With its emerging economies and its competitiveness in terms of labor costs, Africa is emerging as the new space to conquer. To succeed, however, it is necessary to understand the many facets.
With a market that will weigh 5,600 billion dollars in 2025, including 2,100 billion for household consumption, Africa has a strong potential for business opportunities. That said, to avoid unpleasant surprises, every entrepreneur must impose himself to know and understand the environment in which he will be called to evolve. Indeed, each country has its cultural and political realities and these can not fail to impact the economic activity, hence the interest of ensuring to be in tune with the environment in which they bathe. This information is decisive in the choice of the sector of activity, but also possible partners, as well as to establish good relations with local political decision-makers. Because cultural shock can be brutal.
Rebecca Enonchong, founder of start-up AppsTech, a leading global provider of business application solutions, based in Washington and a fixture in high-tech, knows something. Returning to Cameroon a dozen years ago, she was confronted with the observation that “in Africa, in the business relationship, everything is built around suspicion”. “It took me years to understand that,” she says.
Some entrepreneurs, such as Morocco’s Mourad el-Mahjoubi, director of Visiativ Africa, a company specializing in setting up digital platforms based in Casablanca, first experienced a first work experience to dive into the local culture. “Starting from scratch by moving to Casablanca with my wife and three children to develop a business on a continent I did not know seemed risky. Especially when faced with different images of the continent: security problems, lack of resources, delay on health, education, immature market, corruption …, the list is long! Elements that did not discourage this forty-year-old graduate of EM Lyon. Yet, according to the latest Doing Business report, African countries are the ones who have reformed the most to improve the business climate and thus facilitate entrepreneurship. But there are steps that allow you to move from the idea to the project more serenely.
Adapt the idea to the environment
In Africa, efforts are generally made to improve people’s lives. We are so far from developed markets, where almost everything already exists. In fact, if every day there are companies that go up, there are also many who do not go beyond five years. It is therefore necessary to respond to a real need and think carefully before embarking on such an adventure. There are two possibilities for future entrepreneurs: either you have a precise idea of a project, a product that does not yet exist or that needs to be developed – and you leave to create this service – or you leave to create in Africa a product or service that has already proven itself elsewhere.
Especially take into account the informal sector
Given the diversity of African markets, it is important to choose the market where you want to set up. While taking into account the regional dimension of the continent, you should not lose sight of the weight of the informal sector. This may be where your potential competitors are. Shopkeepers, mechanics, plumbers, masons … here is a list of trades occupied by people in the informal sector, but not only. Sometimes, there are also medium-sized groups with proven longevity that do not play the formal game. This demonstrates a great heterogeneity of the informal economy in sub-Saharan Africa. In any case, it is important not to be limited to official data. Once you are sure you want to get started, the job of prospecting is still there to better tie your business plan. “Upon my arrival, I prospected and that’s how I started to understand the economic fabric of the country and especially to identify the organizations that could help me in my development,” says Mourad el-Mahjoubi. And that’s where the investment promotion agencies come in. The interest of these public structures is to bring a greater visibility to the economic actors on all the steps and the regulatory obligations. But be careful, warns Rebecca Enonchong: “On paper, it seems easy! Many countries promise that you can open your company in twenty-four hours to a one-stop shop, but in practice, know that it does not always work! In some countries, such as Morocco, these dysfunctions have been corrected. And Mourad el-Mahjoubi explained: “These first reflexes allowed me to sign my first business and recruit my first employees. ”
Recruit the right profiles: the other big job
According to a PwC study, 90% of African leaders are struggling to recruit. It is therefore a strategic element that must be taken into account in order to anticipate any difficulties. Not to mention the volatility of good human resources, which can be fatal to a growing SME. It can indeed lose its best elements too early, which can not fail to be detrimental to him. “It is true that one of the problems of the business world in Africa is the subject of human resources. Lack of commitment, lack of membership, lack of attendance, abandonment of post, etc., says Mourad el-Mahjoubi. Having had negative experiences on experienced profiles, I opted to recruit young graduates out of school on which I invested in training and support in the control of our solutions. My goal is to create my own corporate culture. ”
What about financing?
African SMEs are struggling to find financing. Certainly, there are more and more banks and investment funds that say they are ready to finance SMEs, but the reality is different. You have to rely on yourself first. Rebecca Enonchong explains to young start-ups: “At first, you do not need financing outside of your customers. You have to know that investors do not invest in ideas, but in companies. So, if you already have paying customers, it’s much easier to attract investors or business angels. ”
“It’s a very difficult step, because you have to have a clear idea of the amounts you need. Ideally, you just have to find an optimal amount to start. And, at each step, repeat this exercise, “says Cédric Atangana, head of Infinity Space. In recent years, fundraising has become a major issue for entrepreneurship. One only has to watch the craze of investment funds jostling. However, the selection is always very strict with demanding criteria!
How to ensure the steps?
It is best to delegate to recommended people to avoid wasting monstrous time and stay focused. Do not neglect the question of the relation to time. It is a different time that governs the movements and decisions on the African continent. Undertaking in Africa is therefore a real challenge for those who come from outside, whether (or not) from the diaspora. Patience and resilience appear as the main allies of the entrepreneur.