It is a simple yet complex question. Does the mid-tier private sector know where government is actually spending money? Understanding government policy on spending is as easy as listening to the Finance Minister’s annual budget address but solutions that would be beneficial to a business are based on real spending plans that may have already began. To get a view of where the real spending is requires in-depth strategic analysis on public affairs.
Government budgets do not necessarily reflect the actual level of spending in any given year. That is why the infrastructure budget that government sets does not obviously result in a prosperous year for the construction industry (South Africa is great example of this). A company that has an interest in a specific sector has to use an advisor that can analyze at micro-level, the spending cycle, in order to exploit a profitable strategic placement of operations. A coal mine for instance takes into account the location of the electricity generating power plant or the distance to nearest port for export. Therefore, the medium-to-small sized mining contracting company (or other stakeholder) needs to know the coal mining company’s strategic area of operations.
Strategic positioning can be the difference between profit and loss, a successful small business and one in in decline. Guessing is for start-up companies. An established business that guesses on these fundamentals is in actual fact putting its entire operations at risk. At PEafrinsights – AfricaRisk, we provide insights on countries that have profitable opportunities for new investors