The continent of Africa is so vast that India, China and the US could fit within its borders, with room left over for several European nations. It comprises 54 nations with populations ranging from less than 1m to more than 160m, and hundreds of ethnic groups speaking more than 2,100 languages.

Wealth differences are stark. Nearly three out of four people in Tunisia earn more than US$2,500 annually at PPP, a level reached by less than 1% of the population of Liberia. Compared with other emerging markets, Africa is still relatively undeveloped. Roads, ports and other infrastructure are often not up to grade. Suppliers of basic products and services may not exist or be able to deliver the desired quantity or quality.

The size, diversity, complexity and volatility of Africa raise challenging organisational and business-model questions for companies. They cannot simply import a structure and a way of doing business that work in other markets. They will need to both create and empower local organisations that are close to the market and create a regional structure that takes advantage of scale and provides consistency. In particular, companies need to do the following:

• Prioritise their African markets, focusing on those that offer the best combination of attractiveness and competitive advantage.
• Organise for many Africas by leveraging either hubs or regional clusters of countries.
• Adjust their business model when the realities of Africa require different approaches.

Prioritise your African markets

Africa’s diversity raises the stakes for companies that want to win on the continent. Even across the 11 nations responsible for 80% of Africa’s GDP, large variations exist in per capita GDP, the concentration and income of consumers and other economic measures. Depending on their industry, overall strategy, risk appetite and proximity to other operations, companies will likely make different choices about where to place bets and build businesses.

For instance, while Nigeria often makes it onto lists of priority African markets because of its large population and wealth of natural resources, an active used vehicle market makes the number of new car sales there relatively small. In Algeria, on the other hand, there are more auto sales than the country’s population or per capita GDP would suggest, in part because of government incentives encouraging private consumption. Consequently, automakers have prioritised Algeria over Nigeria.

Another example is Nokia’s initial focus on South Africa, where the company operated through a distributor. After building its direct market presence there, Nokia expanded to Kenya and Nigeria, which it now leverages as hubs to enter adjacent markets. And a pharmaceutical company, after analysing current and projected sales, ended up developing a three-tier prioritisation of markets tailored to its growth strategy.

Organise for many Africas

Until recently, many companies ran their Africa business from abroad. Today, many category-leading multinationals, including Coca-Cola, General Electric (GE) and Samsung, are creating regional headquarters on the continent in order to be close to customers, stakeholders and local talent. In 2012, for example, GE moved its regional business from Dubai to Nairobi. “We’ve got to run Africa as Africa, not as the Middle East Africa. We might as well run the Africa business out of the US if we’re going to run it out of the Middle East,” said Christopher Akiwumi, corporate legal counsel of GE Africa.

Many companies divide Africa into two or more regions in order to deal with its size and take advantage of linguistic, cultural, economic and historical linkages. The Maghreb, East Africa, Lusophone (Portuguese-speaking) Africa, Southern Africa and West Africa are all common configurations. West Africa is often split into French-speaking and English-speaking markets. Casablanca, Nairobi, Cairo, Johannesburg, Accra and Lagos are natural candidates as bases for such regional hubs. The Moroccan government, for example, is supporting the development of Casablanca into a regional financial hub for the Maghreb and French-speaking West Africa.

Other companies create regional shared-service operations to ensure consistent service levels and increase efficiency. Ecobank, for example, operates in 30 African nations but has created three IT hubs and three call centres to reinforce a common brand, policies and procedures.

Companies cannot manage all their Africa businesses centrally, however, or they will sacrifice speed and agility. They need to energise and empower the local organisations in order to take advantage of market opportunity. In June, Bharti Airtel decentralised its Africa operations by making each country head responsible for investments, market-related decisions and financial targets. Previously, all such major decisions had been made centrally in Nairobi.

Adjust your business model

Africa often demands a larger presence on the ground than more developed markets. Many companies, for example, have discovered that they are unable to source various parts and ingredients from local suppliers and therefore must make their own.

MTN, a mobile operator based in South Africa, has built 6,000 microgeneration plants in Nigeria to power its cell towers because local power grids are not reliable. This has enabled MTN to gain a competitive advantage over its rivals in Nigeria. Likewise, Vale, a Brazilian mining company, has taken over construction and management of a rail line in Mozambique that it depends on to transport coal. Vale entered the rail business only after its exports suffered a two-year delay stemming from the failure of another company to complete and run the line.

To minimise the risks of doing business in Africa, Coca-Cola bottlers have built 29 small bottling plants in Nigeria and South Africa rather than the few large plants they would normally have built. This exposes the company to less disruption if a plant is taken out of service.

Finally, several companies are using mobile technologies to replace traditional services. GlaxoSmithKline has partnered with Vodafone, the GAVI Alliance (a public-private health partnership), Mezzanine (a provider of mobile medical solutions), and the Mozambique Department of Health to send text message reminders to mothers about childhood vaccinations. And Commercial Bank of Africa has partnered with mobile operator Safaricom, in Kenya, to deliver mobile banking services through its M-Shwari service rather than through physical branches. The partnership gives the bank, with just 21 physical branches in Kenya, access to Safaricom’s 19m subscribers.

This is an excerpt from Winning in Africa: From Trading Posts to Ecosystems written by Patrick Dupoux, Tenbite Ermias, Stéphane Heuzé, Stefano Niavas and Mia von Koschitzky Kimani and published by Boston Consulting Group.