I am sure you heard something along these lines before: ‘If you want to build a successful business, know your market’. It almost sounds like a cliché, but fact is, it’s true. However, fact is also that too many people who want to do business in Africa, have no real idea about the market dynamics and trends that are happening in Africa right now, some are even missing the basics. I have written several blog posts about some of Africa’s current market dynamics, for example (opening in a new link)…
‘Profit Guaranteed If You Tap Into Africa’s Largest Drivers’
‘A Message To African Entrepreneurs – Yes, It Just Arrived From The World Economic Forum on Africa’
’22 Bite-Sized Tips and Links To Insanely Increase The Success Rate Of Your African Business’
‘8 Great Benefits You Should Know About Doing Business In The East African Community (EAC)’
…just to name a few.
But while we all read repeatedly about Africa’s fast rising middle class and the growth of the agricultural sector – just two typical patterns – there are some market trends that no-one really reports about much. You only find the info digging deeper….or regularly reading Africa Business JumpStart (Ok, that surely is not a marketing slogan I am going to keep).
But there are some more unusual market trends and being aware of them is important. In fact, I am of the opinion that you can actively use this knowledge to your advantage and even monetize some of these unusual trends if you apply any of them strategically into your business concept. So let’s get started:
1) Environmental and social awareness is HIGH
Yes, personally I am so relieved! Africa is poverty stricken, but it seems to go a completely different route as compared to fast emerging China where both environmental and social exploitation have become chronically embedded during the rise of China’s economy.
In Africa, many businesses in the old days where exploiting both the environment and local communities and while change is never immediate and always graduate, there is a very strong and visible conviction present across Africa to do things very different from now on by protecting the environment and empowering local communities.
The African Development Bank for example is allocating millions of Dollars towards environmentally driven projects, renewable energy is among Africa’s top investment sectors, and many young African entrepreneurs – in fact a significant number – are building businesses around environmental protection, recycling, education, and social empowerment. And lastly, many renowned African business leaders have started their own social initiatives, as they want to give back to society.
Nigerian entrepreneur Tony Elumelu, one of Africa’s most successful businessmen, has even created a now widely used term to refer to some of the context above: Africapitalism. Elumelu champions the idea that long-term focus on key sectors such as infrastructure and power does not only offer high returns but, in the process, can also help Africa deal with pressing problems such as unemployment and food security.
Business Strategy For You: These are wonderful news, and it is a fast growing trend that you can strategically use and incorporate in your business concept, especially if environmental protection and social impact are issues of importance to you personally.
2) Shortage of local skills slowing down investments
Overall, the African continent is becoming increasingly short of local skills, so much so that private equity investors across the continent claim: The money is there, but the problem is to find skilled local partners to invest in. Yes, you got it, investors are not just putting their money on a great idea, of much greater importance to them is a skilled team behind the idea.
But the shortage of skilled personnel and managers is slowing also down growth for many companies. Barclays Africa managers, for example, who I met during an expo in London earlier this year, flew in from South Africa and Zambia and hired people right on the spot during the event!
Business Strategy For You: Training or recruitment in this section is a business with so much prospects for you. You can attract Diaspora Africans and other expert from around the world.
If you run a business in Africa, be aware that skill shortage can slow down your own business operation and expansion plans. Have in-house training facilities or prepare for the growth process early enough!
3) Foreign governments pay aid budget into investment firms
Hmmm, honestly, I am still thinking what to make of this fast growing trend. But as it stands now, I wholeheartedly disagree with the new approach some foreign governments (the UK seems to be rather active in this!) are taking in regards to Africa. Yes, I am one of the voices that calls for re-formulation of traditional aid concepts, but that should not be replaced by somewhat ‘undercover’ government owned investment funds. Basically, they put in the ‘money and reap huge profits out of it. If you want to do business, do business – like China, and call an apple an apple.
Some governments have created Development Finance Institutions (DFIs), where the profit is channeled back into the fund and it becomes self-sufficient. However, it is still profit earned out of Africa and foreign governments become active stakeholders of businesses in Africa as compared to supporting African-run businesses.…
Business Strategy For You: Well, African businesses need financing, and the relevance this trend still has for you, is that you can apply for some of the money through certain funds, for both SMEs and larger scale projects. You need a convincing business concept, a strong local team, and oh yes, of course.…be aware that the investor (that government) wants a considerable stake in your company and an exit strategy!
4) Women entrepreneurship is fast on the rise
This is a trend that we welcome with open arms – and allow me to make a (factual) assumption: Africa will be a better place when women are empowered and take charge.
And the numbers are amazing: Nigeria and Zambia clearly lead ahead with over 40% of all entrepreneurs and startup business owners being women! This is followed by Ghana, Malawi, and Uganda. Interestingly, it is also Nigeria and Zambia that have the highest rate of ‘early stage entrepreneurial activity’ in the world. This is clearly driven by the high percentage of women entrepreneurs. And even better: the failure rate in these two countries, in particular in Nigeria, is among the lowest in Africa and the world.
Business Strategy For You: Promote and empower African women! By consciously and actively supporting this growing trend your business will gain a positive image and it also allows you to give something back to African communities and families. You could do so by targeting women with your products and services, by employing only women or a particular percentage, by training women to take on management and leadership positions in your company, by training women at community level, or even by advocating for certain women rights through your business.
(This is something very close to my heart – and I have an entire vision how I will support disadvantaged women in Africa….but first, I need to put my bank balance up a few notches.)
5) Brand loyalty is strong
A growing number of Africans have more money than you think, but most importantly, they are prepared to spend it on good quality brands. The days where cheap is best do not longer apply for Africa’s middle class. Brand loyalty among customers even exists in the service sector, for example in banking.
Business Strategy For You: You simply need to grasp that the appropriate branding of your products or services will be one of the best success strategies for you in Africa (I think, I should re-vise my own branding strategy soon). Build a brand early on and don’t let it down for quick gains. Think long-term.
Do you know of any other Africa market trends that are rarely discussed, but we should be aware about? Or simply feel free to share your thoughts with us!
Dr. Harnet Bokrezion is the co-author of the book 101 Ways to Make Money in Africa. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: harnet@africajumpstart.com. Or simply follow her on Twitter @africajumpstart.com
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Good content..this would definitely help Entrepreneurs and Corporations to make business strategies.