6 Reasons To Consider Expanding Your Business Within Africa

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Have you considered starting a business or expanding your current business within Africa? With a combination of drive, determination, and skill, you can build a great business within Africa. Here are six reasons why opening shop in Africa could help build your business.

1. Africa’s Economy Generally Growing.

According to The WorldBank, 7 of the world’s 12 fastest growing economies are in Africa. Ethiopia, DRC, Ivory Coast, Mozambique, Tanzania, and Rwanda are some of the fastest growing countries in the world. These countries need goods and services. Africa’s population, with an average age of 19, is has the youngest in the world.

Expanding your business to these countries can give you a first mover advantage while you leverage the investment friendly environments created by the governments of countries like Rwanda, Ethiopia, and Ivory Coast to quickly setup shop.

2. Expanding Can be a Hedge Against Political and Policy Instability.

Expanding into other parts Africa can be a great hedge against political and economic instability. It was not uncommon for even economically prosperous countries like Ivory Cost and Zimbabwe to have political frictions that grids business to a standstill. Having regional offices could ensure that your business is not bankrupt by instability.

It is also not uncommon for populist governments in Africa to ban certain commodities without adequate notice. An example of this happened in Nigeria when the government banned mini generator sets and the importation of certain essential commodities without much notice.

3. Most African countries
 have a low cost of entry .

The entry cost of most African markets is relatively low. The cost of labor, rent, and taxes are low compared to other parts of the world. A relatively small investment could make one a leader in the market or at least a major player. Leveraging ones existing knowledge and tweaking it to suit the needs of the market you are expanding into, should make the cost on entry low.

Expanding your business controlled by the main office results in economies of scale. Fixed costs, such as selling and administrative expenses, become distributed between locations.

4. Increase Customer Base

Expanding your business into other African economies gives you the opportunity to expose your business to a broader customer base. This increased pool of potential clients can significantly improve sales, resulting in improved profitability. Clients, like employees, are significant in operating a successful company. Expanding to other countries, when done right, can place your business in the forefront of clients’ minds.

5. Discover New Market Opportunities

Given the economic, financial, and infrastructural similarities within African economies, expanding into new markets could give you data and insight to create new product lines and also give you the opportunity to cross-sell and up-sell existing products and services. An Information technology firm might identify a profitable niche sector in creating biometric ID and security system.

6. Focus On Your Business.

Expanding to another country helps you focus on your business while avoiding the distractions on your home country. Most Africans definition of family is every extended and it is not uncommon for these family members to have un announced visit to your office during working hours to share various financial troubles they are encountering.

These visits and their associated financial demands from extended family is correlated to the visible progress of your business. You can ignore some of the demands but they will definitely come with demands you cannot turn down. Expanding to another country will shield both your business and time from distractions.



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