Moving in and staying in – 7 tips for sustaining your Business entry into Africa
EIG EDITORIAL
If you’re a foreign company looking to grow or expand, the African market would be a desirable destination. The African market is vast, with up to 53 countries; hence it can be a challenging task, but once you’re able to locate the right business partners that are both efficient and reliable, you’re halfway through.
Since the African market is promising and has so many untapped potentials, it is essential to know that there are pitfalls. Most foreign companies have ventured into the African market and failed severely; well, this failure is induced by their inability to do their due diligence. It is also essential to learn from the success stories and failures of others. It is only wise that you know one or two things about what you’re getting into before you do.
Foreign direct investments over five years had its inflows rising from $19.5 billion to a whopping $26.1 Billion. These results are quite impressive but do not eliminate the fact that an expansion to the African market is a complicated step for foreign companies to take on and see-through.
What makes expansion to the African market a complicated decision for international companies?It’s simple, the fact that they are moving away from their comfort zone into something they are not quite used to.
Before you enter the African market, you might want to consider a few things like operational Risk and others, here are seven effective ways to help you explore the African market and get positive results.
Be innovative and Flexible:Nothing can change the fact that no matter what your business idea is, it is already in play in the market, the only way to stand out is presentation, style, and “what’s new?”. For example, how would you present a new brand of cigarettes to consumers? We know very well that there are already over thousand cigarette brands on the market, well you can sell it from a different perspective, you can say “it is toasted” — I mean all cigarettes are toasted. Still, it has not been presented like that before. To be successful, you must get as creative as possible with your business model and delivery before entry without losing your DNA. Creativity is paramount to sustainable business growth in the African market.
Cultivate good relationships:Don’t get associated with just anyone, and don’t underestimate anyone either. Try to exercise some patience, take time to put the strengths of your potential partners to the test after spotting them and before getting into any form of agreement with them. Study the lifecycle of your deal or approval very well, identify the influencers, gatekeepers, and decision-makers across the deal lifecycle, then be sure to align yourself with them. A country like Kenya is a good example, approximately 50 families are running this country and you would require alignment with at least one family to make any significant headway in Kenya.
Get on the right side of governments: With endorsement from the government, you automatically become a significant game player. Otherwise, the chances of sustainability in the African market are incredibly slim. A country like China, with its fleet of companies, have been able to build up a relevant front in Africa through its strategic involvement and alignment of its interests with the challenges of the government. And if you want a seat at the big table, where the large deals roll in, you need the government to make it happen. They make it possible to strike long-term deals and work with multiple suppliers across industries all at once.
Understand the structure and size of the market: This is one of the most crucial things to consider when entering not just the African market but any market at all. Understanding the structure and size of the market will help you make the right decisions before making an entry, for example, it will help you map out just the right amount of resources to commit to that market since geographic expansion can be a costly exercise. To gain a good return, you would need to invest your money and time in the market.
Get first-hand market intelligence: Try not to rely so much on third party information about the market and how it works. Get your boots on the ground, and conduct your research, find out all you need to know about the market, see how it works for yourself, and answers your questions before you enter. Besides, third party intelligence takes too long and is not very useful. Finally, your arm’s length approach will be challenging when you lack market intelligence.
Plan a longer-term view: Considering operational risks in the African market, it would be advisable to give your team ample time to learn and take five to ten years, preferably to make an overall evaluation on the market, this allows you to note profitability of operations. You should make use of this to calculate your returns on investments. Have in mind that some individual countries like Kenya can drop off for some time, and you would have to close down as well. Some of the popular reasons are disputed election results, but as soon as the dust settles, everything goes back to normal– no need to pull out.
Invest in local talent: keep an eye out for the local workforce because it would cost your company two or three times to keep the average ex-pat than what they would be paid back home mainly because of transportation, relocation, allowances, and other training costs.
With the following ways, it won’t be challenging to enter the African market, take a bold step today, and invest in the African market. Let Enterprise invest Ghana help you establish in Ghana.
https://www.einvestghana.com/2020/03/20/moving-in-and-staying-in-7-tips-for-sustaining-your-business-entry-into-africa/