Six ideas to make a success of your African-based business in 2014

BY Jaco Maritz - Source: How we made it in Africa


1. Many opportunities, but patience required

Although Africa certainly holds many opportunities for business, dealing with red tape and bureaucracy remains a major challenge. Even getting to a meeting on time can be a taxing exercise due to traffic congestion in many cities. It is therefore important to have patience and not expect success to happen overnight.

According to Randy Buday, who looks after DHL’s operations in Nigeria, businesspeople need patience and tenacity to succeed in Africa’s most populous nation. “Nobody is going to make a fast buck here. You need investment, you need patience, you need the ability to understand the workforce, and some of the other unique constraints particular to the country,” he explains. “Even coming to work can be a daily challenge for employees due to inadequate public transport and congestion which is endemic to a number of the larger cities. That being said, there is no doubt that Nigeria is offering some of the most attractive investment opportunities and companies that are willing to invest time and energy here, will see major returns.”

2. Know your market and customers

As a continent of 54 different countries, each with its own distinct economic and cultural features, companies need to ensure they have a good insight into the market they are targeting.

Bernard Malaba, manager for DHL Express in the Democratic Republic of the Congo (DRC), notes that companies wanting a national footprint in the DRC should make sure they have a very good knowledge of the country, as the market can differ widely from one region to another. “The people in the country are so different. For example, what applies in the south of the country, does not necessarily apply in the east.”

Kader Coulibaly, country manager in Ghana, says foreign investors need to do their homework and choose their local partners wisely. “The biggest challenge to doing business in Ghana at the moment is market knowledge. It is also important to choose the right local business partner because the Ghanaian market is a very particular market, and it is better to have somebody that knows the environment very well.”

Coulibaly adds that companies shouldn’t “cut-and paste” strategies used in other territories.

3. Look at the opportunities in lesser-known countries

While countries such as South Africa, Kenya and Nigeria are receiving significant attention from a foreign investor perspective, there are many often-overlooked countries that might offer good opportunities for business.

The West African country of Niger is such an example. “According to some mistaken beliefs, Niger is seen as a country with no resources and few economic fundamentals useful for doing business. Actually, Niger is one of the richest countries in West Africa with a lot of natural resources, including uranium and oil. Moreover, the authorities have managed to establish an acceptable legal and regulatory framework for the conduct of business,” says Amadou Diabate, DHL Niger country manager.

Sierra Leone’s reputation as a war torn economy also remains one of the greatest hurdles for business today. “One of the biggest challenges is the misconception about the state of insecurity, particularly for those who have never been to Sierra Leone,” notes country manager Basil Akinbinu.

4. Build strong business relationships

According to Claude Edgard Zocli, country manager in The Gambia, personal contacts and networks are important for closing business deals in the small West African country. “You can have the best product, a strong brand, the most efficient sales force, but if a person doesn’t know or trust you, if your friendship network is not rich, you cannot succeed in business. People will not buy from you. Except if they don’t have another choice.”

In Madagascar, local businesspeople enjoy face-to-face visits with those they do business with. For this reason DHL country manager Mamy Rakotondraibe suggests that foreigners doing business in Madagascar should take the time to meet with potential and existing clients to strengthen business relationships.

Rakotondraibe adds that clients expect top management to be accessible and easy to communicate with. “You need to remain very simple and accessible to people, even humble, I would say… Be yourself… people appreciate that.”

5. Exploit the opportunities in agriculture and food processing

Nearly all the DHL country managers we spoke to during the year identified agriculture as one of the top business opportunities in their respective countries. Despite the fact that it has abundant land suitable for the cultivation of numerous crops, sub-Saharan Africa still imports large quantities of food products. Significant opportunities exist across the agricultural value chain – from basic crop cultivation to food processing.

“At the moment the agriculture industry in Africa is around US$313bn and we definitely have the potential, across sub-Saharan Africa certainly, to take that to a trillion dollars or more. Firstly because of the arable land and the water resource that are still available, and secondly simply because of the consumer demand and spend that is becoming available. It’s no secret that the middle class is on the rise in Africa and that’s also going to be driving a lot of the growth that we are going to see for the next 15-20 years on the continent,” explains Hennie Heymans, managing director of DHL Express South Africa.

6. Capitalise on game-changing events

Keep an eye out for big economic developments that could present opportunities for your business. Large mining and oil projects, and the subsequent influx of people, often create demand for many other products and services, from accommodation to consumer goods.

There are usually also opportunities to directly provide services to mining and oil companies.

One such development happened in Botswana this year. Diamond mining company De Beers has signed an agreement with the Botswana government to relocate its London-based sales activities to Botswana by the end of 2013. Diamonds from all De Beers’s mines in Botswana, Namibia, South Africa and Canada will now be brought to Botswana. Sales to sightholders – a select group of buyers picked by De Beers to buy rough gems – will take place in Gaborone. The world’s most influential diamond traders will fly to the Botswana capital 10 times a year from major centres such as Antwerp, Tel Aviv and New York to buy diamonds from De Beers, reports Business Day. It is expected that over $6bn worth of diamonds will flow through Botswana every year.

According to Mokgethi Magapa, Botswana country manager for DHL, the influx of top diamond buyers to Botswana, as well as other related businesses setting up shop in the country will create a need for numerous services, from hotels and restaurants to telecommunications and banking.