Africa is on the move. The future is there. But Africa hides many different realities. Its regions are diverse, and countries within each region are very different as well. So, if your company –whether indigenous or foreign – is considering expanding into an African country, how should it go about it? Here are some do’s and don’ts of internationalizing in Africa – or more precisely, in sub-Saharan Africa (SSA) – based on some of my research:
- “Mind the gap”: we too easily fall into the trap of thinking that the country geographically closest to us is where we should expand. But business opportunities may lie elsewhere. Consider “country distance” in a broad sense. I shared insights about different kinds of distance dimensions in previous posts: Cultural, Administrative, Geographic, and Economic distance in line with my colleague Ghemawat’s CAGE distance framework.
- The “toothpick test“: you won’t get a full picture of reality by looking into official statistics. They give some guidance, but you need to be on the field to understand the true drivers of your business. This is what Mitchell Elegbe from Interswitch (Nigeria) calls the “toothpick test.” His company is in the electronic payment industry, so affluence is a key performance driver. When he considers expanding the business into a new country, he looks at whether people have a toothpick in their mouth. This is a way to show off in countries where good meat is scarce in the diets of certain population segments.
- Focus on social impact: this is not an extra, but an integral part of the business strategies of SSA companies. Someone told me “In the West, they say, ‘I am because I think.’ In Asia, they say, ‘I am because I become.’ In Africa, we say, ‘I am because you are.’ ” This translates into business strategies designed to benefit all parties, not just shareholders. Success goes beyond creating value for shareholders to encompass job creation and community development.
Any experience of do’s and don’ts for internationalizing in Africa?