Five business strategies to increase your success in Africa

As an Africa business coach I have come across a recurring problem: ad hoc decisions driven by immediate gratification win over long-term strategic goals. In short, as Africans we make widely emotional decisions when we plan and start our Africa businesses and that usually compromises the competitiveness of our ventures.

Dr Harnet Bokrezion

Dr Harnet Bokrezion

Africa presents an amazing pool of opportunities and in most sectors demand exceeds supply by a mile. Yet in order to create a truly successful business there is a huge need to build your venture on well-informed, strategic decisions. Your choices should largely be driven by Africa’s market dynamics, not by personal preferences or perceptions.

Here are my top five business strategies that will surely increase your success rate:

1. Consider a country’s risk-opportunity ratio for startup and expansion

You should choose the location for your Africa business model based on assessing the risk-opportunity ratio of that market. When basing your choices on personal preferences, you tend to overlook risk and overestimate opportunity. Therefore an objective assessment of several markets in Africa is vital. The most favourable business environment exists in the low risk/high opportunity category, but experience and strategic decision-making can earn you considerable rewards in high(er) risk/high opportunity environments, and you may also be able to develop strong industry niches in low risk/low opportunity locations. You should avoid the final category, high risk/ low opportunity, yet many don’t.

Risk awareness and management need to be integrated factors in your business strategy, but rather than basing decisions on risks per se (as many moving into Africa do), be driven instead by the level of opportunity and then accommodate the factor risk accordingly. It’s simply a better success strategy, as it is forward-looking and dynamic.

2. Consumer-oriented scalability

Unless you are a million-dollar investment firm looking at long-term profitability, you will increase your success rate many times over by introducing and selling products and services that are both consumer-oriented and scalable.

The reason is simple: although market growth is driven by multiple factors, the demand of African consumers is currently the most dynamic and fastest expanding element. So revisit your business model. If your main clients are governments, public institutions, or a limited number of other bodies which are not only less responsive but where you also quickly hit the ceiling, you will find it much harder to succeed and expand. Instead, target consumers or businesses that supply directly to a big segment of end users.

However, targeting consumers and meeting their needs is not sufficient. If you are offering a product or service that is not easily replicable outside a certain segment of the population or across national borders then your business model has low scalability. It’s potentially a poor choice, and one which can limit or cost you considerably. Africa is a large emerging market with low competition in need of basic products and services, and the potential of large scalability will be one of your best advantages.

3. Local partnerships

Building valuable partnerships is a sound strategy for success in any business, but the benefit of local partnerships from an early stage (during planning or shortly after entry) take it to a whole new level in Africa. This is particularly true if you are not a national of the country in which you are operating. Local partnerships are extremely valuable in manoeuvring your business through a range of challenges you will face in Africa, in increasing impact and revenue through avenues you may not have previously considered or thought possible, and in gaining greater acceptance locally, which has been described by many analysts as an important factor for sustainability and profitability in the region. Local partnerships can also be an effective risk management strategy, as these links are often priceless when mitigating the impact of unexpected risk.