In Africa, lo­cal com­pa­nies out­play multi­na­tion­als

Kuwait Times - - BUSINESS -

JO­HAN­NES­BURG: Lo­cal African com­pa­nies have gained a com­pet­i­tive edge on the con­ti­nent over their multi­na­tional coun­ter­parts and are mak­ing in­roads where over­seas play­ers once dom­i­nated, said a re­port re­leased yes­ter­day. The study by the US-based Bos­ton Con­sult­ing Group said African firms had a bet­ter un­der­stand­ing of lo­cal mar­kets, and had seized op­por­tu­ni­ties to in­crease their mar­ket share. “In emerg­ing mar­kets, there is no sub­sti­tute for on-the-ground ex­pe­ri­ence,” said a re­port ti­tled “Duel­ing with Li­ons”.

“To win new ground, multi­na­tion­als need to un­der­stand how Africa’s business has shifted.”

The re­port cited im­proved eco­nomic and po­lit­i­cal con­di­tions and the adapt­abil­ity of African busi­nesses, with com­pa­nies al­lo­cat­ing re­sources to grow do­mes­tic op­er­a­tions and de­velop mar­ket-spe­cific prod­ucts. “African Li­ons”-such as South Africa’s mo­bile telecom­mu­ni­ca­tions firm MTN-were seen to have cap­tured some valu­able emerg­ing African sec­tors.

The re­port said MTN made a bold move to Nige­ria, Africa’s big­gest econ­omy, “when west­ern car­ri­ers were hold­ing back”.

The com­pany has tens of mil­lions of sub­scribers in Nige­ria, but its re­cent ex­pe­ri­ence in the coun­try has also high­lighted the chal­lenges of do­ing business in Africa.

It has been hit with a $5.2 bil­lion fine im­posed by the gov­ern­ment over un­reg­is­tered SIM cards it had failed to de­ac­ti­vate. Nige­ria’s Dan­gote Ce­ment, owned by Africa’s rich­est man, has also upped its mar­ket share , and has am­bi­tious plans to ex­pand across the con­ti­nent in­clud­ing in Zam­bia and Zim­babwe.

Lo­cal po­si­tion­ing

“In Africa, some mar­kets have had very strong growth this decade. Lo­cal ac­tors have seized op­por­tu­ni­ties which the big multi­na­tional com­pa­nies didn’t even no­tice,” said Pa­trick Dupoux, one of the re­port au­thors. “One of their key fac­tors of suc­cess is their lo­cal po­si­tion­ing, their knowl­edge of the field, of dis­tri­bu­tion net­works, con­sumers and the sup­ply net­work,” he told AFP.

“The multi­na­tion­als have to adopt a real African strat­egy and can’t af­ford to con­sider the African con­ti­nent as a mar­ginal place.”

Be­tween 2009 and 2013, multi­na­tional com­pa­nies saw an in­crease in sales, but their mar­ket share dropped. In Kenya’s ce­ment in­dus­try, multi­na­tional firms in­creased rev­enue from $287 mil­lion in 2009, to $397 mil­lion in 2013, how­ever, their mar­ket share de­clined from 55 per­cent to 40 per­cent.

Bot­tled wa­ter in­dus­tries run by in­ter­na­tional com­pa­nies in Egypt and Morocco also saw a dip in mar­ket share.

African com­pa­nies have ben­e­fit­ted from a more ed­u­cated work­force as “highly skilled Africans have been re­turn­ing to their home­lands”, the re­port said. “Stu­dents in coun­tries such as Nige­ria, Kenya and Morocco still em­i­grate, but nowa­days they’re more likely to come back af­ter they’ve got­ten their ed­u­ca­tion.” Ac­cord­ing to the re­port, African economies in 2014 and 2015 recorded growth above the world av­er­age, de­spite fall­ing oil and com­mod­ity prices, the out­break of Ebola and some re­gions hit by mil­i­tant un­rest.

“Even now, as low oil prices threaten the con­ti­nent’s en­ergy ex­ports, Africa’s long-term pos­i­tives are too big to over­look,” it said. Two weeks ago, the In­ter­na­tional Mone­tary Fund fore­cast growth in sub-Sa­ha­ran Africa to dampen from 5.0 per­cent in 2014 to 3.75 per­cent this year. Coun­tries such as Ivory Coast, Ethiopia and Mozam­bique are still ex­pected to post growth rates of at least 7.0 per­cent this year and next. — AFP

DUBAI: Jeff Wilkin­son, Se­nior Vice Pres­i­dent Tech­ni­cal of Eti­had Air­ways, pic­tured right, with Franck Terner, Ex­ec­u­tive Vice Pres­i­dent of Air France KLM En­gi­neer­ing & Main­te­nance, af­ter sign­ing a 10-year agree­ment for a com­po­nent main­te­nance agree­ment for the car­rier’s Boe­ing 777 fleet.

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