South African companies have been slow off the mark when it comes to expanding their interests beyond local borders, while European and Chinese enterprises have been establishing infrastructure in some of the continent’s key markets for many years.
Yet with the rapid advance of mobile technology in countries like Nigeria, Ghana and Kenya, Africa is quickly becoming a continent rife with opportunity for local enterprises, particularly those in the digital sector. Digital spend increased by 58% in Nigeria alone in 2012, and other territories are demonstrating similar growth. The growth is driven by the gradual move from feature to smart phones as well as the advent of widespread m-commerce initiatives.
There’s no doubt that conducting business on the continent is riddled with complexities. In Nigeria, for instance, the business environment is characterised by a lack of trust, meaning that companies need to engage in difficult contractual negotiations and be paid upfront for their services.
Entering this type of market unprepared and unaided can spell disaster for small South African businesses with an eye to expansion. So how do these companies go about bridging the gap and establishing a successful and lasting presence in Africa?
The key to success in Africa lies in collaboration. Finding a trusted partner on the ground that understands the market not only reduces the hassle of having to negotiate the various cultural idiosyncrasies of an unexplored territory, but also exposes businesses to a number of varied and sometimes unexpected opportunities.
Rather than attempting to build a client base from scratch, businesses would be better advised to provide their services to locally based agencies, who can then in turn supply these as part of their offering to existing clientèle.
The lack of specialist digital skills in Nigeria, Ghana and Kenya means that agencies on the ground are now forced to look elsewhere in order to provide the level of service that their clients now expect. As a result, partnership opportunities are plentiful for local companies, who, thanks to internet technologies, can now supply their services without ever leaving South African soil.
In fact, it’s no longer uncommon for businesses to be working on a number of high-profile projects in pan-African markets from their hubs in Cape Town and Johannesburg without ever having set foot in the countries in question.
That’s not to say that partnering with agencies solves all the problems associated with doing business in Africa. Poor telecommunications systems mean that it’s not unheard of to lose contact with partners for significant periods of time, something that can prove frustrating for local businesses that tend to take these kinds of things for granted.
Yet despite the sometimes unexpected frustrations that form part and parcel of African expansion endeavours, the general consensus is that the rewards far outweigh the intermittent ordeals. With African clients boasting big budgets, and happy to pay in US dollars for the type of world-class service they require, companies that establish a strong presence in these markets can look to significantly boost their bottom line.
Africa’s doors won’t remain open indefinitely. With the continent’s burgeoning business landscape attracting increasing foreign interest and service delivery on the ground constantly improving, South African businesses need to move swiftly in order to make their mark on a continent bursting with opportunities.
Nick Durrant is the director of Bluegrass Digital, a global provider of cost-effective web solutions and online marketing services to a wide range of clients, with offices in London and Cape Town.