Doing Business in Africa - The African Way

Seeing traditional African dance as part of a university graduation programme, a few weeks ago, did not come as a surprise. As an African myself (born in Durban, and now living in Cape Town, South Africa), I have come to appreciate that to be successful in doing business in Africa, you need to embrace the African way.

What does this mean for company executives looking to expand into Africa? How different is it to grow your presence in Africa, compared to Europe or North America, for example? Why is it that although Africa appears to be a goldmine of opportunity across several industries, very few companies succeed?

The key lies in your own thoughts about how best to do business on the continent. If your reason for expanding into an African country is purely to make easy money, quickly, well you need to make adjustments in your thinking. I am not saying that you may not find a goldmine. The trick is that when you do, be prepared for a lot of digging.

This applies to doing business in any country, East, West, anywhere! Simple questions to consider before entering an African market are:

1. How can what I am selling, be of benefit in this country? Interrogate this question further. You may for example want to sell online programmes into West Africa because online is the way to go. How do the local people feel about online education? What are government departments saying about it? After a student has completed his online certificate, diploma or degree, will they be able to use it to get the job or promotion they want? Or is this value only value in your own head?
2. Why do I want to expand operations into this market? In addition to growing your market share, if you are prepared to put in the hard labour, and you are prepared to invest in this growth, your probability of success is much higher. Africa is no longer a market that does not know, is not a market where the sole reason why goods are purchased are because they are the cheapest. Even little children have access to the internet. What is available in the West like the latest iPhone, when launched, is broadcast in real-time to anyone with a smartphone, all across the globe. So, when you choose to sell something in Africa, let the reason be that you are dealing with an informed audience who would like the chance to buy your product over several others.
3. With more than 50 countries in Africa to choose from, which ones should I begin with and why? Much has been said by the banking sector and auditing firms about opportunity vs risk. Trying to have a presence in as many countries as possible is a sure way to tire your staff and kill your cash flow. Most businesses have limited resources (financial and human capital). So instead of skimming the surface through superficial conversations with potential partners in several countries, why not invest in just one or two to begin with. Start off in markets similar to ones where you already have a presence. Speaking a common language is always a positive starting point. Invest time, money, people, energy - all your strength, before moving on.
4. How will I get paid? A very simple question, but one that should be part of your thinking process before any investment is made. Choosing the most populous country does not mean that your investment risk is being reduced. Examine currency trends over the past 10 years. How easy or difficult is it to apply for forex? In some countries, even though the money is yours, limits are placed on how much is spent across its borders. Are their any discussions about revaluing the local currency, or adopting something else? Do you expect a regime change which may impact negatively on performance against the US Dollar or Euro? Even strong partners are not immune to decisions made within a country that may no longer make it viable to do business there.

The African way places high value on mutual consensus. African leadership is inclusive leadership, which sometimes results in a longer decision making process. Even when a business is owned by one person, there may be a need to address the whole management team on why they should do business with you, and how any changes to the way things are done will provide benefits in the long term.

Respect is an important component of doing business the African way. This includes acknowledging everyone, listening carefully, and building trust. If you like to see things moving along, become edgy when meetings do not start and end on time, or are pretty fastidious by nature, it could become easy to get frustrated. Give yourself some time, try to understand the context (for example it is impossible to schedule more than two meetings in Nairobi a day on account of Kenya's traffic), and get to know the people you are doing business with. The more you learn what it means to be African, the easier it will be to do business with its people.