Seven tips on how to be successful in Africa’s consumer markets

  

Tapping into the hidden wealth offered by the African consumer markets requires a mindset shift. Large corporations have known this and have been in Africa for decades, right through the darkest of times. Today, opportunities are also opening up for small and medium enterprises, writes Nissi Ekpott

Tapping Africa's consumer markets requires innovation and shaping strategy to fit the context.

Tapping Africa's consumer markets requires innovation and shaping strategy to fit the context.

1. See beyond images of poverty, conflict, and corruption

Business decision makers need to see Africa beyond the caricature images of poverty seen on TV. They need to recognise the fundamental changes on the continent, which still has many problems. And, they need to be comfortable with Africa already being on an upward growth trajectory.

2. Recognise potential of growing youth population

An investor needs to recognise the potential of a growing youthful population, which offers long-term potential. Then, develop strategies to access this market.

3. Design innovative solutions

An investor has to design innovative solutions to harness this potential market. The African terrain is very challenging – tough, underdeveloped in many cases, and with multiple issues that could hinder business. Without an above-average emphasis on innovation, any African foray is doomed to fail.

South African companies have succeeded in this space; they are involved in over 2,000 projects across the continent. South Africa is among the biggest investors on the continent, if not the biggest.

Alan Knott-Craig, former Vodacom CEO, tells the story of deploying mobile phone base stations across rural areas, jungles, war-torn areas, etc. They found ways of being able to overcome the variety of problems in each of the nations.

Innovation should not be limited to product and service offerings only, but has to extend to pricing. It is important to look at ways of making it cheaper.

Craig’s story reflects one that is very common across the face of the continent. The level of innovation available at all levels in Africa is simply astounding. You cannot grasp it until you see it.

4. Know the market and develop appropriate strategies

Look beyond some of the “impossible” challenges and pictures painted by the media. Get on the ground and find out things for yourself. Do your own research. Look for value in the rough diamond. Learn from businesses, which are in Africa already.

You need to be able to reach African consumers at their level, offering them products they can identify with, and gradually guiding them up to what you see as global best standards.

Carry out thorough research of your target market, combining your personal research with information from other sources. Make wise business decisions, limiting risk and boosting impact.

The markets are usually fragmented and underdeveloped, if not undeveloped. Develop a strategy to organise the market. Start from major hubs and work outwards.

5. Leverage the African diaspora

Recognise and tap into the hidden strength of the African diaspora. It can bring resources and knowledge to create successful strategies for business in Africa.

6. Leverage African culture

Investors should understand and leverage Africa’s culture, taking advantage of social, faith-based, professional, and other networks, which are an inherent part of African culture. These cultural networks are one of the most powerful means to furthering any initiative and spreading any message.

7. Focus on the long-term

Invest for the long-term. Systems in Africa are not efficient in general, but improving. Things take longer than they normally should. This should not be a deterrent. The market takes longer to develop, but a long-term outlook will put an investor in a good place.

Conclusion

The African consumer markets are large and growing rapidly. However, the demographics are much different than Western nations. For example, the consumer markets are very young, fragmented, and have lower income levels than Western markets.

The key to tapping these markets is innovation and shaping strategy to fit the context and consumers. There are several mechanisms for taking advantage of these markets. You can focus your venture in areas with high population density like cities. You can develop a regional strategy to incorporate a larger number of fragmented consumer markets. Another approach is to adapt business models to incorporate both formal and informal markets, as well as address issues of affordability.

There is also a window of opportunity, from now through 2015, during which we see firms having the greatest advantage because the markets have not quite fueled up like in China. There will be a lot of opportunities for decades, but the next few years are particularly good for positioning your firm in the marketplace.

This article was first published in Redefining Business in the New Africa (2011). Click here to buy the book.



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