How to do business In Africa?

The last decade has been a tremendously exciting and dynamic time to be working in Africa. After decades of being considered a global business backwater, we have seen the conventional wisdom shift from “the hopeless continent” to “Africa rising”.

Most people now accept that at least some of the continent’s economies are likely to grow consistently in the coming years. Today, the danger is less that businesses and investors will ignore the Africa opportunity, and more that they will squander the opportunity through a predictable combination of poor strategy and weak execution.

 

Starting a new business anywhere is hard. To respond to the challenges of unfamiliarity, businesses will often – understandably – try to apply strategies that worked elsewhere, taking the safe route to success. But this response is short-sighted.

 

The only viable approach to operating in Africa is to recognise the importance of the mass market, source talent locally, and carefully select credible operating partners. Across a broad spectrum of African countries, these criteria are essential for businesses to develop a competitive advantage.

 

For many multinationals and investors, this means a focus on serving the small but growing middle class segment, whose tastes and demands most closely resemble those in wealthier parts of the world. By choosing to focus on this more familiar segment, businesses minimise their exposure to the unpredictability and strangeness of a different country and culture. 

 

Building partnerships with proven local operators, even if they are small, puts the focus exactly where it should be – on the practical and often mundane challenges of bringing world-class products and services to the majority of Africa’s consumers. On a continent that houses almost 20 percent of the world’s workforce (and by extension its consumers), it pays long-term dividends to target the needs of the majority, hire a more practical and hands-on workforce, and partner with seasoned operators. Doing business successfully in Africa requires a competitive advantage, just like doing business in any other unfamiliar location. The first step is recognising that Africa is different, but the key to long-term success is understanding that ultimately business success relies on similar principles everywhere – in particular, a competitive advantage – will best position businesses (and Africans) to reap the rewards of Africa’s growth.



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