The Central and Eastern Europe (CEE) region has been one of the worst affected by the economic meltdown afflicting the world over the past year. The International Monetary Fund (IMF) recently forecast an average 4.9% fall in Gross Domestic Product (GDP) across the region, while the European Bank for Reconstruction and Development (EBRD) predicted a 5.2% drop. However, despite the recent suffering, the region as a whole has grown remarkably over the medium-term period and many CEE countries are showing an increasingly globalised and competitive outlook, exhibiting the beginnings of a potentially lucrative trend.

There are parallels between some African and CEE countries. Investors flocked to CEE states in the early 1990s following the wave of political and economic reform, despite the region having previously provided little in the way of any meaningful attraction for foreign investors. Similarly, many African countries have sought to attract foreign companies eager to invest after seeing the significant progress being made to tighten up regulatory frameworks and provide a stable investment climate. Nevertheless, CEE countries with massive European Union (EU) funding and more mature institutions have grown substantially faster, and are now looking at ventures in Africa.

To date almost all outward investment from CEE countries has been in the direction of Western Europe. Several deals have taken place where “old” European companies have been bought by “new” Europe. “This was a trend we were seeing with increasing regularity during 2007-2008 before the crisis, and now is starting to re-emerge once again”, said an observer of cross-border mergers and acquisitions (M&A) activity in the region. He concluded: “Currencies and markets have rebounded after getting hammered in the last two quarters of 2008 and the first quarter of 2009”.

Business between CEE and Africa is undeveloped and represents a growing opportunity. Convergence is clearly happening, and a lot of wealth has been created over the past 20 years in the region. Though there is a lack of historical ties between Africa and CEE, an increasing number of businesses are looking at the final frontier for further growth.

Sectors which have been of particular interest so far have been petroleum and mining:

• KGHM, the Polish state-owned copper concern, has looked at acquiring copper mines in the Democratic Republic of the Congo.
• Bumar, the secretive Polish defence concern, has looked to make deals in Sierra Leone to acquire oil concessions.
• Polish construction and specialist machinery company Makrum has been looking at acquisition opportunities in South Africa.
• Most of the business conducted inter-regionally is currently on a small scale, with SME's remaining the growth engine of business between CEE and Africa. Many of the larger CEE companies were historically seen as lumbering state-owned monoliths, which acted in a politicised manner and were cumbersome in their business dealings. Although this has changed over recent years, the engines for growth are likely to be smaller, more entrepreneurial companies.

The prospects of working together more closely with African regimes for mutual economic benefit has led the governments of countries such as Poland to actively seek greater cooperation through a series of initiatives such as the Polish Ministry for Foreign Affairs' recent consultation on Polish-African co-operation.

The lack of experience of CEE executives in Africa represents an interesting opportunity to experts in the region. While Poles, Serbs or Ukrainians have a strong feel for both European and Russian culture, their knowledge of business practices and cultural norms in Africa is limited. It is much lower than that of Western European countries due to the lack of historical ties and also a dearth of immigration into these countries which has been prevalent in the West. It is clear that as CEE companies look to act on a more global level, interesting opportunities will present themselves to bankers, consultants and experts on Africa.