Branching into Africa
TRANS-LIMPOPO: RICH PICKINGS LIE NORTH OF THE ORANGE BELT
Why aren’t SA SMEs diving into Africa, outsmarting the American and European investors who have discovered such wealth?
Emerging markets is a buzzword in the investment community that brims with excitement, hope and undiscovered wealth. In layman terms, the label refers to a country or region that has economic potential and is currently on the rise, fulfilling its moniker of an emerging market.
Developed countries see emerging markets as nations that have discarded their “Third World” label as they transform into developed and stable economies.
Swings and roundabouts
But why the fuss over emerging markets? It has to do with investment theory. Regions such as the US and Europe seem to have run short of investment opportunities inside their borders and are casting about for alternative opportunities and one such destination is none other than Africa.
Africa is viewed as a continent with massive economic potential because of its vast natural resources, land and, most importantly, a working, ever-growing middle class. And why does a working middle class matter?
Believe it or not, the middle class is the one that carries an economy. Every country has a handful of wealthy people who will buy expensive goods like cars. But they constitute just a handful – not a market.
So, if the people directly below them can generate enough income to buy a car each per household, millions of cars can be manufactured and sold. Consequently, the economy grows.
Americans and Europeans have been invading African shores for centuries, but now they’re planting businesses, not plantations, and are amassing wealth. Which brings us to my concern: Why not us?
Why aren’t SA entrepreneurs venturing into Africa and proudly staking SA’s claim to be the financial powerhouse of Africa? Yes, mass market corporations like MTN and Shoprite are all over Africa but these are big corporations.
What about SME businesses like yours and mine?
It is one thing to export a product into Africa; it is entirely another matter to set up operations in another country. Too many local entrepreneurs are content with expanding their national footprint at home, but don’t thinkg about Africa and beyond.
Yes, there are risks, but with knowledge and understanding those risks can be mitigated. And over the coming weeks I will lay out crucial steps of how to open and run an international branch in Africa.
Primal fear
A constant refrain murmuring in the background is there is too much political turmoil in African countries that destabilise economies, making it difficult to run a business. But I assure you, every country on earth has its political mess and businesses must find ways to deal with it.
Expanding across your borders to open international offices is the epitome of entrepreneurial success; it is the ticket into the big league, playing with the big boys. Not many can or have done it, but it’s not impossible. It just takes ambition, determination and a strong back bone.