Africa has been called ‘the final frontier’ by many investors in search of new opportunities. With its youthful population (roughly 1 billion people, 70% of whom are under 30 years of age), vast mineral resources, consistent improvements in democratic governance, economic growth, and security, the continent continues to attract people from all walks of life, hoping to strike a fortune. For those interested in doing business in Africa, you must keep a few things in mind.
Define your market
When defining your market, you should know that Africa is a large and heterogenous continent. Its regional boundaries aren’t necessarily determined by the lines drawn across a map. In addition, the continent has over 100 cities. At least 50 of them contain a population of over 1 million people.
Consequently, you could define your market in terms of regional blocs, countries (for those countries with high populations), urban corridors, or even sub-markets within specific country borders. This is important as the heterogeneity of this region impacts how people communicate, consume, and even trade.
Some countries/ regions follow Islamic cultural norms, while others are Christian (with other smaller religious sub-divisions in existence). As an entrepreneur, you should ascertain whether your products or services would be appropriate to the region and the best way to market them.
Unlike European or American societies, which are highly individualized, most African societies are community/family-centered. People in Africa live out their lives in the safety of extended family structures, which, when broadened form tribes.
This societal structure plays an essential role in the opportunities available to each individual. These are further entrenched by political ideologies that are oftentimes formed on the basis of tribal sentiments.
As an entrepreneur, you cannot simply expect to set up shop without ‘knowing the right people.’ Therefore, it would be a good idea for you to network locally and interact with those in a position to help you navigate the scene, process necessary paperwork, and even ward off unwanted attention from local authorities.
Additionally, it is essential to conduct due diligence before entering into local partnerships. Failure to understand the terrain or to connect with those in power could be disastrous for your business.
Stay government friendly
Most African countries are a mix of public and private sectors. Although not openly acknowledged, African governments tend to wield a heavy hand over private enterprises. They frequently set policies with little regard for how they might impact the private sector.
The African political scene is tumultuous. For your business to succeed, you must maintain an amicable relationship with government authorities. This you should do without displaying overt support for any particular political party. This means it’s safer for your business future if you remain non-aligned but friendly.
This might sound like rookie advice, yet African business journals tell tales of hopeful international brands that started big only to close their doors a few years later.
Although the African market might seem similar to Asian or South American markets- it’s different. African countries have unique social-economic and political challenges that you should thoroughly understand and test before launching full-scale.
This is true not only for new brands looking to penetrate the African continent but also brands from one African country interested in launching into another.
There is no cookie-cutter business plan. It would help if you analysed each country/ region based on its unique identity. This is to fully appreciate whether your business idea would work, receive approval, and whether you can stand the competition.
Mind your language
There are over 2000 languages spoken on the African continent. As an entrepreneur, you are only expected to know some of them. However, you should communicate in the language your target audience understands. This might seem fairly straightforward, but it isn’t.
African history is steeped with tribal tension and hatred, often stifling cooperation and development. With proper research from local guides, you can choose a language or mode of communication that, though well-known, might be widely hated.
A safe balance is to lean towards French or English, depending on the region, supported by the use of local languages but only after receiving proper guidance from an informed individual in the Area.
Prepare for the worst
As the adage goes, ‘prepare for the worst, but hope for the best’ when doing business in Africa. Despite the recent economic development, the continent still suffers from infrastructure challenges.
Power and water outages, flooding, and poor cellphone reception are just a few of the challenges you’re likely to face (especially in rural areas) on the continent. Whatever business you decide to set up, you must plan for the eventuality that you will encounter one or all of these challenges.
Play the long game
Africa is not Silicon Valley, even though some African regions may encourage such branding. When you start a business in Africa, you shouldn’t expect to win early. This, too, might seem pretty obvious, yet with all the PR surrounding the ‘opportunities’ on the continent, it’s easy to lose perspective.
The African market is complex, diverse, and highly nuanced. Africans are traditionally not early adopters or anything- this might have a lot to do with the continent’s dark history. In almost every African market, there are substantial social-economic gaps, with some members of the population living very well and others barely getting by.
These realities will affect how you do business and how quickly your business takes off. However, this shouldn’t dissuade you because, ultimately, your success depends on many other factors.
In conclusion, when considering how to do business in Africa, don’t forget to define your market, build strategic relationships, stay government-friendly and play the long game. The African market is heterogeneous and complex, requiring thorough research before investing your resources.
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How to Do Business in Africa FAQ's
- Define your market
- Strategic relationships
- Stay government friendly
- Start Small
- Mind your language
- Prepare for the worst
- Play the long game