5 tips about how to build a successful business in Africa
Updated: Apr 1, 2022
Although Africa, one of the largest continents, is home to nearly 1.3 billion people. This about to increase nearly 2.5 billion people by 2050.
Most countries in Africa have become places with incredible business opportunities. According to UNECA the African continental free trade agreement AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. It will cover a GDP of $2.5 trillion of the market.
However, there are some guidelines to follow to build a successful business in the region. Let us take a look at the five most important ones!
Africa 101 - The basics
Africa's rapid urbanisation makes it the fastest-growing continent on the globe and the only region on earth where more women decide to become entrepreneurs than men. This is Africa 2021 with significantly increased of investment in different fields, such as Agribusiness, Mining industry, telecommunication, retail, start-up projects, and a constantly evolving financial environment all contribute to putting the continent of 54 countries on the economic map.
To give just one simple example of scale: One of the world's leading oil companies receives 1 million resumes from job seekers in Ethiopia monthly for every position advertised.
Let’s see the tips on how to build a successful business in Africa!
Tip #1 - The importance of the local culture
Culture in Africa plays an important role within the society that goes along with faith. Understanding the culture is key to effective communication and reaching your organisation's target audience. Traditional "Western" techniques and methods for sales and marketing do not work effectively in most African countries, so you will need to adapt if you want to be successful.
Tip #2 - Negotiation through local support
Researchers estimate that there are about 2,000 different languages on the African continent, which often come with exotic protocol rules - at least for American-Europeans. The secret to building a successful business is having a local partner who is familiar with the customs and language and can assist in negotiations.
Tip #3 - Government behaviour
Armed conflicts (there are currently four different unresolved conflicts in Africa) and the diversity of political regimes (from democracy to tyranny, from kingdom to political chaos) are factors that lead to political instability in many regions. In some countries, the complete absence of traditional economic institutions, and in others, rampant corruption, make doing business difficult.
To build a successful business in Africa, it is important to avoid quick, ill-informed decisions and intermediaries who promise to mobilise government connections in return for a bribe.
Tip #4 - External/Independent report
The abundance of opportunities also means that one of your first and most important decisions will be which country or region to start your business in. Be sure to hire an independent team to collect and analyse the necessary data, which will process data that is not available elsewhere because existing sources can become outdated due to frequent changes and rapid growth.
Tip #5 - Choose a local business partner carefully
In many African countries, it is not even possible to start a company without a local business partner, but if chosen well, the partner can open up the right network of contacts for you. For this reason, it is important to carefully select local support, personnel, and business partners.
Africa's dramatically developing countries offer amazing opportunities, but as you can see above, there are also pitfalls that you should prepare for in advance to build a successful business.
At Har-Che Business Solutions, we believe that business and social impact go hand in hand. We support foreign investors on their journey to promote the economies of African countries through sustainable development. If you are interested in knowing more about how we help our business partners in setting up a new venture in Africa, check out our website and send us a message.