Considerations for expanding your business into Africa
Into Africa |
Philip Myburgh, Head of Franchising, Rest of Africa for Standard Bank, gives expert advise to business owners on what to consider when expanding into Africa.
How to move your business successfully into Africa
Franchising, Business Banking Africa at Standard Bank Group, Philip Myburgh shares his insights into what’s involved in successfully moving your business into Africa.
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I’m a firm believer in the opportunities that African countries have to offer businesses. The growth is evident, as is the demand for a large amount of products that haven’t been available to many of these markets in the past.
What we have to be mindful of is that the risks are considerably higher than what the average businessman in South Africa would be exposed to.
What are the risks of doing business in Africa?
Businesses need a good site to operate from and the lack of infrastructure in much of Africa makes this a massive undertaking.
Infrastructure can impact significantly on transporting your goods to and from your site and if your business relies on bringing goods in through a harbour, this can also be a big challenge.
As a business owner, you must be well aware that by the time your product gets to your outlet in a specific town, the cost that you originally estimated might be significantly higher because of a more challenging supply chain. You now need to adjust your prices, but still fall within what the market will pay.
The LSM market that you target in South Africa might be significantly different to the market that you will be targeting in a different African country, in part due to the price adjustment you might have to make as a result of the additional costs of the supply value chain.
Many African countries also have political challenges that you need to be fully aware of. In much of Africa, political leadership might change quite abruptly, which can impact the business environment – laws may be changed at any given time, which is why partnering with the right people on the ground is key, and will assist your business in adapting smoothly to business disruptions.
How long does it take to register a business?
One of the challenges that businesses face in certain African countries is the sheer amount of time it can take to register your business. For instance, registering a business in Rwanda may take 10 to 12 days, while Nigeria can take up to 45 days. Be aware of the ease of doing business in each country when weighing up which country is best suited to your business and needs.
What mistakes do businesses make when moving into Africa?
One of the biggest mistakes that businesses make is seeing Africa as one country. Every country is unique in its approach, its culture and its regulatory environment and even within the country itself there will be different regions where the culture can differ drastically.
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Business owners should not expect to be able to bring a South African offering and mind-set into a different African country and expect it to work.
How do I find potential business partners or industry experts in Africa?
We pride ourselves on being experts on the countries that we operate in and consistently engage with our customers and the market within these countries so that we’re able to guide you at a high level on the opportunities available on the continent.
We can also facilitate the next phase. Once you have decided on the country that you’d like to establish your business in, we can introduce you to local business leadership who truly understand the granular insights of that specific country.
Standard Bank will also introduce you to other clients of ours that might be able to assist you in the up or down stream of your supply chain. In this way, we can add value to all clients involved and ensure a better chance of success for our customers, as well by improving their ability to deliver.
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