What Does It Take To Win In Africa? Some Key Critical Success Factors

With Africa’s population expected to grow to over 1.5 billion within the next ten years, I often find myself imagining the possibilities that come with this number of people. Also, I ask myself what African political and business leaders need to do to ensure that we take full advantage of our young and resourceful population to try and solve the continent’s challenges.?

We can do a lot to facilitate investment in the continent if we are willing to change how we do things, such as ensuring that our borders are more open to each other, expediting the process of registering new businesses, putting in place the infrastructure and technology that allows for smooth movement and communication across different languages, and working together to grow a corruption-free generation.??

Having travelled extensively in Africa, I know the continent’s potential. I also agree with those who argue that the continent’s potential is underestimated. In this piece, I want to focus on ten factors that those who want to take advantage of the continent’s potential should consider when doing business in Africa.??

1. Ease of Doing Business

Things have significantly improved in most African countries regarding the ease of doing business. For instance, it is heartening to note that countries are doing a lot to reduce the time it takes to register a company.?

Currently, South Africa introduced a portal where individuals can register a business within a day. This is a massive improvement from some 2019 reports indicating that registering a business in South Africa took 40 days and seven procedures.?

Rwanda is making it easy to do business too. Registering a business takes less than 24 hours. International companies investing in Rwanda enjoy a 7-year corporate income tax holiday in specific sectors like health, ICT, and energy. The results of these initiatives are there for all to see as some international companies, including Motorola Solutions and? Volkswagen, have established their offices in the country.????

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If it is becoming easier to register a business in most African countries, the story regarding the continent’s visa regimes is different. It has been accepted that visa restrictions hurt the economy, particularly tourism. Therefore, those who want to set up businesses in the continent must start the process in advance to compensate for the time lost in red tape.??

To unlock growth within the African continent, countries must ease the movement of people between their borders. For instance, the African Development Bank reports that because of its liberal migration policies, Rwanda has reaped the fruits of increased business and tourist arrivals. The same applies to visa-free Seychelles, where tourism has grown steadily in the last few decades.??

The border points of La Corniche and Poids Lourds between the DRC and Rwanda have an average crossing time of 15 to 30 seconds. If you compare this to the long lines of trucks at the Beitbridge border post between Zimbabwe and South Africa, you will realise why African countries must open up to each other by easing their requirements at the ports of entry.????

2. Identify Available Talent

Ask anyone who has been to any African country, and they’ll tell you that talent is abundant on the continent. I remember reading a report from the American analytics and advisory company Gallup which concluded, “For many Africans, working hard is not an option; it's often required to meet even their most basic needs.” The report attributes the strong work ethic in Africa to this view.?

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Successful businesses in Africa understand the importance of leveraging technology to access talent. They also know why it’s crucial to invest in potentially good employees through training programs and sponsoring organisations that help young people gain skills. Partnerships with student associations, institutions of higher education, and NGOs that help ease unemployment are indispensable for organisations that want to excel in the continent.????

3. Localise Strategy?

One of the biggest misconceptions outside Africa is that the continent is a single entity. Any strategy created from this thinking will miss the point because African people have different needs. Creating a localisation strategy reveals that your business is willing to deal with each region and country in which it operates based on fully understanding its laws, consumers, and business landscape.?

4. Assess Political Landscape?

An unstable political landscape impacts a business negatively. For this reason, investors need to assess the political landscape and determine the risks inherent in different regions. Big corporations that have succeeded in Africa have realised the importance of investing in resources to deal with political instability where it exists.?

The challenge of corruption in Africa is a perennial one. Anyone who doubts this possibly has not read South Africa’s Chief Justice Zondo’s state capture report or watched Aljezera’s? “Gold Mafia” documentary on money laundering across the continent. Thus, business leaders must be clear about how they will deal with this challenge.??

5. Respect Cultural Nuances

Many organisations that fail in the African continent often have themselves to blame because they do not understand the importance of respecting cultural nuances. Any company that fails to respect the cultural nuances in its region will not connect with consumers. This is because communities in Africa take pride in their culture and traditions.?

For example, I have seen multinational companies arriving with expensive marketing campaigns shot in Europe or the United States, using actors and scenery that the target audience does not resonate with. As you may expect, such companies fail to connect with the local communities.

Religion is another vital aspect to consider. Suppose you look at a country like Nigeria. In that case, the religious culture is strong, and significant differences exist between the southern parts, primarily Christian, and the northern parts, inhabited mainly by Muslims. Therefore, it will be vital to acknowledge the religions of employees. For instance, a company should know when to grant leave to employees for religious observance.???????

6. Make Products and Services Relevant To the Markets

When you do business in Africa, avoid the one-size-fits-all attitude. For instance, international food producers will need to understand the diets of their markets. For instance, an international fast food company can introduce pap in South Africa, jolloff in Nigeria, and ugali in Kenya.

7. Prepare for the Language Barrier?

Having been colonised by different powers speaking different languages, language barriers are one of the biggest challenges faced by people doing business in Africa. In this regard, it becomes vital to assemble the talent to communicate across these different cultures and languages.??

Even though the African continent has over 2,000 languages, businesses that understand the major languages, including English, French, and Swahili, increase their chances of success. Even so, where companies have the means, they need to translate their material into smaller African languages using local interpreters.??

8. Supply Chain Issues?

Travelling through Africa, I have had the opportunity to experience firsthand the continent’s infrastructural challenges that lead to supply chain issues.

Living in South Africa in the past decade, I have also seen the havoc caused by insufficient infrastructure when Eskom introduced rolling blackouts to prevent a total grid collapse. Transnet, the rail, port, and pipeline company, struggles to facilitate transporting goods to and from the country’s ports.????

However, the South African challenges look insignificant when you look at the needs on the ground in many African countries where poor roads and inadequate access to clean water are accepted as normal. Many solutions have been suggested to deal with the infrastructural challenge. One of the most effective ways is for governments to collaborate with the private sector and involve grassroots communities.??

In our case at Medtronic, for us to do sophisticated procedures, you need good hospitals with a theatre and qualified staff to succeed. This happens through collaboration on training development, bringing skill sets together to ensure successful procedures. This ensures that people do not have to leave the country to get medical procedures.??

9. Forex Availability and Currency Fluctuations?

African trade still relies to a large extent on the US dollar. This leaves the currencies in the continent susceptible to extensive fluctuations, leading to accelerating inflation. There are instances where it is impossible to change one African currency to another without changing the money to the US dollar first.?

Successful businesses build resilience against currency fluctuations and the unavailability of forex by working with professionals that can help them use an array of risk-mitigating strategies like sourcing raw materials locally.???

10. Access to Credit?

Access to credit does not just speak to the business’s ability to access the capital it needs to operate; it also concerns whether the consumers can get the credit they need to buy the goods and services your company manufactures. Therefore, it is vital for businesses that want to operate in different markets in Africa to have strategies on how they will deal with consumers that often do not have access to meaningful credit.??

Growth Opportunity Still Big

It cannot be disputed that Africa faces real short-term challenges and pockets of volatility. However, Africa’s growth opportunity is still enormous. The continent’s growth prospects are strong due to many factors, including enormous resources, a big pool of young people, and trends in the global economy and within Africa’s domestic economies.?