The opportunity of doing business in Africa

Picture: flickr/Mispahn

Picture: flickr/Mispahn

Africa, the continent with a land mass equaling that of China, India, Japan, America, Mexico and Europe combined, has in recent years become an attractive destination for foreign businesses. Respectively, foreign direct investment has increased by about 50% since 2005.

Once regarded as a gamble, local capital markets are becoming less risky and more promising. Subsequently, the question arises: why is this the case and where exactly does the opportunity lie?

Main reasons for the steep economic upswing

Africa’s economic rise can, according to a World Bank economist, be attributed to various reasons: firstly, Africa has the right kind of population growth, with most Africans living increasingly longer whilst having fewer children. In addition, Africa was the world’s fastest-growing continent in 2013 (+5.6%), with GDP expected to rise by an average of 6% p.a. between 2013 and 2023, so that by 2025 most of Africa is expected to be at a middle-income level. Furthermore, rapid urbanisation is generating efficiency gains and attracting investors to capital cities that have begun to flourish. Rapid technological progress is another economic booster, considering it once started from a very low base. Besides, governance and economic management by officials have greatly improved since the beginning stages. The increasing popularity of African sovereign debt is a good indicator (The Economist).

According to company-own analysis and experience, Jonathan Blackmore, Ernst & Young EMEIA Advisory Risk Leader, notes that the risk-reward relationship when it comes to doing business in many African regions is – against common perceptions – further very promising. He further explains that “we are actually seeing a very positive risk-reward relationship in Africa, particularly for companies with robust systems of risk management that enable opportunity taking”.

Frontrunner South Africa

Particularly South Africa has been experiencing an upward trend and growing constantly, having generated the highest GDP among the top ten African nations in 2013 (608,8 USD billion) (IMF World Economic Outlook Database, April 2013). Classified by Ernst & Young as a “lower risk – higher reward” nation, South Africa can be attributed a high profit potential with low risks of investment. This is unlike most African countries, which face a positive risk-return correlation, i.e. the higher the risk the higher the reward and vice versa. According to Baldur Dürrwang, Chairman of SELLBYTEL Group affiliate LIVINGBRANDS, the relatively low risk in especially South Africa stems from the comparably low level of corruption enabling “clean business”. This is supported by the low density of large scale enterprises and instead the majority of monopolized industries and SMEs, which tend to be free of corruption-driven middlemen.

How is SELLBYTEL taking advantage of this positive trend?

The SELLBYTEL Group has to date established local offices in various African growth regions, such as Lagos/Nigeria, Cairo/Egypt, Nairobi/Kenya and most notably Johannesburg/South Africa. Having had a strong presence in Africa for seven years now, SELLBYTEL has established a highly experienced and skilled local management team. From the African continent, the SELLBYTEL outsourcing specialists principally manage the sales operations for one exclusive partner, a prominent producer of network solutions. Services include inside sales (direct sales with end users and indirect with channel partners), partner account management, plus back office solutions.

The SELLBYTEL Group currently has a total headcount in the mid two-digit range in Africa for the respective partner, Johannesburg comprising the vast majority.

Hence the latter has over the years become Africa’s and thus SELLBYTEL’s African powerhouse. SELLBYTEL’s vast success in the city is greatly owed to Neil Gouveia, operations manager Africa for the aforementioned project. Neil has worked in Johannesburg/South Africa for many years and as a native South African, he has an excellent understanding of the local business cultures. His remarkable business sense and his strong target and client orientation further are extremely valuable assets.

The specialty of SELLBYTEL South Africa is the direct integration of offices with the respective partner, enabling closer client contact and direct mutual assistance. BBDO South Africa, which has been operating successfully in the country for more than 20 years, further provides valuable support to its daughter agency SELLBYTEL Group, such as excellent social benefits for employees. SELLBYTEL also takes pride in its BEE (Black Economic Empowerment) certification, a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups economic privileges.

SELLBYTEL adopts a powerful recruitment strategy in Africa, including the “Remote Experience” scheme, whereby potential employees are searched, found and employed without personally being seen. This unique approach is possible through SELLBYTEL’s longstanding local expertise enabling it to find the right people at the right place in the right way. Finally, SELLBYTEL’s extensive network and very importantly the vast amount of well-educated and skilled talents make talent-spotting in Africa relatively easy, according to Dürrwang.

The upward economic trend combined with SELLBYTEL’s excellent local management structure, profound expertise, outstanding services and high efficiency therefore provide the best conditions to further strengthen the outsourcing provider’s position in the growing African market.

Please get back to Baldur Dürrwang with questions or comments via Baldur.duerrwang@livingbrands.de

Picture: flickr/Mispahn
Text: Anna-Luisa Wiefel

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