“Anyone with an export strategy should not ignore sub-Saharan Africa,” stresses Suhail el Obeid, Africa Consultant at Switzerland Global Enterprise, right off the bat. One reason for this is the diverse potential in sub-Saharan Africa, encompassing areas such as airport construction, expansion of the railway network, medical products and equipment, the energy industry (increasingly also sustainable energies), mechanical engineering, consumer goods, drones, payment options by smartphone, and even agriculture. “There is business potential in almost all areas,” says Suhail el Obeid.
A second reason to examine market entry is the increasing level of purchasing power in African countries. More than one billion people already live on the continent, and by 2050 there will be two billion. Africa is thus developing into the second largest market after Asia.
Economic growth: African countries in the top ten
The third reason is the economic growth in the countries of sub-Saharan Africa. According to World Bank figures, five African countries are among the top ten in this regard, including Ethiopia, Ghana and Ivory Coast. “Of course, economic growth is also strong because the countries have a smaller base, but they are undoubtedly showing development and increasing dynamism,” says Suhail el Obeid. “For example, the markets in Kenya, Ethiopia and Nigeria are currently developing very well from the perspective of Swiss companies. Particularly worthy of mention is Nigeria, which has replaced South Africa as the largest economic power on the African continent.”
As promising as these facts sound, not every export market is suitable for every SME. Serious preparation is also required for market entry into a country in the sub-Saharan region, and one important tool in this regard is market analysis, which shows companies whether and how much potential exists in the market. Switzerland Global Enterprise supports Swiss companies by preparing a market analysis on request. Additional information
Challenges in market entry
Even if there is business potential in sub-Saharan Africa, there are always barriers to sustainable market entry. “Some countries in Africa take a strong protectionist stance to protect their own economies.” According to Suhail el Obeid, this is reflected in import bans or product registrations, which can involve very lengthy and complex processes. Pharmaceutical and medical products are a particularly sensitive area and involve lengthy procedures. “In addition, companies need to know and understand the market, as well as build and maintain a network to generate sales, and this takes time and sometimes also money.” Despite these hurdles, Suhail el Obeid is convinced that entering the market in a country in sub-Saharan Africa does not have to be more difficult than in other countries. However, companies should allow sufficient time for this. Successful market development in African countries can take from several months to several years.
Respecting cultural differences
In addition to the barriers to entry, companies must also take account of the culture. According to Suhail el Obeid, there is no general recipe for dealing with African business partners – the region is too large and diverse for this, so regional differences need to be identified and considered in advance. Depending on the culture, cultural missteps are difficult or almost impossible to correct afterwards.
Communication between Swiss and Africans can become a stumbling block in this regard. “Swiss companies often prefer email to telephone for communication purposes.” In African countries, on the other hand, emails can sometimes be regarded as very non-binding and may only be answered very late. In such a situation, Suhail el Obeid recommends not immediately putting an export project on ice, but rather meeting regularly with the potential business partner in Africa so that confidence can be reinforced. “If necessary, working with a local distributor can help to mitigate such problems.”
Check your potential for exporting to Africa
In conjunction with a worldwide network, S-GE supports Swiss companies with their export projects and helps them to evaluate their business potential and to master their market entry.