When I write about Doing Business in Africa I usually talk about opportunities you can use, smart strategies you can apply, or how to enter new markets in Africa and successfully position yourself there.
So today’s post is the odd one out. But I think looking at the shortcomings of Africans who are based on the continent and already engaged in business activities ‘at home’ can provide very useful insights to all of us in a range of ways.
Here is how:
* If you are African and doing business on the continent (or planning to start one) it may help you to mitigate some of the shortfalls
* And if you are an African on the continent, in the Diaspora, or non-African and you want to provide a B2B service for the continent (as a start-up or a well-established company in the service industry) then reading this may help you towards developing a greater understanding of the problems locally and enable you to create a much needed solution to fix them and improve business efficiency on the continent.
Therefore, the areas I will outline below are not meant to generalize, but to make you aware of some of the inefficiencies and shortcomings in how business is conducted locally allowing you to contribute towards improvements. The list is by no means exhaustive, but you may learn about the less obvious challenges that are usually not emphasized.
And as you know, I enjoy taking you beyond all that is mainstream approach.
Let’s dive in, shall we?!
Many African business owners and manager are….
1. Not investing into themselves or the company
While certain investments such as developing a strong marketing or brand strategy, training your employees, or hiring mentors to increase business growth or leadership capabilities make up billion Dollar industries in the West, you will have a hard time in Africa to even sell a firm a professionally designed company logo. Of course you will find huge discrepancies, but African business leaders at large invest in apparent necessities: machinery, goods, and the occasional business event. However, other investments that lead to a longer term gain or high life-time value and that often do not have immediate results are less popular.
The reasons for that are many, such as long-standing socio-economic traditions and strategies for survival, adaptation to a risk-prone environment, and little need to excel due to low competition. But this will change fast in the future and those who are aware of these changes now, will in my view be ahead of the game, especially when doing business outside of Africa.
Opportunities to increase efficiency of African businesses: Provide a variety of services or training courses to African CEOs and managers for improved marketing, capacity building, and communication to improve the competitiveness of their businesses and focus on those who urgently need that (e.g. because they want to own a greater market share for example or they are currently looking for investors)
2. Looking for export opportunities the wrong way
Dropping some random e-mails into someone’s mail box or on LinkedIn groups is not the way to look for serious export opportunities, however a significant number of those engaged in exports do exactly that as related platforms are rare. Or they are relying on too many middle men and are often at their mercy. Instead, African business owners who want to export need to pro-actively develop viable export opportunities by building professional relationships with sellers abroad – be it during related industry events (invest in attending them!) or a professional presentation of the products you have to offer using an online platform or direct mailing to selected companies. Also make the most of your membership with the local Export Council, the Chamber of Commerce, and your related industry association.
Opportunities to increase efficiency of African businesses: Create export events, networks, platforms, or a related B2B communication company to fill the gap.
3. Not writing back
Not receiving a prompt written reply is still very common when doing business in Africa and in some markets this is much more of a problem than in others. I was involved in cases, where people abroad wanted to BUY and still did not receive an answer although they had met the seller personally and were no strangers. Yes, communication still works best in person or over the phone in Africa, but here is the thing: if African managers are interested in winning non-African partners or buyers, then being able to send a prompt and professional e-mail reply is so important. It conveys efficiency, trust, and professionalism and will make you stand out. Besides, it will also be needed in an increasingly competitive local and regional market.
Opportunities to increase efficiency of African businesses: Create a network of virtual assistants or offer rare copy writing services to African CEOs and managers.
4. Running investable projects, but non-investable proposals
Africa has many projects that are very investable in essence, however there is a huge lack of ability in bringing the project outline including budget and ROI projections professionally onto paper. This is why a lot of equity funds, investors, and institutions will often be on the ground to search for projects they want to take on and in a next step to work with the African partners on a plan and project proposal (and often improved management, product formulation etc). Deal flows and conversion could be increased manifold in Africa if local businesses would pay more attention, time, and money towards the preparation and presentation of their investment opportunities.
Opportunities to increase efficiency of African businesses: Work with local businesses on improved deal flow for equity firms, venture capitalists, angel investors, and other intuitional or private investors
5. Copying what others are doing
I always fondly remember my time in Eritrea and how excited we would be when we spot a new kind of coffee shop or restaurant in the streets of Asmara where the founder really put a lot of thought into being different. One year later you would spot 10 more of the same. In fact, many Africans are so worried about being copied that they keep their business idea close to them instead of trying to gain valuable support and input towards it. And I really do understand why.
