Frontier market economies in Africa are predicted to grow higher in 2016 relative to the well-known emerging countries. Indeed frontier markets are where populations are growing and urbanizing rapidly, household disposable incomes are increasing and the taste for sophisticated consumables are rising.
The interesting part is that both local and international firms are competing to satisfy the growing needs of African countries, but is your firm well positioned to take advantage of the economic opportunities frontier markets present?
According to a Boston Global Consulting (BCG) report titled; Dueling with Lions: Playing the New Game of Business Success in Africa released in November 2015, multinational firms, which have historically been the major source of manufacturing and supplying African consumers, are losing out of the competition to what the BCG calls African Lions-companies based and grown out of Africa that are able to withstand and win market competition from multinational firms. What is the winning strategy of these African Lions? According to the BCG report, these companies have the four Fs: focus, field, facts and flexibility.
Whether you are a local firm or an investor based in or looking to invest in Africa, these four Fs can provide input for your strategy in 2016.
Focus: African lions are winning because they consider the continent to be their primary market and source of revenue and hence give it all their attention. This has been seen in the emergence of pan African businesses, which spread across regions. For your winning strategy in African business, give it all your attention. Consider putting in place resources to give your company a permanent face on the continent, make your business visible and strengthen partnerships.
Field: On the ground experience, gained through many years of living, working and understanding the culture of African business is an advantage to African Lions. Being overly professional and disregarding cultural practices is not the way to do business in Africa. CEOs of the firms categorized as African Lions, are down to earth, build strong personal relationships and understand that not all agreements need to be formalized, according to BCG. Also, more importantly, the erroneous notion that Africa is one country should be done away with. Africa is a continent with 54 countries with different levels of populations, economic development, cultures, histories and laws. They also speak different languages.
Facts: It’s the norm that business decisions are made based on accurate data, however, in Africa accurate data is not a given. To win, firms investing in Africa need to gather information through innovative strategies and use personal judgement. Also, the traditional view of Africa as a high-risk continent must give way to a thinking that juxtaposes risks and opportunities and puts in measures to mitigate them.
Flexibility: Applies where your business processes, products and activities are tailored to local conditions. Innovative businesses using mobile phone technology are increasing in Africa and flexible firms are taking advantage of these for payment systems in doing business.
The rules of doing business in Africa are changing, see the opportunities and take care of the risks, but by all means take advantage of the opportunities.
Best wishes in 2016.
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