HR Pulse

Numerous Businesses in Africa Could Achieve More with Funding

Africa has business people with the necessary skills to create large businesses and employ a significant number of people, but are hampered by financiers who don’t understand the dynamics of doing business on the continent. Numerous businesses could be achieving more if they had easier access to funding. Sales cycles can be long and equipment is often delayed at customs. These are some of the challenges faced by many under-funded small businesses.

However, comparing the African continent to the 1980s, it is now an immensely improved business environment. Across Africa there is a strong need for products and services. Most countries doing business in Africa have relatively good services themselves and tend to overlook Africa’s potential services market.

The continent also has huge potential in the agriculture and manufacturing sectors. There is a need to supply 1.1 billion people with food and specialist skills. Once again, financial institutions need to understand how Africa operates and how to meet its unique needs. Comparing Africa to the US, it has a diversity of culture, each African country having its own way of doing business, which potential investors need to first consider.

There is growing emphasis across Africa on local beneficiation, local employment and local partnerships. However, the consensus amongst many in Africa is that South African business people are arrogant. The problem is that many South Africans say “l am taking a trip into Africa”, but they are already in Africa but don’t see it that way. Therefore, are we as South Africans, African enough to do business in Africa?

With the positive changes across the continent in recent years, investors are moving directly into Africa, with the result that South Africa has lost its status as the launching pad into the rest of Africa.

China, Japan and even Israel, for example, are going directly into countries such as Kenya, investing billions of dollars, while South African businesses appear to not be seeing the opportunities. SA companies have a huge potential COMESA market, estimated at 440 million people, but few are pursuing these opportunities.

More South African businesses need to see themselves as part of the continent and its potential for economic growth and development. Countries such as China hunt in packs. They regularly send delegations into Africa covering a wide range of businesses. In South Africa we don’t do this. Businesses tend to do their own thing, operating in silos and not achieving as much.

When doing business in Africa it is also important to adopt a focused rifle approach rather than the traditional shotgun approach. In addition, companies need to have a presence in the country where they want to do business and not operate at arms-length. Appointing an agent who holds numerous other agencies generally does not work. It is better to have a local partner with experience and a track record.

Therefore, selecting professionals to work with is important. For example, a good freight forwarding company, with experience in a specific country, can save time and money, speed up customs procedures and generally help with running a successful business.

Doing business across the continent is not the easiest thing to do, however optimists see opportunities where many see hardship.