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Doing Business in Africa
Dr. Jasper Grosskurth Africa Business Week 2013
[email protected] www.researchsolutionsafrica.com
Disclaimer
All statistics I present and most statistics presented by my colleagues are unreliable.
African data consist of insufficient measurements, intentional biases, unintentional estimation errors and gaps of information all piled on top of each other, again and again.
My rules of thumb (handle with care): –
Population numbers are inflated
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Recent economic growth is overestimated
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Total GDP is underestimated
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Reliable information about African consumers is extremely scarce
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For initial investment decisions, work with critical thresholds rather than market volumes
Everything in this presentation is oversimplified.
I know very little about North Africa and even less about resource intensive industries.
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Workshop Structure
1. The mindset 2. How to identify and explore the right markets for you in Africa? 3. Which data is freely available for companies being active on the continent? 4. Which information do companies collect to support their strategic choices concerning Africa? 5. How to prepare your actual market entry?
Your active participation and sharing of experience is warmly welcomed. Do interrupt.
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The mindset: You
Which companies / sectors are present? And in which countries do you operate?
Who is not yet active in Africa? Who makes more than 10% of their turnover in Africa? Who makes more than 50% of their turnover in Africa? Who makes more than 90% of their turnover in Africa?
Does your organization have an office in an African country? Does your organization have a documented strategy for its African markets?
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The Mindset
For those below 10% turnover or no activity at all: –
What do your colleagues / your CEO associate with Africa?
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Have you had any “funny” comments about your interest in African markets?
For all: –
How has your perception of Africa changed during the past 5 years?
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Have your colleagues / your superiors perceived that change as well?
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Source: Ernst&Young
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Paradigm shift
NGO
Diplomacy
Business
Source: Berenschot
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Source: McKinsey (2010).
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Expansion 65% is satisfied or highly satisfied with their performance in Africa
95% considers to expand
Source: Berenschot
N=106
The Mindset – Conclusion
It is important to prepare your own organization for Africa.
Stop sending second class people to Africa. It is a complex market and full of opportunities. (van Boxmeer, Heineken, 2010)
Share publications, such as The Africa Report, Africa Business and the reports listed at the end of this presentation.
Share visuals of your target group in addition to your spread sheets.
Invite delegations of your local partners. They need exposure to your business and your business environment to serve you optimally.
Develop a business case for your African investment as you would for any other world region.
Do not consider a presence in South Africa as a presence in Africa.
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Source: Ernst&Young
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Source: Ernst&Young
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Key Markets
For most of you target countries are likely to include the NEKST countries. They are top consumer market environments, as well as major economic hubs.
For niche markets this might be a very different set of countries. You are more likely to know these than I am.
Source: Berenschot
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Presence 1. Dutch firms are everywhere Top 5: 1. Kenya 2. Ghana 3. South Africa 4. Tanzania 5. Nigeria
Source: Berenschot
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Which countries do you consider?
How did you select them?
Have you been to the countries on your list?
Can you describe what happened during your first visit to that country?
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Identifying Markets
Desk Research
Network: Peer to Peer / Professional advice
Scouting trip
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Desk Research
Generic data sources –
Africa Economic Outlook
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World Bank Doing Business
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Human Development Indicators
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IMF indicators
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Reports at the end of this presentation
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(location selector; www.locationselector.com)
Market specific –
Google! Really.
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Get someone to Google for you.
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Ask us.
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RISK DISTANCE
Source: Berenschot
It is equally risky to invest in Niger and/or Angola as in India
It is equally risky to invest in Namibia as in the UK
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Network
Everything is 2 questions away.
Attend meetings, conferences and networking events focused on your markets.
There is no shortage of professional advisors on all scale levels and disciplines to support you. Some channels for finding the same:
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Afrikaverein der Deutschen Wirtschaft (across the continent)
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Delegations and Chambers of Industry (Ghana, Nigeria, South Africa, Angola and Kenya)
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Embassies – German and target country embassies
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Global consultancy companies
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Specialized consultancy companies
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Individual consultants
Long-list you African counterparts. –
Build proxy networks
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Be demanding
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Be specific
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Pay accordingly
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Don’t accept ‘TIA’ 21
Services on offer
Typical services offered by the likes of AHK, Afrikaverein and others include:
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Market entry facilitation
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Business Partner Search
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Tailor made Fact-Finding Missions
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Market research
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Legal and Tax advice
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Organization of business delegations, trade fairs, conferences, seminars, workshops
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Scouting Trip
Cheap, instant and extremely effective!
Send teams of at least 2 people for at least 3 days per country.
Plan for at least 1 buffer day per country.
Let others assist you with identifying the respondents, but add your own research.
Focus on the market, its potential and your clients. The red tape comes later.
Take plenty of time to walk your market and interview your potential customers.
Take pictures and video.
Recruit an independent local assistant on a freelance basis.
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Research Solutions Africa Overview - a leading Pan-African Market Intelligence Provider Presence in Africa
Background Research Solutions Africa was founded in 1996, and is a leading Pan-African information solutions provider. We serve businesses, NGO’s, Governments and other institutions We provide market insights and offer full research services from survey design to data collection and analysis of findings. Our focus research areas entail: – – – –
Market Assessment studies Social research studies Trade Research – retail & census Consumer Research
West Africa
East Africa
• Senegal
• Kenya
• Sierra Leone
• Tanzania
• Ivory Coast
• Uganda
• Burkina Faso
• Rwanda
• Niger
• Burundi
• Nigeria
• Somalia
• Chad
• Sudan
• Ghana
Head • Ethiopia Office in • Eritrea Kenya (Nairobi) Southern Africa
• Benin
• Zambia • Malawi
Central Africa
• Madagascar
• Cameroon
• Zimbabwe
• Gabon • Congo Brazzaville • DRC (Democratic Republic of Congo)
• Angola
Hub Office in Kigali (Rwanda)
• Mozambique • Namibia
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Our teams use state of the art technology
Functionalities
Digital Recording
Real Time Info
Samsung Galaxy Pocket
Removable Battery
Stand-by Up to 406 h (2G) / Up to 406 h (3G)
Talk time Up to 8 h 45 min (2G)
Wi-Fi
GPS
2.8-inch QVGA (~143 ppi pixel density)TFT Capacitive Touch
Auto rotate (G-sensor)
2 Megapixel Camera
3 Megabytes of internal memory
Micro SD, up to 32GB
Tracking System
Photographs
Questionnaires are conducted on the phone largely by a drop down menu
We work with a range of customized data collection software packages.
