Reshaping business engagement – growing inclusive benefits with Africa
The world goes round and round because of business-related migration and tourism for business owners, investors, and executives. These business migrations, however, had been dealt a blow due to travel restrictions and the rising spread of the COVID-19 pandemic, causing major global trade falls as well as stocks swinging on an opposite pendulum. There are still many travel restrictions in terms of physical contact in one form or the other. With these travel restrictions still in place, the possibility to transact businesses even from a distance still feels like a strange option to most African businesses. Additionally serving as a host for other emerging markets seeking the best alternatives to bilateral trade alternatives to consider for a business. What is expected of business in Africa and what can make a business succeed in Africa? These remain questions to newbies in the emerging African markets and so, would remain until better options begin to appeal to investors and local businesses alike. Emerging markets are one of the ways to expand a business, get more revenue streams and outsmart competitors. Africa is one of the emerging markets in business whether is to target local, regional, or international audiences with a product or service.
Why choose Africa?
It’s because Africa provides a haven for businesses and is a fast-growing market. To start with, full services can be provided to customers like businesses with global customers whilst having a local presence. Also, Africa is a place to recover fixed costs and achieve competitive scale efficiencies like with electronic equipment, automotive, and pharmaceuticals businesses. Again, for companies with luxurious brands, Africa is the place to established early on in the minds of the middle-class elites about the product or service.
Furthermore, introducing new products at lower prices and business models, is what is essential to penetrate the African market. Finally, Africa is a place where lessons learned from competitors and other places can be replicated by industries to help enter African markets in a smarter way. Thus, for businesses with high aspiration, African markets are imperative.
Reasons for investing in African markets
Entering any new market is challenging and Africa is no exception. These challenges vary from regions as well as markets. Like building a local brand for a product or service from scratch, winning over competitors, dealing with regulations, accessibility, infrastructure, and the perception businesses have about Africa to name a few.2 Despite these challenges, there are various reasons why Africa markets should be at the top of the list as a business destination. According to Accenture,1 Africa has been seen as an attractive destination to many players including Europe. Also, the areas most attractive to investors are telecommunications, financial services, and retail. This can be seen from the presence of corporates like MTN – a cell phone operator across Africa.
All things being equal, Africa is made up of a very young population. According to the United Nations article on Africa,3 it is the only continent with the youngest population in the world and this will continue to increase in the near future. So, when entering the African market, a business can tap into this young educated workforce and talents for their business.
Furthermore, Africa is rich in natural resources, in most cases have stable governance, and definitely, a growth destination that businesses can take advantage of. Also, Africa heavily depends on agriculture not only as a business, but as a way of life. Facing the challenges in this sector like low yield, poor soil and pre to post harvest losses, industries that have invested in this sector can thrive. For instance, most of the agri-products produced using Good Agricultural Practice, are organic certified, thus, can fetch premium prices in the world market.
In this sector, tech companies can strive when it comes to;
- Providing solar energy for health care services in Africa because healthy farmers are happy farmers.
- Online training of farmers in their local languages using solar-powered smart projectors to reach remote areas.
- Pump water for irrigation for crop production all year round.
- Technologies in value addition, reduce post-harvest losses and ensure consumer trust.
Investing in technologies in general and agri-tech, in particular, is very important to penetrate African markets. For it can help farmers to produce more with less, preserve goods to reach the market fresh, in good quality, to increase their profit margins. As such, tech companies in this area can thrive in the African market.
Furthermore, sustainability is at the center of every round table discussion all over the world, and the EU in particular. The EU for instance, by 2050 wants to become climate-neutral with an economy of zero greenhouse gas emissions by transforming climate challenges into opportunities.4 Investing in a business in Africa that has green branding in sustainability, that is, making profit while serving the interest of the greater good, can not only help to create unique marketing for the company, but also make it stand out amongst its competitors and ensure continuity of the business.
Doing Inclusive business and winning in Africa
Doing business face to face is better for most businesses since one can check first-hand the needs of the people, and consequently address them in the business. It is clear that COVID-19 has limited traveling to some extent. People, in general, want to travel less for business but still be able to do business like usual. That is where the internet and digitalization come to place. Going digital can create visibility and take a business to reach all corners of the planet with a few clicks. Advertising products or services online can engage consumers from one-to-one to one-to-many and actually engage them. This is even in a place like Africa where the majority of the people still have a smartphone.
Working with trusted partners who can connect and facilitate businesses hassle free, especially with the external world, is a great way to engage in Africa and succeed, without actually going there in person.
Also, doing inclusive business is a win-win – being a good way to engage local’s attention and make it in Africa. That is doing business that will help to trickle down benefits at the Base of the pyramid, as Accenture also confirms that Africans’ buying power is high. So, businesses that make profits, while addressing the needs of the locals, and in turn, create sustainable employment and jobs for the locals especially for women and youth, have a shot at making it.
Furthermore, the creation of the African Continental Free Trade Agreement – AfCFTA, is a great opportunity to foster trade and investment among African member states, at the regional and international level. This will help to increase the annual growth rate in the continent. Taking into consideration that Europe is still number one trading partner of Africa, investors can take advantage of that.
Thus, to invest in Africa means that one need to have a good understanding of the business and how the business can create a lasting impact within the community in terms of job creation, whilst ensuring sustainability of the business. This is a win-win which is appealing to the survival of any business. As such, it is time to consider Africa as the next business destination before it is too late.