions about Africa and commerce.

PointCare is paid up-front, before it delivers products, and no clients question that policy. It does help that the Aurica meets a pressing medical need throughout the continent, where 6 percent of people in sub-Sahara Africa have HIV. There are also substantial amounts of cash available to fight AIDS, through programs such as President Bush's President's Emergency Plan for AIDS Relief, which in many cases has helped foot the bill for PointCare's device.

Prior to starting PointCare, Hansen and Krauledat, who had co-founded two other successful medical device companies, spent weeks traversing the continent, touring South Africa, Botswana, Tanzania, and Namibia. That helped them recognize where the markets were strongest, set prices, and fine-tune the design of the Aurica. They also learned that many of their preconceived notions were false. The roads in many regions, for example, are quite good, and corruption isn't as systemic as stereotypes suggest.

"The headaches of Africa are no different than the headaches of Russia, or China," says Krauledat. Indeed, in her view, Africa resembles Europe following the fall of the Soviet Union, when the European Union was still coalescing. "You had to learn every market, and figure out which areas to avoid," she says. She says most African nations are better than Russia, which invited the company to make a presentation on its equipment and then told them it would take six months just to get a visa. Hansen says there's a huge reward for those who go to Africa. "I love doing this," he says. "We had an installation in a hospital in Kenya and people cried. They were weeping. They told us, 'Finally, we can do what we need to do!" He pauses, then adds, "Nobody's going to cry in Chicago."

Last updated: Feb 1, 2007




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