Business Opportunities in Africa
Many business people who have not been to Africa, don’t realize the potential scale of market opportunities there. While most of the technologies that you’ll find in the western world can also be found in the major cities all across the African continent, in many instances the scale is not the same and in most cases the main problem is with infrastructure.
Apart from possibly South Africa whose infrastructure is quite advanced in comparison to other African countries, there are still massive requirements for transportation infrastructure (roads and bridges), electricity, water treatment and waste water treatment throughout the whole continent. Traffic congestion in most major cities in Africa is a real problem, because the roads and highways are not in excellent condition and there simply are not enough of them. Using Tanzania as an example, with a population of over 53 Million, there is a current capacity of 2000MW of electrical power. Compare this to 150,000MW of power generated by Canada with a population of 35 Million. Clean tap water, water filtration and waste water management are problems which, in many cases have to be borne by businesses throughout the continent.
Costs and problems associated with private electricity generation (diesel generators mostly), additional transportation costs and costs for water treatment are extra financial burdens to businesses in Africa which are almost an afterthought in the western world.
While infrastructure companies would be an ideal industry to take advantage of these needs throughout Africa, it is easier said than done. Not all governments are stable enough to guarantee payment to companies willing to come in and invest for the good of people in Africa and with these additional risks involved, many companies avoid these markets altogether. This being said, there are literally hundreds of other industries with solutions, which, if marketed and scaled correctly have limitless potential in Africa.
It is not only the massive scale infrastructure project types that can have success in Africa. In fact the opposite may represent an even better opportunity. Many industries have low cost to market entry barriers because their goods are inexpensive to build (low cost building supplies, electronics or personal clean energy solutions) and/or they have already been built and are being amortized (business software for example). The only parts that remain to be determined are which markets should be tapped into, and which partners should be used to work in these markets. Getting a good reliable local partner is the key to success in any foreign market.
There are many resources available to help in finding the right partner, like your country’s foreign trade services offices and foreign business consultants. Many of these resources are not too expensive for a small to mid-sized company ready for international expansion. The opportunities are numerous in many categories, provided that your offering has a solid value for the cost. If you find that your company has an offering with large value, and you want to see it grow large globally, finding markets to expand to in Africa is a solid strategy, as long as you go about it in a smart way offering value to your local partners as well.
It is important to think outside your comfort zone when wanting to grow your business. Growing to other western countries has its advantages, however if you have a product or service that can make a difference to many people in markets where you may not have much competition, Africa has the potential to be a bonanza and neither the distance or unfamiliarity of it currently should dissuade you from growing where the growth is.
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