In a new report, professional services firm Ernst & Young, identified ten strategies that can help companies to mitigate these potential risks.

1. Source local partners to create efficient supply chains and distribution channels

An increasingly wealthy and urbanised African population is creating significant growth opportunities. However, poor infrastructure is an inhibitor of growth and a key risk to doing business successfully across Africa. The gap is particularly noticeable in terms of power generation capacity, the density of paved roads, and, to some extent, in communications technology.

This makes supply chain efficiency more challenging and can substantially increase the costs of doing business. To overcome these barriers, companies need to establish a cost-effective and stable supply chain that can help them to serve African consumers while maintaining profitability.

They should look for sourcing partners who understand the preferences and issues of local markets and have strong community links. A good sales and distribution network can be created by leveraging a mixture of third party, wholesale and direct-distribution models.

2. Develop robust capabilities to manage regulatory compliance

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Kenya’s economic prospects eclipse the risks posed by next week’s election, said Mark Mobius, the head of Templeton Emerging Markets Group. (TEM) The country on March 4 holds its first national vote since a disputed ballot in 2007 triggered clashes that killed more than 1,100 people. The unrest caused growth in East Africa’s biggest economy to slump by two-thirds to 1.5 percent in 2008 as farm output collapsed, the shilling declined 8.5 percent against the dollar and the benchmark stock index dropped 11 percent.

Increasingly, the case for investing in Africa is made on the basis that this “last frontier” is now in a strong position to develop, to urbanise its growing and relatively young population, and to foster a large middle class.

The opportunities for individual South Africans to access investments elsewhere in Africa remain fairly limited. Even retirement funds and unit trust funds with mandates that enable them to invest in Africa’s markets have been slow to venture into this new frontier.

Just over a year ago the Carlyle Group, a US-based private equity firm, entered Africa and opened offices in Johannesburg and Lagos. During a panel discussion earlier this week, Marlon Chigwende, managing director and co-head of the Carlyle Sub-Saharan Africa Fund, discussed whether he thought the continent would deliver on its promising growth potential for investors.

“I think that is the multibillion dollar question,” said Chigwende. “The historical growth over the last ten years has been very strong; only India and China have grown faster than us. Looking forward it is projected to continue to be strong. I think only China is projected to grow faster than sub-Saharan Africa as a region… But I think there is a clear gap between perception and reality, particularly when it comes to risk and investing in Africa.

Clearly there is risk on a pan-African basis but the question is: is the risk as high as investors on a global basis currently perceive?

I would like to make a sweeping generalisation saying that the risk premium that has been required of Africa in the past is reducing. I still think that we are very much, as a continent, in delivery mode.”

That might be a relatively small sum for such a huge group, but the fact that one of private equity’s most prestigious companies is, partly from its London office, looking at Africa is testament to a 180 degree turnaround in perception. War is no longer rife, consumer spending is soaring, and, from an admittedly low base, sub-Saharan Africa has seven of the world’s 10 fastest growing economies.

Lord Malloch Brown, the Europe, Middle East and Africa chairman at FTI Consulting and a minister under Gordon Brown, says: “Politically Africa was seen as a risk, but economics was a great leveller in bringing stability. There is an untold story about the umbilical relationship between Europe, the UK in particular, and Africa. It’s a legacy [of colonial times], for example Scotland has extraordinary emotional links with Malawi.”

“Ghana’s entrepreneurs will benefit from strategic advice from international business experts, as well as dedicated African investment managers on the ground, who can add value and provide hands on management support,” he said.

Mr Antwi-Asimeng added that majority of entrepreneurs operating in SMEs in Africa struggle to access capital to grow their businesses, as banks most often do not provide loans to SMEs due to the associated risks.