Recently Africa has been the focus of the global market, people are starting to realise “Africa is the future”. Many African countries have experienced rapid economic growth in the 21st Century. There is also rise in Entrepreneurship and foreign investments.
Africans in other parts of the world are returning home with hopes of starting a business. If you fall into this category, here are 5 important things that you need to consider.
1. Opportunities come from Relationships
Building strategic relationships go a long way in the African business market. It is all about “who you know”. Having long standing relationships and being consistent will enable you to forge the right partnership. Never underestimate the power of the “word of mouth” . Africans are very likely to recommend your business to others if they enjoy your service. People tend to value and trust personal recommendations over commercial advertisements.
It is easier for a small business to overcome challenges in the market when it partners with larger companies, this can lead to a strategic allocation of resources. This can help to cut down your costs and increase revenue. Many countries in Africa have laws that support local partnerships.
2. Tap into the “tech boom”
If you are into internet provision (WIFI and mobile data), Africa is the place to be right now. The tech industry in Africa is really growing and attracting foreign investors. There really a lot of emerging, however they tend to be focusing on local problems. This has been a problem for foreign investors that are interested in a connection to the global market. For more information on this please Click here.
Internet connection is often slower in most parts of Africa than in Europe and America. Getting a very good connection can cost more than what many small business owners are willing to pay.
3. Market boundaries are less obvious
Market boundaries are not always defined by country’s borders, you might have to take a regional approach. For example, you are likely to find that certain products and services can be found in Ghana and Nigeria because they are both in West Africa. Some countries are really small and the movement between countries in the same region is quite easy and affordable. Looking at Sub Saharan Africa as one big platform would be a good idea.
4. The government is involved in the private sector
It is very common to see government awarding contacts to privately owned companies. This has created an avenue for corruption in some countries. You need to know the development agenda of the country you hope to do business in so you can be in alingment with the market. Developing a good relationship with government officials is a good idea.
5. Market competition is quite intense
Most startups in Africa today are competing alongside other brilliant startups, multinational companies and existing companies (brands). Africans tend to be loyal to affordable brands, even food brands. You can find someone using the same brand of butter for a decade.
You need to know the type of customers you are going to attract. Note that though there is an emerging middle class, there is still a reasonable margin between the rich and the poor.