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Five Reasons To Do Business In Africa
Oliver Hellewell • Dec 10, 2019
I first traveled to Africa when I was 19 years old, in search of excitement and adventure. At the time I was in pretty good physical shape (sadly no longer the case) so one of my main concerns was having access to a gym for the duration of my stay. Upon arrival I ran into a man who introduced himself as “Sparky”, so-called because of his employment as an electrical engineer at a local hotel. Sparky said there was a gym just 10 minutes away and offered to meet me the following morning to take me there. When we arrived I was slightly taken aback, this certainly wasn’t the health club type setting I’d become accustomed to and there wasn’t a protein shake in sight. Instead there was a mishmash of machines that appeared to have been donated from the 1950’s as well as some homemade equipment, one painted bright pink for some reason. The weights bench in particular caught my eye because it consisted of a plank of wood covered with an old duvet and then wrapped entirely in duct tape. Above the bench was an iron bar holding two old car wheels for weights, wheels that even the least observant amongst us could tell came from different cars. When I raised concerns about lifting uneven weights, Sparky simply said “do one set, then turn the bar around and do another set to even it up”. Humbling right? The entire trip was eye-opening and ultimately did two things to me. Firstly it made me fall in love with the continent, particularly the spirit of the people who fascinated me with their resilience, resourcefulness and positivity. Secondly it opened my eyes to the vast entrepreneurial opportunity, many challenges that could be solved and solutions that would add value to people’s lives.
Fast forward a few years and I found myself studying an MBA and scrambling around for an interesting research topic. It suddenly clicked in my mind and African entrepreneurship became the focus of an extensive academic literature review. As a result of this research and subsequent trips to the fabulous continent, I’ve summarized five reasons I believe you should be doing business in Africa;
1. The New Frontier
Africa epitomizes the term “Emerging Markets”. You can’t turn on a business channel for more than ten minutes without hearing about this trending topic and acronyms such as BRICs and MINT. What’s more, top consulting firms are urging businesses to get in early for an opportunity to influence consumer preferences, build lasting brands and shape industries.
2. The Triple-up
Over the past 15 years Africa has averaged 5-6% GDP growth each year, Europe and North American only 1-2% over the same period. In addition, according to the latest figures, almost 50% of global growth in 2018 will come from emerging markets including Africa. Take advantage of the economic growth.
3. The Quarter On The Table
More basic numbers here; Africa is home to 1.2 billion consumers today with a combined spending power of over $4 trillion annually. It’s also growing faster than any other region in the world and will represent 25% of the global population by 2030. Can you afford to ignore 25% of your potential customer base in this global marketplace? Well you could, but I’m not going to.
4. The Brain Gain
Africa has an unusually young population with 60% under the age of 25. Combine this with the new phenomenon known as the "brain gain" (the diaspora returning for better career prospects) and you have an impressively well educated, dynamic, tech savvy workforce with a hunger for success.
5. The Sahara Valley
Almost all the academic research agrees on this point which is potentially the result of high unemployment and lack of other options. In contrast one could argue that it stems from the emergence of successful role models to chase and emulate. Either way, I’ve witnessed a true hustler mentality in Africa and I certainly wouldn’t bet against the region rivaling Silicon Valley in the not too distant future.
Senior executives decide that your company needs to adopt a CSR strategy because everyone else is doing it. In the coming weeks you are bombarded with emails from the unfortunate person in marketing who has been stuck with the title of "CSR Champion". You are asked to cast your vote in nominating a charity of the year, give money to wear jeans to work on a Friday and convinced to take part in the local 10k fun run. Sound familiar? Giving money to charities is admirable and many third sectors organisations do great work with their donations, my concern is that companies aren't looking at CSR efficiently......... Which of these example companies do you believe creates the most competitive advantage through their CSR initiatives? 1) A chain of supermarkets donating profits from baby products to a local cancer charity. 2) A train operator that opts to buy energy from supplier X because they are investing in green fuels as a pose to supplier Y who is cheaper. 3) A US based online retailer donating towards infrastructure projects in Rwanda 4) A chain of UK based supermarkets that supports local farmers to produce more high-quality fresh food. 5) An accounting firm that allows all staff members 0.5 days a week to volunteer their professional skills to a charity of their choice. 6) A restaurant that provides free meals to homeless people on Tuesdays. Please post your choice and reasoning in the comments section. :) Remember; incorporate CSR into your corporate strategy to maximize shared value! Enjoy your weekend!