Barely two years ago, foreign businesses and analysts hailed Africa as the world’s economic miracle. With economic, political and social reforms sweeping the continent, a burgeoning middle class and growth rates hovering around the 6 percent mark, people were queuing up for a slice of a $1trn opportunity.
Today, that picture might appear less appealing to some. Epidemic challenges have swept various countries, especially in West Africa. Across the continent, instability and conflict is either simmering just below the surface – or worse, bursting out into the open.
Between strikes, extremist activities, economic turmoil and political unrest, the African dream might be looking a bit threadbare right now. Nobody said it would be easy. But for the businesses that are prepared to face the storm and manage the volatility afflicting the continent, there are still huge rewards to be had from doing business in Africa. You just have to be alive to the opportunities and avoid the pitfalls.
As the head of a multinational company that is deeply committed to Africa and its people, I believe firmly that this phase will pass. What is needed at times like this is the ability to manage volatility – something that companies in commodity markets are already familiar with.
You do this by having an ear to the ground, solid relationships with your partners and customers and as much real-time information as you can get your hands on to make informed predictions and decisions.
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The most important component to understanding the continent and its ways is time. When foreign businesses go into a country or a region with preconceived templates and notions, chances are they will miss the opportunity to truly understand how to work and collaborate with governments, potential partners, and potential customers.
Here’s the best-kept non-secret to always consider – Africa is a large continent. One size does not fit all. Business is done very differently in Ethiopia than in Nigeria. You will never know Africa based on a PowerPoint presentation. You must immerse yourself into the continent and experience business on the ground, face to face.
Choose a few key destinations; spend time there: not just for business, but to learn and experience. Engage people in business and on the street – this is the only way to understand the rhythm of the region and understand how business is conducted on the continent.
Of course there are challenges. In many regions, the lack of infrastructure and political instability means that cash is king. This will have a fundamental effect on the way you are paid, or intend to pay, for products and services. You need to stay hands-on.
C-suites need to own relationships on the ground. If you’re going to try and manage the business by remote control because you think a region is unstable, you’re looking at a sure-fire recipe for failure. I’m often asked about the best country on the continent regarding opportunities and stability.
There are many options. South Africa will always be right up there, and remains a key launch pad into the continent for many businesses. Angola’s a great gateway not only into Lusophone Africa, but into Portugal as well. Nigeria, in spite of its challenges, is the largest economy on the continent and is immensely strategic importance to West Africa and the continent as a whole.
Ghana is stable, and a relatively easy place to conduct business. While Kenya is experiencing some political unrest, it remains a well-structured country with a strong political agenda.
Pfungwa Serima
Pfungwa Serima is the chief executive officer of SAP Africa
