According to the 2016 African Economic Outlook report, Africa’s annual GDP growth increased from around 2% in the 1980s and 1990s to above 5% between 2001 and 2014. The continent’s growth slowed slightly in the past two years but a 4.5% rise is forecasted for 2017.
This economic growth presents multi-national businesses with a good opportunity to expand north. However, these expansion plans can be hampered by many unexpected or even unknown factors. Without the right preparation and support, your company could face challenging payroll, HR and legal issues.
To expand successfully across the continent, avoid making the following assumptions.
One continent, one country
The African continent is actually made up of 54 countries. What’s more, each country has its own languages, laws, regulations and customs. A surprising number of foreign organisations forget this and embark on a one-size-fits-all approach to doing business on the continent. Your company may already be familiar with navigating Nigeria’s systems and processes for example, but don’t assume that this knowledge will help you establish your operations in neighbouring Niger.
Many companies also believe that all of Africa is corrupt. Bribery is not standard business procedure but a straightforward negotiation can become culturally complicated if not managed carefully.
Everyone speaks English
French is arguably more useful than English but these two languages, plus Portuguese, cover most of the continent’s urban areas. However, seeing as there are an estimated 1500 – 2000 African languages, no matter how tri-lingual you are, you will face a language barrier at some point.
There’s also more to understanding a foreign country than just language. A familiar knowledge of local expressions, colloquialisms, gestures and customs are just as important and will help you avoid any embarrassing or damaging ‘lost in translation’ moments.
Information is everywhere
Companies operating in more technologically advanced countries are used to accessing information easily online. Some African countries have a great digital network while others are still unconnected. Either way, don’t expect to find important legislative information online. This can be a major challenge as adhering to local laws is crucial to setting up an office in a new country.
It’s also very easy to miss regulatory updates which are sometimes put into effect overnight without any advance notice. Should you fail to implement an amendment, your business could be charged a stiff fine for non-compliance.
To overcome these challenges, most companies work with a service provider in each country to navigate the local legislative environment. This support works well for a business with interests in maybe one or two African countries. The bigger your expansion strategy though, the more your company will need a robust solution that transcends borders. What you want ideally, is to work with a local partner that operates across Africa and has the whole continent covered.
In other words, should your operations stretch from East to West, all you’ll need is one service agreement to manage one supplier relationship.
A successful expansion strategy doesn’t have to be fraught with frustration.
With the right knowledge and experience on your side, you can navigate the bureaucratic minefield with ease, stay compliant at all times and reap the real rewards of doing business in Africa.