As Global Entrepreneurship Week shines a spotlight on innovation and cross-border opportunities, Africa’s economic momentum is impossible to ignore. With the growth of the overall African economy continuing to outpace South Africa with a solid two percentage points higher, the demand from across the continent for local goods and services will only grow significantly. Even businesses who have given little thought about trading beyond South Africa’s borders will soon find queries and orders from neighbouring countries, particularly via online platforms. According to a recent report, logistics companies have seen a 14 percent year-on-year increase in cross-border e-commerce volumes.
Joel Andrews, regional investment manager for Business Partners International, notes that major infrastructure developments are not only opening up large parts of the continent to economic growth, however the construction of roads, railroads, telecommunications towers and power lines is not only driving growth but creating an unprecedented demand for goods, services and engineering expertise. Materials and technical skills are in great demand, as are goods and services to the flourishing and growing tourism and hospitality sector across Africa.
Joel says food and drinks are to a large degree produced locally, but other consumables of the tourism sector, such as personal protective equipment (PPE), cleaning products, linen and uniforms will continue to be in high demand.
Across Africa, businesses and government institution are embracing digital transformation, creating significant opportunities for South African companies in IT, electronics and related services. The relative scarcity of IT skilled professionals on the continent makes this an especially attractive market. Although political instability remains a factor to consider in certain regions, it is far less of a barrier than in previous decades.
Joel believes that Africa’s growth is not a short-lived surge. Its long-term growth prospects are tied to its young and growing population and the opening up of its interior through massive infrastructure project, developments that will play out and shape the continent over decades to come.
It therefore makes sense for local business owners to look across the Limpopo, even if it is just to keep an eye on the development of increasingly efficient courier services for the fulfilment of online orders from the neighbouring states.
For those business owners who are interested in doing more direct business in the rest of Africa, Joel recommends a cautious and step-by-step approach.
It starts by getting to know the region, country or industry where the opportunity lies. Avoid assuming that what works locally will succeed elsewhere. Everything from laws, regulations, tastes, preferences, tolerances and social dynamics differ from country to country. This may require that you might have to change your offering, packaging, pricing, marketing message and sometimes quite literally your recipe if you happen to trade in food products.
While much of the initial research can be done from South Africa, in-person visits are important to explore new markets, especially when it comes to building strong client relationships and establishing reliable support networks.
Credit rating services are not as prevalent in other African countries as they are in South Africa, says Joel. That, and the fact that your local intuition about someone’s creditworthiness doesn’t easily translate across borders, this makes thorough due diligence on prospective clients and potential partners a critical first step when entering a new market.
Start small by testing the market in small, manageable projects that do not require big capital investments. Where possible, ring-fence these ventures as far as possible so that your local operations are protected in case they don’t succeed.
Expanding your business into any new market carries risk, says Joel. In certain ways, Africa presents unique challenges, but few other regions offer the same scale of opportunity as a whole continent on the rise.
About the Author: Joel Andrews
