Before considering a European or American location, why not explore Africa first? You’ll be impressed by the growth potential for your business on the continent.
Let’s be frank – people living on less than one dollar a day are some of the most discerning and loyal consumers on the planet. “When you are living on the poverty line, you cannot afford to make a mistake [with money],” says David Hendrie, marketing specialist at Gateways Business Consultants.
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Urban populations in Africa will triple by 2050, creating more easy-to-reach target markets – and they won’t be living on a dollar a day. The middle class is growing exponentially. Now is the time to establish your brand beyond SA’s borders.
Botswana, Angola and Nigeria are some of sub-Saharan Africa’s most attractive retail markets, according to consultancy A.T. Kearney, based on market attractiveness, country and business risk, market saturation, and the time pressure to enter or expand in the market.
Here’s why and how you can cash in on these countries’ brimming potential:
1. Proximity to South Africa is an entry point bonus
Botswana has a small population of about 2.1 million. It offers a fairly high GDP per capita and a stable economy makes the landlocked country enticing. Strong diamond mining, agriculture and tourism sectors are bonuses our neighbours possess.
Most South African brands already have a presence in Botswana. Most recently, South African discount variety retailer The Crazy Store announced its expansion into the country. “It has got a great economy and similar consumer habits to what we have and what we know in South Africa,” says managing director Kevin Lennett.
Classified as a mature retail market, Botswana’s retail environment is relatively saturated, but as a whole is still growing. Adding to its allure is Botswana’s proximity to South Africa and Namibia, especially as an entry point for businesses with something new to offer.
2. “An interesting place to do business”
Oil-rich Angola is also experiencing growth in its retail sector with numerous new shopping malls being built. However, according to A.T. Kearney, Angola’s true middle-class is relatively small, with consumer spending per capita remaining on the low side.
But, “with a specific proposition and a strong sense of the target market, a business can still find a strong opportunity” in Angola, says the report.
“Applying sound business judgement principles to the myriad of opportunities on offer in the Angolan marketplace can certainly make the market work for those with an appetite for the country,” says Roger Ballard-Tremeer, chief executive of the South Africa–Angola Chamber of Commerce.
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3. Urbanising with an expanding middle- and upper-class
One out of every five Africans is Nigerian. Africa’s most populous country, boasts a population of 178 million, most of whom are steadily rising in affluence.
Currently, only 1% of all trade is modern supermarkets, meaning there’s significant room for growth in Nigeria’s formal retail sector. However, this doesn’t mean entering the market will be easy, but it will be worth it.
“Retailers that succeed in Nigeria will be those that do not underestimate the effort and investment to be successful,” says the report. Managing Director of Resilient, Des de Beer, believes Nigeria offers better potential returns than South Africa, where opportunities for new business developments have become few.
Trading across borders means you’ll need a foreign trading account, among other services. Standard Bank assists you throughout your working capital cycle with their extensive range of transactional solutions.