But there are really two messages here: For those who copy others, and for those who worry about their ideas to be stolen or imitated: In my view Africa does need more than one of everything so replicating a general concept is natural and actually a valid thing to do – but you will be much more respected and valued in the market when you attach your very own unique selling point (USP) to it. The same goes for those who worry about their business idea to be taken by others – integrate something that is so unique about yourself or that is so difficult to build (for example based on careful personal networking) that others may talk about it, but won’t have an easy time to just do the same. Most people fail at execution. Make sure this is where you excel.
Opportunities to increase efficiency of African businesses: Provide services to African companies that identifying, building, and pro-actively communicating their USP for increased competitiveness and business growth.
6. Not managing electronic book-keeping and accounts
Many African business owners continue to do things the old way, but if you want to even just strike a chance to get a bank loan or investment to grow your business, and increase general competitiveness that certainly has to change. And it will.
Someone who has seen this shortcoming as an opportunity is Titus Mawano who studied in the US and returned to his country Uganda offering businesses there his very own electronic bookkeeping software. He signed up over 600 companies in his first two years! Read his amazing story and how much he earned here (in case you have not done so yet): How A Ugandan Returned From The US To Build A Successful Business In 2 Years
Well, I guess, here is a thought.
7. Not treating their employees as an asset
This one is tricky, because one of the huge problems Africa business manager face – but which is hardly discussed anywhere – is a fast turnaround regarding new employees and challenges related to ‘unreliable staff’. You hear the most absurd stories! A significant number of employees are taking incredible liberties or are walking away from one day to the next. As far as I can tell you, it is a worrying problem across the continent. But what does not add up for me is that there is a huge job shortage across Africa – on all skill-levels – yet too many employees hardly seem to value their job enough.
So the problem has to be more complex and I truly believe that staff performance, reliability, and loyalty can be raised manifold when African managers start investing into building the necessary environment, inclusion, systems, training, and personal benefits where relations can strive. The problem is many do not know how (or they focus only on on-the-job training), they are not aware of such form of capacity building, or it is simply not accessible to them.
Sure, it would mean to invest into their employees (which brings us somehow back to point 1 in the list), but the cost of rotating staff with little enthusiasm will have a much higher price in the long-term including expenses, time spent, and company image affected. [Read my related post: Fix It Fast! The ONE Overlooked Obstacle For Doing Business In Africa]
Opportunities to increase efficiency of African businesses: Provide various training such as team building / motivational, in-house communication and reporting systems, and ‘pampering services and days’ designed to increase the performance of business employees. What a great niche you could build to help African managers to meet that challenge!
[photo credit: .borgenmagazine.com]
One one more thing: If you want to start doing business in Africa or invest on the continent, but you don’t know where to start join our Africa Business Bootcamp in the UK and USA!
REMINDER! Join our Africa Business Bootcamp 2016 in the UK and USA! Register here.
I would love to hear your feedback and questions for this post! Just post your comments below! And if you’d like to get my latest articles on Africa business opportunities, strategies, and tips as soon as they are published, feel free to click the little box ‘Notify me’ below the comment section.
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I hear you Dr. Harnet.
I would like to believe that since you deal with a host of businesses you may have found a pattern that you summarised into these 7 points. I therefore cannot comment about some of them because I may not be picking them in my daily activities. But one point which surprises me is no. 3. Not writing back. The way I value communication, I find it odd that some managers fail to give feedback to buyers (who want to give them business) and who they had previously met. No. 5 is sure very common. In my country Zimbabwe, we call such people ‘copy cats.’ I am involved in an industry which is easy to copy since the barriers of entry are low. I believe that coming up with a unique approach always ensures that one is not copied. At Carbon Investments (Construction), Namibia, we have found that though our initial year (2015) was bad, the market began to open up to us towards the end, due to this (our) unique execution. No. 7 is particularly interesting. You are spot on in observing that in a continent where employment is difficult to find, we seem to have a high number of workers who do not put effort into their performance. In addition to my Zimbabwe, I have also worked in Botswana. Combining my experience in these 3 countries I have come to realise that there is a unique work ethic in each. Some countries generally have workers who can put in a good day’s work. And who can stay with a company for the long haul. Alas, some don’t. Just as with the 7 ills you have shared with us, I have come to respect that Africa is indeed made up of 54 countries. And even within each country, provinces/regions have their uniqueness when it comes to work ethics. Therefore doing business in Africa needs one to have a discerning eye. There is no uniformity like one could expect from say USA’s 39 states. Or any other country from the developed world. To sum up, there is a new generation of Africans doing business in Africa. I would like to believe I belong to this lot as we come into entrepreneurship via business schools & are also into continuous personal development.