Establishing operations in a new country or continent can be challenging for any company. For those looking to expand to Africa, one way to enter the market could be through providing services to companies already on the ground.
One such company that is looking to outsource a lot of its non-core operations is Indian agribusiness company Karuturi. The company owns a 100,000 hectare farm in Gambella province, in western Ethiopia.
Karuturi’s core business is the cultivation of crops like cereals, rice and sugar. It wants to outsource activities such as packaging, the running of maintenance workshops, fuel stations for its farm vehicles, fleet management, construction, and the establishment of facilities such as sugar and palm oil mills.
“Our core business is growing, and we would like to outsource whatever is possible to local Ethiopian investors and foreign investors,” said Sai Ramakrishna Karuturi, the company’s founder and managing director, during the recent Ethiopia Investment Summit, held in Addis Ababa.
During a separate session at the same conference, Birinder Singh, who heads up Karuturi’s Ethiopian agriculture operations, said his company will create legally sustainable models for foreign investors to work with Karuturi.
An easy entry into Africa
These opportunities to work with established companies in Africa are not only available in the agricultural sector.
Tullow Oil is also looking for service providers in Africa. “We have endless opportunities for companies to work with us. If you want an easy entry into Africa, come and offer the services to the companies who are currently there,” said chief executive Aidan Heavey in a recent interview.
Tullow has major investments in Africa. It currently operates in 15 countries on the continent. Tullow is producing oil in Ghana and is expected to start pumping crude in Uganda later this year. In March the company also announced an oil find in Kenya, although the commercial viability is yet to be confirmed.
A company that has successfully managed to enter African markets by partnering with a large player is South Africa’s Stuart’s Joinery, a shopfitting business.
The company has been responsible for South African retailer Woolworths’s shopfitting since the late 1980s. Woolworths has, however, expanded into the rest of the continent – and so has Stuart’s Joinery. The company has already completed 14 Woolworths stores in seven African countries.
Stuart Hopley, founder of Stuart’s Joinery, says that for a small business looking to supply services to a big company, it is essential to do one’s research. “Know the prospective company’s current business practices relating to your product/service and know who you are competing with. Only then can you make a persuasive argument on why doing business with your small business will be of benefit to them.”