What it takes to succeed in Africa

Against the backdrop of the slow growth of most global economies, Africa shines out as home to a trillion-dollar, resource-rich economy which is host to some of the fastest-growing markets in the world. It is widely promising to turn into the next China in growth terms and, for committed entrepreneurs, this challenging continent could well be envisaged as an emerging Eldorado.

One can easily get frustrated by the prevailing conditions in the slowly developing continent, but one cannot escape the fact that Africa is the second largest continent in the world and has a lot to offer. The NEPAD organisation (New Partnership for Africa's Development) mentioned that this vast continent produces approximately 13% of the world’s oil; 46% of its diamonds; 21% of its gold; 57% of its cobalt; and 50% of its platinum-group metals. And, its vast mineral resources are just the tip of the iceberg in a continent where the youthful population is another significant resource advantage, with Africa boasting more people under the age of 20 than anywhere else in the world.

We can find so much in this rising continent that it is no surprise international investors and companies have set their hearts on Africa. To some extent, setting one’s heart on Africa is a good thing as long as these organisations and individuals help to develop the continent’s economies. As of now, it looks like global contributions, together with indigenous initiatives, are pulling the continent forward, with the real GDP of Sub-Saharan Africa increasing slowly but surely. The results are that more jobs are being created and the lifestyle of the locals is improving, as well as vast tracts of the population are getting access to education and are increasingly focusing on health and sanitation.

Today, we have more and more businesses being run by locals because they have understood that they can make a difference – a difference to their own lives to begin with, but also to those of others in the long run. Whether for their employees alone or the community alongside, entrepreneurs can create a positive socio-economic impact by the homegrown nature of their businesses and the local opportunities they create.

As just one of the ways to succeed in Africa, a repeatable business model may be considered in terms of a proven formula that works across different countries in the vast continent. Simply put, a repeatable business model entails that an entrepreneur must specialise in an area and become so good at what he does that he can efficiently replicate that business model across markets.

To give an example of what we are talking about, let us take the case of GroFin as an entrepreneurial venture. At inception, the idea behind GroFin was to develop a concept/business model that would work for every entrepreneur in Africa and beyond. Today, the viability model of GroFin’s finance and business support has led to a success rate of 80% in a small and growing business environment where 80% usually marks the failure rate. Based on the repeated application of this viability model, GroFin has built a strong presence in 12 countries (South Africa, Zambia, Uganda, Kenya, Tanzania, Rwanda, Nigeria, Ghana, Egypt, Iraq, Oman and Jordan) over the past 15 years, serving the needs of thousands of entrepreneurs.

Thus, repeatable models have been known to work, and work well in Africa, as GroFin’s own case illustrates.

Supplementing the inductive data at our disposal is a study conducted by James Allen from the Harvard Business Review (HBR), based on an in-depth assessment of repeatable models in emerging markets like Africa.

Here are five reasons identified in his HBR study, to show why repeatable models work for businesses in the continent, with repeated success:

1. Countering talent shortages: Most African entrepreneurs grapple with severe talent shortages. The HBR study noted that repeatable models allow for better training and experience sharing, which enables people to get up to speed faster. Besides, the employment impact of such simple models is higher, as they can be understood easily by more people, opening up more opportunities for local members of the community to gain fruitful employment in local ventures.
2. Addressing infrastructure gaps: African entrepreneurs are typically faced with huge infrastructure gaps, adding on many layers of operational complexity. Getting simple and repeatable processes in place was identified by several participants in the study as an easy way to counter the unpredictability brought upon by infrastructure challenges.
3. Guaranteeing consistency in delivery levels: Most African customers perceive themselves in the grip of an unpredictable market, where they are not guaranteed a consistent delivery of a product or service. In such markets, predictable customer service can be a critical success factor. A study respondent noted that simple delivery models that work repeatedly can allow a business to win customer satisfaction and market share.
4. Facilitating formal succession planning: Since a single entrepreneur is typically responsible for starting the business and shouldering its responsibilities, succession plans are hard to find in a majority of small and growing businesses. However, the study noted that, as businesses grow and succeed, many founders are increasingly willing to leave a legacy of a repeatable model that can be passed down to succeeding generations.
5. Adapting to local needs while keeping global avenues open: Businesses can only succeed in Africa if they adapt to local needs. M-Pesa is a case in point where the high mobile phone density in Kenya was leveraged by local mobile operator Safaricom for mobile money transfer, faced by a situation where traditional banking channels had failed in view of low account penetration. However, local businesses must ensure that their model can be successfully replicated across economies. Going back to the earlier example, a technology-rich model like M-Pesa is suited to replication across developing and developed economies and has done a smooth transition from Kenya to South Africa, India and Europe, travelling across the world with ease.

So, take the time to identify the simple and repeatable processes in your business, put them in a clear language that new entrants to your company can also understand, and see the difference it makes to your business efficiency.

It is no coincidence that some of the best-performing companies globally such as IKEA and Nike, as well as some of the most interesting innovations from the developing world, from Kenya’s M-Pesa to India’s dabbawalas, are based on simple, repeatable models that are can be easily explained and efficiently implemented.