When trying to understand the commercial opportunities across Africa, it’s best you start with getting a “50,000-feet” high-level bird’s eye view of the market before taking action.
Africa is home to 1.3 billion inhabitants.
The entire continent can hold the US, Europe, China, India, and Japan combined within its borders. There are 1000 – 2000 languages spoken across 3000 tribes over 54 countries.
Before you get flustered with where to start or spend your time in unprofitable markets, it’s good to have the right context of the geographical and socio-economic landscape of the continent.
Start by understanding the cultural diversity across the continent.
Africa’s GDP is projected to grow to $29 trillion by 2050.
The most youthful population (with 60% of the population under the age of 25) will see economic growth driven by its young workforce, rapid urbanization, digitalization, AfCFTA, a push for diversification, and a focus on reducing the infrastructure gap.
That means there’s a lot going on in this dynamic market.
Due to the vast size of the market, you can break down this high level view by thinking of the continent in regions.
There are five main regions in Africa – North, West, East, Central, and South Africa. Each region has its pros and cons economically, geographically, and politically.
According to the Africa Regional Integration Index (ARII), the East Africa Community (EAC) is the region with the highest mark on overall regional integration.
Although certain regions have commonalities like the shared currency of the Central and West African countries, it is important to note that each country varies in business culture and the commercial opportunities across Africa.
For instance, under the ECOWAS (Economic Community of West African States) agreement, there is free movement of people between countries but a high level of cultural and language differences.
It is the adept understanding of these cultural nuances that separate great business developers from the others.
If you are new to any of these regions or countries, find the right local guide that will bridge the cultural gap and help with your business development goals.
It is important for people looking for commercial opportunities across Africa to be clear on where their customers are and how their solutions can help these customers achieve success.
The main industries across Africa are mainly commodity-based. With countries relying on the export of their natural resources as a main generator for revenue.
However, there is a push by governance for economic diversity that is driving the projected growth across the region.
Agriculture is Africa’s largest sector, representing 15 – 20% of the continent’s total GDP. The share of GDP per sector varies from country to country.
Agriculture, agro-processing, construction, telecommunication, consumer goods, oil & gas, mining, healthcare, and financial services are the main industries across the major markets in Africa.
So what does your organization offer?
Equipment for farms? Pumps, valves, drives, and automation for residencies and factories? Computer hardware and communication devices? Capital for the entrepreneurs building these enterprises? Medical devices for healthcare providers?
Having an understanding of the industry and how they cut across countries in Africa will help you orient towards the addressable market for your industry. This will give you an estimate of how much market share you can hope to gain from tapping into the market.
Main markets for commercial opportunities across Africa
Another way to view the opportunities across Africa is by looking at the main markets.
South Africa, Nigeria, Egypt, and Kenya account for 46% of the total GDP across Africa.
According to the African Development Bank “Nigeria, Egypt, Kenya and South Africa account for about a third of the incubators and accelerators and 80% of investments in Africa.”
Each of these markets are major hubs within their region also.
By understanding the major markets and the opportunities within each one of them, you can develop a more tailored approach towards that market. If you are a manufacturer and you’re looking for new markets in Africa, you may want to start with these “top choices” of markets as a preliminary point of access.
You also want to stay clear of any landlocked countries because it will be a logistical challenge to get to your customers in a country that does not have access to sea ports.
Understand the tangible addressable market, the needs of your customer base, and the unique value proposition to offer them in order to localize your product to meet the needs of the market. But before you do that, you first have to prioritize the top markets or regions across the continent that will give you the best chance for growth.
The size and diversity of Africa presents a lot of opportunities for innovation but also presents a lot of challenges for business developers looking to expand across the continent.
With varying levels of macro-economic, socio-political developments, and currencies, having a clear and coherent Pan-African strategy can have its challenges.
However, having a high-level aerial view of the continent allows you and your organization to develop clear goals, long-term visions, and a pragmatic approach to business development in the next great commercial frontier of the world.