Ten insightful quotes on doing business in Africa

Every week How we made it in Africa speaks to numerous business people, both African and foreign, who are successfully operating on the continent. Here are some of the highlights from our recent articles.

Liban Egal, chairman of First Somali Bank, says countries such as Somalia offer a once-in-a-lifetime opportunity for investors.

1. On seeing the opportunity in war-torn countries that are now stabilising (such as Somalia)

“It is a once-in-a-lifetime opportunity to see a country being rebuilt. We have seen it in Rwanda and Sierra Leone. Every time that happens it brings great opportunities … When a country has the kind of destruction Somalia has had, a boom follows. The opportunities are limitless.” – Liban Egal, founder and chairman, First Somali Bank Read more

2. On taking a long-term approach when investing in Africa

“Plan for a slow ramp-up. Given the operational challenges of Africa, gaining access to opportunities typically takes longer than expected. Take this into account when calculating return on investment into your market entry model. Allow your teams to learn, because this takes time in Africa. Also from an evaluation perspective, take a longer-term view to the profitability of operations in Africa. We typically recommend five to ten years. The individual countries can drop off for periods at a time – look at Kenya a few years ago with the disputed election results. It will be business as usual in a couple of years, so don’t pull out, but be prepared to put the business on hold or on maintenance mode for a while.” – Hendrik Malan, operations director for Africa, Frost & Sullivan Read more

3. On partnering with established players

“We have endless opportunities for companies to work with us. If you want an easy entry into Africa, come and offer the services to the companies who are currently there.” – Aidan Heavey, chief executive, Tullow Oil Read more

4. On tailoring strategies for the African market

“Many strategies that have worked elsewhere have failed dismally in Africa because investors have failed to recognise that Africa has a very different landscape and frame of reference to the rest of the world. Not being attuned to the consumer or neglecting to tailor strategies could mean that businesses are overlooking valuable segments of the market.” – Lwandile Qokweni, development director for sub-Saharan Africa, Carat Read more

5. On targeting low-income consumers

“The economy at the base of the pyramid is the future. Many multinationals for a long time assumed that the people at the base of the pyramid cannot be served and that they are not a viable market. That is the only frontier left in business. If you are not serving this particular group you will not be in business for long. The ‘kadogo’ economy solves social issues and helps improve the economic situation of many people.” – Michael Momanyi, general manager, Premier Gas Read more

6. On focusing on the opportunity, instead of the challenges

“This is not a perfect place. One thing that drives me crazy is people walking around trying to find heaven on earth … You have to take things into perspective and realise that you are not going to find a place that is perfect. Africa has a lot of countries with very interesting opportunities, and a lot of problems at the same time. Ethiopia is not immune from problems … Now stop focusing on the fact that there are still people out there that aren’t quite perfect, and let’s focus on the fact that this place does provide a very interesting conducive environment vis-à-vis its competitors.” – Gabriel Schulze, CEO, Schulze Global Investments Read more

7. On not painting the continent with one brush

“We tend to continuously refer to the opportunity out there as ‘Africa’, but there are over 50 countries in Africa. You can’t just consolidate the entire continent and say that’s the opportunity. You have to realise that one size does not fit all across this diverse continent and there in itself lies the challenge … For example, in Kenya the infrastructure is significantly better in urban areas than other African countries. But as you move towards the outlying areas, it becomes a lot less developed and hence results in a costly service model, as transportation costs increase as well as the involvement of more people in your distribution network. For example, when we are servicing the Nairobi market we can deal directly with key accounts, for instance Nakumatt, the supermarket. However, as we service the outlying areas we must deal with major distributers which then deal with sub-distributers which in turn deal with the smaller format stores that are typical of rural areas or small towns.” – Thushen Govender, head of business development, Tiger Brands Read more

8. On finding local partners

“The only way that something is going to work in Tanzania, specifically in communications, is to have an owner-manager culture, where you have someone on the ground who is responsible for the product and who has a share in the business. Who is going to work hard for someone else’s bank account?” – Ulric Charteris, co-founder, Roots Marketing Communications Read more

9. On becoming a market leader

“The fact is that it is easier to become a market leader in Africa than in other deeply competitive markets like China and India where you will have many competitors right behind you. But you need to know Africa to take advantage of the opportunities. It is the best time for Africa’s CEOs to charge ahead and capture markets. I would say invest now and invest smart. Think of Africa and let’s not just give its treasures away. The world has its eyes on Africa and we have to direct investment in a way that cares for the continent and develops it.” – Ashish Thakkar, founder and managing director, Mara Group Read more

10. On Africa’s consumers

“One of the things that have amazed us, is that it is a very brand-conscious market … Particularly in our west African markets, in Ghana and Nigeria … it is a market that travels extensively and has access to internet. It is amazing how sophisticated that customer is.” – Mark Turner, Africa director, Massdiscounters (a division of Massmart) Read more