Africa is a business opportunity waiting to explode but…

Africa is a business opportunity waiting to explode but…

Africa is not just larger than the whole of Europe put together, it is the third fastest-growing region in the world. It also has about six of the world’s fastest-growing countries. This alone makes it a business opportunity to be explored. However, lots of businesses in Africa have to deal with challenges that are peculiar to the continent.

There is the issue of corruption which gets a recurring mention any time challenges of doing business in Africa is to be discussed. There is also the infrastructure deficit, political instability, unfavorable business and economic policies in some parts of Africa, and discouraging ease of doing business ranking.

In spite of these challenges, businesses are constantly being established and groomed to survive on a regular basis and I think knowing about the challenges and being prepared in advance is one way to go. 

In a population of about 1 billion on the continent, we now have more than one-third of the population in Africa’s middle-class consumers and this presents a huge market opportunity to entrepreneurs. There is also a vast amount of wealth and resources on the continent simply waiting to be harnessed and channeled in the right direction.

Experts say that businesses in most African countries will have a very long and expensive supply chain infrastructure to deal with, except of course you are dealing in digital products and services. There are lots of loops across what should be a smooth sail from manufacturer to consumer, and this compounds business processes and increases operational costs for entrepreneurs. As a new entrepreneur in Africa, prepare to deal with this.

In a report, Nganga Wanjohi, CEO of Kaskazi Network Ltd, described how his company manages the distribution of fast-moving consumer goods (FMCGs) to low-income areas (slums) in Kenya using bikes and motorcycles to reach over 130,000 kiosks, primarily in low-income areas which have been largely neglected by many FMCG companies.

This is what poor infrastructure can do to your supply chain processes.

There is also a threat to intellectual property rights in Africa and this is a reality that entrepreneurs might have to confront at some point. Despite trademarking or patenting a product or brand name, the very wide market makes it difficult for entrepreneurs and business owners to track breaches to their intellectual properties or even brand names.

Do you remember when we had a product entering the market with the name Millo, and using the green color that has been associated with the popular Milo brand? That product did not last long in the market but big as Africa is, how can an entrepreneur trace all of such breaches.

A third challenge that everyone doing business in Africa should expect to deal with is employee theft. This is like the big problem killing small businesses in Africa, and practically every entrepreneur will tell you he has had to deal with this in one way or the other. It could come in form of inflated operations and service costs, pilfering of raw materials, products, and resources from the company, or outright stealing of funds from the company. I will dwell more on how you can tackle this in a subsequent article.

I think if every entrepreneur enters the African market prepared to deal with these three challenges, things should be a little less bumpy. There are several other challenges to doing business in Africa but I will likely discuss more in subsequent write-ups as they come. Please feel free to share your thoughts with me in the comment box.