Info sent immediately to the server computer (network allowing)
When no network, data is stored and uploaded with regained network
Enumerators can be continually tracked by GPS system
GPS system provide location movement every 5 seconds (network allowing)
Smart Phone has a camera built in
Possibility to add picture information to the collected data
Our clients - Market research
Research work done
Example clients Market Research
Types of Research we provide: Qualitative
Quantitative
Focus Groups
Face to Face interviews
Individual depth
Telephone interviews
Interviews
Hall tests
Observations
Self administered
questionnaires
Example of Assignments: Qualitative
Quantitative
Trade Research
Image & Equity
Concept and pack testing
Usage and Attitude
Advertising &
Retail mapping/census
communication testing
Retail Audit/tracker
User profiling
Customer satisfaction
Product testing
Segmentation
Brand Audits and Brand Health checks
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Our Clients - Social research
Research work done
Example Social Research Clients
Types of Research we provide: Qualitative
Quantitative
Asks why
Asks what
Exploratory
Descriptive
Interpretative
Statistical measurement
Gain Insights
Structured
Unstructured
Large numbers
Small numbers
Example of Assignments: Qualitative
Quantitative
Ethnography
Awareness and Image
Behavior and Attitudes
Base-line studies and follow up assessment
Monitoring & Evaluation
Media access and information needs
Visualizing all the outlets on google map gives endless possibilities for distribution optimization Zoomed in section of Pipeline area Nairobi Different colored markers are different outlet types Zooming in and out is possible Isolation of outlet types is also possible
Tena Estate Nairobi
By clicking on a marker, information on the outlet is displayed in a pop up window – Name and owner name – Telephone – Sales per week etc
Using Google earth pro we can anchor a particular point as our centre and get directions to any other point
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Recent Assignments
Mapping all points of purchase (PoP) for beverages across Nigeria (retail census). Surveys of informal trade channels (including BoP trade) in Kenya, Tanzania and Uganda. Market exploration studies for fashion in Gabon, motorcycles and personal hygiene products in Kenya. Surveys of the SME sector in Kenya for two major Kenyan banks. Lifestyle, usage and habits consumer studies for several FMCG clients. East and West Africa are the cheapest regions in the world to conduct in-field market research. All Global market research companies have a presence in Africa. Check the ESOMAR website to find most of our competitors.
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Market Approach
Localize, learn, listen.
Select the appropriate depth of your involvement
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Distributor/s, no own presence.
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Very regular trips of a sales team
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Small sales office/s
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Larger office and own marketing / distribution
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Own assembly / production
Don’t be too hesitant. Prepare to learn from failure. Prepare to make a loss at first.
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Grow your business!
Source: Berenschot
Type
Do you have a local representation?
• Most firms are involved in trade • Have small local representations • Make limited investments
What is the nature of your business?
• Focus on business and governments
Source: Berenschot
32 N=106
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Strategy Few Dutch firms have integrated their Africa activities into a broader strategy
Out of the 36 AEX/AMX listed companies, 12 (33%) explicitly include Africa in their growth strategy
Source: Berenschot
Your Questions!
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Acknowledgments
African Studies Centre, Leiden
Afrika Verein der Deutschen Wirtschaft, Hamburg
Berenschot Consultants, Utrecht
IHK / AHK, Frankfurt / Nairobi
Netherlands-African Business Council, the Hague
Rotterdam School of Management, Rotterdam
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Published sources
Africa Consumer Insights Center (McKinsey), 2012, The Rise of the African Consumer: http://www.mckinsey.com/global_locations/africa/south_africa/en/rise_of_the_african_c onsumer
African Development Bank (AfDB), 2011, The Middle of the Pyramid: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/The%20Middle%2 0of%20the%20Pyramid_The%20Middle%20of%20the%20Pyramid.pdf
Ernst&Young, 2012, Africa Attractiveness Survey: http://www.ey.com/ZA/en/Issues/Business-environment/2012-Africa-attractivenesssurvey
J. Grosskurth, 2010, Futures of Technology in Africa: www.stt.nl/Africa
M. Jerven, 2013, Poor numbers - How we are misled by African development statistics and what to do about it: available in bookstores
M. Lem et al., 2013, Doing Business in Africa (see next slide for source)
McKinsey Global Institute, 2010, Lions on the Move: http://www.mckinsey.com/insights/africa/lions_on_the_move
World Bank Doing Business, annual: www.doingbusiness.org 36
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‘Doing business in Africa – a strategic guide for entrepreneurs’ is available from www.nabc.nl and www.managementboek.nl Marjolein Lem |
[email protected] | Rob van Tulder |
[email protected] | Kim Geleynse |
[email protected] |
Leave me your cards for a list of links to the listed reports. Let me know if you are interested in a company specific workshop to scope your opportunities in Africa. Contact us for your market research needs:
[email protected] www.researchsolutionsafrica.com
Thank you!
Jasper Grosskurth
[email protected] +254 732817670 38
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