Words of wisdom for doing business in Africa
“Africa is not for the faint-hearted, but it is the place to be,” Johan van Deventer, managing director of Freshmark, recently told the Africa Economic Forum conference in Cape Town.
Freshmark is a subsidiary of pan-African supermarket group Shoprite and responsible for the retailer’s fruit and vegetable procurement and distribution. Based in South Africa, Shoprite expanded into the rest of continent in 1995 with its first store in Zambia. Shoprite currently operates in 15 African countries outside South Africa.
In his presentation to conference delegates, Van Deventer outlined a number of issues investors should be aware of when doing business on the continent.
1. Africa has a combination of rich and poor people: Van Deventer says it is a mistake to think that the entire Sub-Saharan Africa is poor. “There are stinking rich people in all these countries, locals as well as expats, [while] the masses are relatively poor.” He says that Shoprite tries to cater for all these people.
2. Doing business in Africa requires patience and perseverance: “There are many frustrations, but you must just carry on and on and on.”
3. Operate with government support: Investors in Africa should seek to obtain government support in the countries they operate. “You must have the political blessing and a buy-in. Don’t try to get in by the back door. That is not going to work. Use your political contacts; if you don’t have, get some,” van Deventer notes.
4. Long-term commitment: Companies should have a long-term view on their investments in Africa. “A quick buck into Africa is not going to work.”
5. Involving the local population: “Local involvement is very important. In Freshmark’s case we prefer to buy local. You must have local support, you must invest local, you must do training,” Van Deventer explains.
6. Just because people are poor, doesn’t mean they want substandard products: Van Deventer says that even if one is dealing with the poorest of the poor, one should always offer quality products. He says that all people aspire to better themselves. “We are not going to open-up substandard stores and take old equipment. You must go and make a difference. Offer to people things they have never experienced or never seen before.”
7. Variety of languages: Investors should keep in mind that a variety of languages are spoken on the continent, which could affect operations. “In Angola and Mozambique, Portuguese is still very strong. [It has a] strong influence even on the consumption of product,” says Van Deventer. “You cannot export anything into Angola unless all your paperwork and all your labels are in Portuguese.”
8. Stay focused on the opportunities: “This is the place to be . . . with all its challenges. Let’s go and work hard. I know there are hurdles and [conditions in Africa] are not every day the way we would like it to be, but look through that [and] see the opportunities because they are ample,” says Deventer.