British small and medium enterprises (SMEs) should examine the potential for exporting their products to sub-Saharan Africa, where a growing middle class is creating interesting opportunities.
So says Hennie Heymans, managing director for DHL Express in South Africa.
“The timing is absolutely perfect… We are seeing an enormous growth in the up and coming middle class, which means that from a consumer spend perspective they are now ready to spend their money somewhere. I think that opens up an entire new market for SMEs out of the UK,” he said.
According to Heymans, British companies should find it relatively easy to export to South Africa due to a similar business language and the fact that the two countries have a strong historic commercial relationship.
“I think South Africa is in a wonderful position because the business language in South Africa is English, so… there should be no language barriers there. From a cultural perspective, [it should also be] pretty easy to do business. The two countries have been doing business with one another for an incredibly long period of time, so I think there is great sensitivity to one another’s cultures and way of doing business.”
To gauge the attitudes towards doing business with Africa, Barclays bank in 2012 conducted a survey with 250 prominent UK business leaders who trade with the continent.
Nearly two thirds (64%) of UK companies currently exporting to Africa said they believe opportunities will grow in the next five years.
While the majority of respondents indicated that UK exporters will take advantage of Africa’s improved trading landscape, only 17% think these companies will truly maximise the opportunity.
South Africa is the top African country for UK exporters, with 60% of respondents saying they currently export there. Other important export markets are Nigeria (37%), Egypt (35%), Ghana (24%) and Kenya (23%).
While there is general consensus that the business environments in many African countries are improving, numerous challenges remain. Just under 30% of companies exporting to Africa said it is “very challenging” to do business with the continent. This was less of an issue for smaller companies (< £5m turnover), of which 37% referred to doing business in Africa as “straightforward”. In comparison, only 21% of larger companies (>£100m turnover) responded in the same way.
The biggest opportunity for UK companies in Africa stems from the reputation of British goods and services, according to 32% of respondents.
DHL’s Heymans also highlighted the perceived high quality of British products. “The label ‘Made in the UK’ means a lot… It has kind of set a benchmark of style and quality and good products all round.”
Areas of opportunity
Heymans said the fashion industry holds significant potential for British exporters, especially considering the growth of e-commerce in Africa. “I cannot tell you the amount of wedding dresses I’m actually importing from the UK for our base of customers in South Africa.”
Sporting goods, especially cycling equipment, is another area where British exporters could find a good market in Africa. Cycling is one of the fastest growing sports in South Africa, and is predominantly practiced by high-income earners.
According to Heymans, British companies need to make themselves known in the African market, and ensure that consumers understand “they are a click away”.
“I think the continent is absolutely ready to get some more products in from the UK,” he said.