What one needs to keep in mind when entering the African market
Firms from around the globe direct their attention to this new promising market – Africa. But what do you need to know about the land and its people before setting out for the journey? Businesses that have already succeeded in entering the market shared their experience about Africa during a multilogue held in Vorarlberg.
Before trying to establish your pres- ence in a new market, you should rst learn about the country and its people to understand its wants and needs. Over the years, this strategy has been repeatedly proven correct and it should have positive outcomes also in Africa. And it will be especially so if one does not forget that Africa is a continent, not just one country.
The sub-Saharan region itself comprises 47 countries and is larger than China, India and the USA combined. It is no surprise that individual strategies need to be adopted for individual countries. Robert Mudida, Director of the Strathmore Business School in Nairobi, also talks about how important it is not to hurry in Africa; one needs patience and a high frustration tolerance threshold to achieve his goals.
“The clock simply ticks at a di erent pace in Africa and it can often be difficult for a stranger to position himself. This is why it is important to rst try and nd trustworthy partners on site before storming the market,” explains Mudida.
The reasons why an exciting market emerges are complex and depend on the given product but four reasons can be identided which are decisive for many companies. Countries like Kenya or Nigeria are among those worldwide where the middle class is growing at the fastest pace. However, fast growth can be seen also in other African countries.
This corresponds to a potential market equal to two-thirds of the current private consumption in China. The average income of the local population is growing as well although the economy is presently unable to keep up with such rapid growth.
There is still a lot of backlog demand precisely in infrastructure, providing great opportunities for domestic companies. However, thanks to the fact that political reforms are being adopted in many of the countries, opportunities are also arising for foreign companies to seize the African market.
Representatives of these African countries realize what potential foreign businesses can bring to their national economies and try to make the access easier for them.
For one half of the countries in the sub-Saharan region, the export of natural products represents approximately one quarter of their export vol- umes but many have been trying to expand their activities into the elds of transport, telecommunications, tourism etc.
Given the multitude of di erent cultures and political environments, it is necessary to carefully research where (in which country) the establishment of a certain production makes the most sense and involves the least risk.
“One has to realize that in countries where state corruption is a part of everyday business life a company’s growth will be slower if you choose not to follow this convenient way. But that does not mean that it is impossible to succeed,” ensures Mudida.
Many European countries keep trying to secure their position on the African market. Especially in health and infrastructure there is a lot of potential for foreign businesses. Observing the situation on many roads, one can only shake his head. People here are happy to spend hours trapped in a traffic jam to travel a short distance when this could be avoided.
In many places in Europe, people would rather spend the same time walking to the destination. However, this is not possible in many African cities due to their high crime rates. Smart solution concepts taking this issue into account are in great demand.
One needs to have patience and avoid setting short-term goals as the clock in Africa simply ticks at a different pace. An individual strategy is necessary for each country. Standard solutions do not work here, only carefully developed country-adjusted strategies. In addition, the African culture is very di erent from the European one.
It is not enough to adjust to the great ethnic diversity; one must also nd a way to keep it in balance. And since no one knows the market better than the Africans themselves, local trade partners usually play a key role. tm
Robert Mudida, Director of the Strathmore Business School, Nairobi, Kenya
“In every country, one always needs to watch the political situation as it reveals a lot about the potential of the given market. In deciding whether or not to position oneself in a country, one must never rely on a single factor, rather always consider a multitude of possible in uence factors. For example, rapid growth is only natural just after a war. What is important here is the ratio.”