What to Expect in African Expansion

Take note of these tips if you’re looking to expand your franchise into Africa.

What to Expect in African Expansion
  • The continent is not a single market. It has numerous and diverse economies.
  • Don’t assume you ‘know’ Africa because you’re a South African company.
  • Infrastructure is one of the biggest expansion risks – roads can be congested or non-existent, impacting supply chain operations and general movement. Natural disasters like the recent flooding in Malawi also takes its toll on infrastructure.
  • Though we have our own power shortages to contend with, Africa’s energy grid is underdeveloped and companies should prepare for chronic outages and surges. Diesel generators can help alleviate the pressure, but ensure good access to clean diesel.
  • Kenya enjoys some of the best communications infrastructure on the continent, but the same can’t be said for all African countries – connection can be intermittent, poor quality and expensive.
  • Political, religious and tribal conflict in many African countries is rife, and even in politically stable countries, undercurrents of contention can exist, all of which impact the business environment.
  • Standards of good corporate governance vary from country to country with corruption and nepotism posing the most significant risk. The recent formation of African Corporate Governance Network is working to build a culture of sound corporate governance.
  • Mixed in with some of the world’s fastest growing economies, are some of the poorest and most unstable. Zimbabwe’s inflation went from 16% in 1996 to 1 281% in 2006, and an estimated 471 billion percent in August 2008.
  • Finding skilled labour in your country of expansion can be a challenge and needs to be factored into your long-term business planning. Similarly, language and cultural barriers can impede expansion.
  • The tragic collapse of a church in Nigeria and the ongoing deadly Ebola outbreak in West Africa are just two examples of health and safety issues that can impact international expansion success. Be sure to have the necessary insurance policies and risk management in place.
  • Heavy reliance on foreign suppliers can end in poor service and quality that hampers your brand; similarly, relying solely on your own infrastructure and distribution chain can send costs sky-rocketing.
  • Using Beitbridge at the South Africa and Zimbabwe border, for example, and getting visas processed for individuals can take several hours while trucks of cargo can take days. Visas and work permits are at the mercy of frequent change in many countries, and they’re far from harmonised for multiple country travel. Be sure to take these time and bureaucratic idiosyncrasies into consideration.
Tracy Lee Nicol
About the Author
Tracy-Lee Nicol is the managing editor of Franchise Zone Magazine and deputy editor of Entrepreneur Magazine. She studied her Masters degree in Art History and Visual Culture at Rhodes University and spent the next two years working and travelling in Asia. Her love of people, business and teaching is reflected in telling the stories of entrepreneurs, franchisees and franchisors, inspiring others to take the leap to being their own boss and bringing about positive change in South Africa.

Related Articles

© Franchise Zone / Entrepreneur Media SA (Pty) Ltd. All rights reserved.

Disclaimer: Reliance on the information this site contains is at your own risk. Readers are advised to consult their attorney and/or financial advisor prior to pursuing any investment. Please read our Editorial Disclaimer and Terms & Conditions of Use.

Is this information out of date or incorrect? Report it to our webmaster.

Leave a Reply