Boston Consulting Group (BCG) recently identified 50 emerging market companies that are winning customers with targeted and customised business models. These “local dynamos” are competing on innovation, rather than traditional sources of advantage.
Although these companies might not yet be global players, they are thriving at home. According to BCG, multinationals ignore these dynamos at their peril.
Five companies from sub-Saharan Africa were included in the list. How we made it in Africa takes a brief look at each of them.
Equity Bank (Kenya)
Equity Bank is a Kenyan-based banking group with operations across East Africa. Under the leadership of CEO James Mwangi, Equity was turned around from a technically insolvent building society in 1993, to a leading commercial bank.
Part of Equity’s success is due to its innovative ways of reaching rural customers, a group previously seen as unbankable.
Instead of expanding into the rural areas through costly bricks and mortar branches, Equity works through independent agents to deliver financial services. These agents operate under contract to Equity and are trained to offer basic banking services to customers.
Agents rely on smartphones to accept applications for new accounts. Applicant data is loaded onto the phone, while photos are taken of the applicant and supporting documents. Once signed up, customers can perform basic transactions through Equity’s mobile banking service.
Discovery Health (South Africa)
South Africa’s largest private health insurance company Discovery brought innovation to the sector by rewarding clients for healthy living. Through Discovery’s Vitality rewards programme, members get discounted gym membership and pay less for health food and other products from selected retailers. Members also qualify for discounts on everything from flights to movie tickets.
The company reportedly says the Vitality scheme pays for itself through fewer illnesses and hospital stays.
“What makes Discovery so intriguing is that it changed the rules of health insurance,” notes BCG.
Nigeria’s GTBank, one of the country’s biggest lenders, boosted its operations by leveraging internet and mobile technologies. Through its mobile money application clients can transfer funds, pay for goods and services, and withdraw money from teller machines without a card.
GTBank is also successfully tapping into social media, with over 2m Facebook likes and more than 145,000 Twitter followers. Last year it launched a social banking service that allows the public to open new accounts and get customer service support on Facebook. This was the first service of its kind in Nigeria.
According to BCG, GTBank is an example of a company that converted the constraints of the local economy into a profitable opportunity.
Zambeef is a Zambian integrated agribusiness company involved in the production, processing, distribution and retailing of beef, pork, chicken, eggs, milk, dairy products, edible oils, flour and bread throughout Zambia and in West Africa. The company operates its own retail and fast food outlets, while also managing pan-African supermarket chain Shoprite’s butcheries in Zambia, Nigeria and Ghana.
Expanding its operations in West Africa is a high priority for Zambeef. It has established processing plants in both Nigeria and Ghana, and plans to grow its retail footprint, both through its own stores and in association with Shoprite.
Woolworths (South Africa)
Woolworths is a South African-based clothing and food retailer that predominantly sells its own in-house (or private label) brands.
The company has expanded into the rest of the continent, and currently has a presence in 12 African countries. However, last year Woolworths pulled out of its three stores in Nigeria, citing high rental costs, duties and supply chain challenges.
Woolworths also sources clothing and agricultural produce from other African countries. For example, 10% of its clothing comes from Mauritius and Madagascar. In Tanzania, the company has partnered with a group of farmers on the slopes of Mount Kilimanjaro to grow organic coffee.
Woolworths recently increased its footprint in the Australian market when it bought department store David Jones. It also owns Australian clothing retailer Country Road.