5 Reasons to Set up Shop in Africa’s Second Tier Cities

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According to The Economist, in 1950 there were no African cities with more than a million people. Today, more than 50 African cities have more than a million residents. By 2030, a full half of Africa’s population will live in cities. Most businesses in Africa seem to focus primarily on the major (Capital) cities, which may still have economic prospects, but major cities are becoming highly competitive. Here are five reasons why you should consider running your business from a Second Tier African City.

1. Non-congested Infrastructure

Most second tier cities have low morning traffic congestion and the infrastructure is not inundated with time-consuming traffic jams. This enables you to focus on your business instead of spending hours in traffic. The air quality and schools for your children are also generally cheaper in second tier cities.

2. Lower Cost of Living

The cost of rent, labor, and general living expenses are generally cheaper in second tier cities. This, coupled with the fact that you can sell your goods and services at a higher price, makes second tier cities very attractive for investment. Generally, your capital investment will go a lot further in second tier cities.

3. Low Regulation

Second tier city governments tend to be much more business friendly. It is usually easier to directly negotiate with second tier city governments on tax breaks, land allocation, and general government support. As cities compete for investments and as local politicians are eager to tout how many jobs they have brought in to their communities, second tier cities can be very flexible and are willing to make generous concessions to attract businesses.

4. Competitive Markets

Secondary African cities are less competitive because new entrants in African markets are usually focused on the primary cities which are usually already saturated with the same kinds of businesses targeting a limited customer base. Opening a business in a secondary market can give you the time, resources, and space to grow and refine your business.

5. Ideal for Agro Industries and General Manufacturing

Given the relatively cheaper cost of land, labor, and the general proximity of secondary cities to rural settings, starting an Agricultural or Manufacturing business, which can have vast land requirements, makes excellent economic sense near secondary cities.

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