Updated: Sep 17, 2020
Welcome to the third instalment of our 4-part series on expansion in Sub-Saharan Africa. MɅD Associates have been involved in a number of projects which had the aim to expand into new markets in sub-Saharan Africa (SSA) or to improve traction in SSA. In this series we provide some practical insights to assist those considering entry to, or building growth strategies for SSA countries (excluding South Africa)
Part 3 covers the market approach on the journey to expansion in sub-Saharan Africa through three themes.
Adopt a strategy that fits the local consumer and market and is designed to take advantage of some key market drivers
In our experience, the competitive landscape for almost all products, including sophisticated financial services and online offerings, is strong in most SSA countries and finding a unique competitive space is as difficult here.
SSA Markets are young and digitally savvy:
Connecting with the young consumers is vital in SSA given the population age distribution. These Millennials, like their peers in other countries, are mobile savvy but they also have a distinct Africaness. The growth in digital across the region has been a major factor in how the SSA Millennial’s view work. Today’s young urban African’s (especially in Kenya and Nigeria) are all about empowerment, social enterprise and social networking.
“They don’t want to become engineers but UX Designers. Doctors? No, they’re creating health apps. Lawyers? They founded platforms where you can contact a legal consultant. And they are doing all these from their homes, co-creation labs or their office-in-a-box. In Nigeria, the incursion of Elance, Freelancer and ODesk and similar platforms serves as avenues for this generation to explore their passion and creativity.” Franklin Ozekhome, Tink, Nigerian Market Consultant
Online shopping sites have grown in stature and popularity in the last few years. Mobile money platforms like Mpesa in Kenya and MyPaga in Nigeria are becoming de facto payment mechanisms and super malls are becoming shopping entertainment hotspots. The marriage of social shopping and mobile connectivity brings about a market for brands that have a story to tell and sell. Decoding the average social shopper to understand their mentality is as important as any other market where rapid growth is driving change in consumer patterns and consumer behaviour.
Each country has it’s own culture and sub-cultures – culture matters for business success
Local cultures are very different and deserve the respect that companies would pay to the diversity of segments in their home markets. This is demonstrated in the following examples which apply to Nigeria but not necessarily to other countries:
Women are strong in Nigeria and take many of the leadership roles and decision-making roles.
The business environment is led by highly educated leaders and the assumption otherwise has been the undoing of many South African executives we have worked with in Nigeria.
The country’s history and ongoing turmoil has brought about a resilience in people unlike many other regions. The Nigerian Spirit is “we never back down”.
Personal aspiration is a key motivator in Nigeria and the reason why they take on endeavours that seem impossible to some.
Where affordable, children are sent to England or to the US to be educated. Even so, local private schools have long waiting lists (an important factor to consider with expatriate appointments).
It is also very common for Nigerian’s to work for themselves. Most own a business or two and are involved in other business activities (even if employed full time).
Nigerians are very particular about their culture and traditions, even though they adapt and adopt other cultures to create a unique hybrid. Brands that know how to connect with the culture will definitely be on the rise.
In Nigeria (and in Ghana to an extent) the Afro-Cosmos and Afro Pop Culture is strong (much more so than we experienced in Kenya). Everything African from fashion, hairstyles, tattoos, music and local musicians is influencing today’s pop speak.
Partnering for success
Almost all successful ventures of international companies in SSA are built on local partnerships. We use the term partnership loosely here and don’t mean joint ventures but strong, often proprietary, partnerships in the value chain. AB InBev has strong local sourcing and distribution partnerships, Sasol builds unique community partnerships for economic development.
Partnerships are vital in successful African expansion not just for reasons of capability acquisition but also for it’s significance in the African culture, something that is often undervalued in the business case.
Many corporates shy away from partnerships, citing the need for control (and a majority share philosophy), lack of skills, investment requirements for managing these relationships, margin erosion in an already small market, trust issues, and a general lack of appetite for creating win-win shared investments. Investors see partnerships as complicating the investment whereas the partnering route seems to bear better fruit than alternatives in SSA.
In your growth strategy, consider how much more successful you could be if you could focus on your core competency and not have to create added benefit in all parts of the value chain, e.g. product manufacturing instead of distribution, offering a multitude of products instead of just one, using channels and insights competitors don’t have, and leveraging systems and infrastructures others have already built. In business cases it is typically viewed that one will leverage capabilities from internal sources but tends to ignore what we can leveraged from potential partners. An insurance example of this is given below, where developing exclusive partnerships with complimentary risk services creates differentiation and focus for the insurance business.
In part 4, the final instalment in our series, we will look at the investment journey and stakeholder management involved in making a successful expansion into Sub Saharan Africa.