Establishing business in Africa
Africa’s combined consumer spending of US$860 billion in 2008 will grow to more than US$1.4 trillion in 2020, according to the McKinsey Global Institute. Released in June 2010, its research paper MGI African Economies gives an interesting forecast for Africa in the next decade. The report concluded that growing consumer purchasing power and increased foreign direct investment flow is positioning Africa as prime destination for business.
Having said that, starting business in Africa is the same as any other part of the globe. There are surmountable challenges one must overcome to become successful in international business. One of the key challenges new entrants face in Africa include limited supply of reliable market data and the stress of finding a reliable business partner. This article will cover strategic steps that could help businesses find credible business partners in Africa.
Seek expert advice
To get meaningful and strategic advice on how to start business in Africa, new entrants should consider employing the services of an expert with experiential African knowledge. The Africa expert should have the capacity to educate and inform new entrants about potential risks to avoid, understand the regulations that must be complied with and, most importantly, create networking and meeting opportunities with credible business partnership prospects in the local market. It is not hard to find and view information on Africa online, but nothing compares to having the services and guidance of a local expert.
Every business sector has unique challenges when starting out. To make a successful entry into any of the emerging African markets, there is great need for research. The research findings should cover opportunities, operational risks, competitive analysis, and feasibility studies among others. Considering that many African economies do not update market data as quick as obtainable in developed economies, it is important for market research on nominated African market to be conducted by a local research firm operating in the environment. The choice of a local research firm is informed by their capacity to unearth related opportunities, local challenges, business culture, un-written regulations guiding the nominated business sector among others.
Attend international exhibitions and industry events
On getting required research information and advice from an expert, it is very important that new entrants consider making a trip to the desired market. It is not enough to gather desktop research intelligence and start making plans to make the first shipment or sign a business contract by email.
There are annual international exhibitions and industry events for most business sectors in Africa. With the help of a local expert, new entrants should consider an event that will maximise opportunity for networking and meetings with local players and potential partners.
Below are the benefits of industry events:
- Hear firsthand of new opportunities and challenges in a nominated African market from distinguished speakers and panellists.
- Gain insight into the latest internationalisation strategies from other foreign investors and local captains of industry.
- Network with key decision makers and government officials in the country.
- Take away practical tips on your business international growth and local market entry strategies.