Swiss small and medium enterprises (SMEs) are realising Africa is the last ‘frontier’, and are excited about the significant business opportunities the region has to offer. At the same time they recognise the potential risks and challenges, and are unsure how exactly to enter the market.
This is how Charles Brewer, managing director of DHL Express for sub-Saharan Africa, describes the general feeling of Swiss SMEs that attended a recent Africa business conference in Zurich. Brewer also delivered a presentation at the event.
During his talk, Brewer painted an honest picture of the continent’s business environment – highlighting the numerous opportunities and how companies have navigated the many unique challenges the continent presents, whilst not shying away from the hurdles foreign companies can expect to encounter.
“Africa has the potential to be a lucrative market for European SMEs, but companies should anticipate running into some unique challenges along the way. Proper research and partnering with trustworthy organisations on the ground in Africa is therefore essential,” explains Brewer.
In terms of logistics many African countries still face challenges related to infrastructure, including the local customs environment and clearance. These are however not too dissimilar from what Asia Pacific experienced not too long ago, and is improving rapidly, according to Brewer.
He says DHL’s own growth is testament to what can be achieved in Africa. Over the past years the company has seen good market share gains, and strong volume and profit growth.
“The key is to recognise the opportunity and not focus so much on the risk. A good example of this is DHL’s significant and accelerated expansion of its retail presence, from 300 outlets to over 3,000 in less than two years, designed to tap into the rapidly growing African SME segment.”
“However, and because of the relatively embryonic state of the manufacturing sector, Africa’s economic progress is likely to be more akin to a marathon, as opposed to the 100m sprint we have seen in Asia Pacific,” notes Brewer.
Market opportunities for Swiss companies
Switzerland has been ranked by the World Economic Forum as the world’s most competitive economy, scoring especially high in terms of innovation. Switzerland’s sophisticated scientific research institutions, along with other factors, make the country a top innovator.
While the country is most well known for producing watches and chocolate, Switzerland excels in a number of other industries. Swiss companies with a presence in Africa include insurance firm Swiss Re, food manufacturer Nestlé, healthcare company Roche, and media house Ringier, to name a few.
According to Brewer, Africa provides a ready market for a number of Swiss goods. An area that holds particular potential is technology products, from video conferencing equipment to consumer electronics.
“Africa has a billion people with growing disposable incomes, and they all want to buy the latest gadgets and gizmos. The growing private sector also requires technology to make their businesses run smoother.”
DHL sees additional opportunities in industries such as food, life sciences, banking and automotive equipment.
When it comes to investing in Africa, Brewer likes to borrow shoe company Nike’s slogan and tell foreign companies to “just do it”.
“First mover advantage is incredibly important in business and those companies that are already doing business in Africa will have a significant advantage over everyone else once Africa’s economic development reaches a point of no return,” he explains.