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Expanding into Africa

Four South African ICT veterans share the single biggest challenge they faced when moving into Africa.

Understanding the market

"While every region is different, overall, the African market might be seen as a tough one to crack. You have to understand the market conditions, and only the tough survive. Africa has the highest concentration of high growth and rapidly emerging markets in the world, presenting huge potential growth opportunities. But not every international vendor expanding into Africa has been successful when entering this market. Some have placed expat staff in African countries and had to close offices when security risks became too high, and some have found the business culture too foreign for them to operate successfully.

Perry Hutton, Fortinet Perry Hutton, Fortinet
"We believe understanding local conditions is crucial for success, which is why Fortinet’s model entails hiring local direct touch staff to represent the company in key regions, who then service local channel partners in their countries and neighbouring countries. They understand the local market and business culture, and are more successful than foreign representatives in engaging with the channel in those areas. We started expanding beyond South Africa into the rest of Africa in 2007 using this model. Now South Africa is less than half of our business in Africa, and some markets – like north Africa – are achieving near 50% growth year-on-year.

 

Communication 

Louise Robinson, Database 360 Louise Robinson, Database 360
 

"We’ve been successfully introducing multinational companies to Africa for the past six years. Overall, we feel Africa offers more opportunities than challenges, but if I had to identify the single biggest challenge in doing business in Africa, I’d say it was communication – both in terms of physical communications infrastructure and the ability of multinationals to communicate with African companies across language and cultural differences. Multinationals moving into Africa are often surprised to find that processes take far longer than usual in a Western context. Across Africa, it’s common for delays to occur owing to a lack of transport infrastructure or materials, owing to red tape, or because slow customs processes hold up the works. In some regions, time is not of paramount importance and people could take months to respond to queries.

"In many areas, bedding down a deal takes extensive relationship building – companies who think they’re going to fly in and leave with a signed deal are making a big mistake. In addition, Western-based multinationals sometimes make erroneous assumptions about products and services African markets want and need – what works in the West may not work in Africa. With 54 countries, each with its own languages, cultural norms and infrastructure challenges, multinationals need to work through local partners who can help them understand local markets and communicate across the language and culture barriers."

Geographic spread

"Like any emerging market, Africa offers more opportunities than challenges. I travel through much of Africa and I’m excited about the revenue potential. The perception that Africa lacks infrastructure is quite wrong – major centres like Nairobi and Lagos now have highly functional business hubs supported by advanced ICT infrastructure. While it’s true that relationships and trusted connections are important when doing business in Africa, a multinational entering Africa can get around this by going in through local partners, as Riverbed has done with great success.

Hanli Wood, Riverbed Hanli Wood, Riverbed
"However, what can prove challenging is Africa’s sheer size. We strive to enable our distributors through ongoing knowledge sharing and training. To do so across a continent as vast as Africa has required some innovative thinking. It’s difficult to get extensive face-to-face time with partners across the continent, so we use Webex training, which works very well for us. We do monthly training at set times, and our whole sub-Saharan African partner community is invited. We get a very good response, with most partners participating regularly."

 

 

 

Popular misconceptions

Simon Campbell-Young, Phoenix Distribution Simon Campbell-Young, Phoenix Distribution

"When Phoenix Distribution began its expansion into African countries after 2008, it came as a huge surprise to us to discover that selling products from a hub in South Africa was never going to work for countries north of the SADC region. Businesses in Central, East, West and North Africa have been buying out of Dubai for years, and they prefer to consolidate all their procurement and shipping in a single shipping container out of Dubai. It’s the way they’ve done things for years. For them, shipping from Dubai is simpler and between 5% and 8% cheaper than shipping out of South Africa.

"Possibly due to good old-fashioned South African arrogance, we initially assumed we could serve the market from South Africa. But through face-to-face meetings with players in East and West Africa, we quickly realised a presence in Dubai was going to be key to our growth in Africa. Establishing a presence in Dubai and regional offices in East and West Africa were good moves for us: currently, 40% of our channel business comes from north of South Africa’s borders and this business is growing strongly, in line with our African growth strategy.

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