Business in Africa: Opportunities for Wealth Creation

Introduction

Africa’s prospect as a blooming market for investment is underrated, just as the ability for new businesses to play a huge role in solving the continent’s biggest challenge is underrated.

As of 2013, Africa was the world’s fastest developing continent at 5.6% a year and is predicted to increase by an average of 6% a year between 2013 and 2023. Development has been noticed throughout the continent with over one-third of African countries having 6% or even high-rise growth rates and the remaining 40% developing between 4% to 6% per year. This has made several international spectators name Africa as the future economic growth engine of the world.

These growth rates in Africa present tremendous opportunities for businesses in Africa. Here we describe what makes Africa a goldmine for businesses and also give tips to entrepreneurs planning on seizing the opportunity to start a business in Africa.

Africa: A Goldmine

As Africa continues to bolster up their high economic growth even with the recent global economic recession, a lot of international agencies and businesses are becoming more interested in investing in rising African economies. Because the rate of return on investment in Africa is the highest in the developing world. This makes Africa a goldmine.

Here are the reasons:

1. Growing and urbanizing population

The population of Africa right now is around 1.3 billion people and is estimated to reach 1.7 billion by 2030 with over 80% growth occurring in cities, making Africa the fastest urbanizing region in the world. This growth has led to an increase in income all around the continent. It is projected that the yearly spending of African consumers will reach 6.6 trillion dollars by 2030, up from 4 trillion dollars in 2015.

Businesses are expected to take advantage of this increase in growth in sectors where Africans have unmet needs which include healthcare, education, pharmaceuticals, and financial services.

2. Resource-rich continent

Africa is a resource-rich continent because of its abundance in mineral resources and agriculture. Though it has been difficult for Africa to change its resources into wealth and constant economic development. New structures and investments promise to change the picture and create tremendous growth and big platforms for businesses.

For example, Africa has high demand for energy and is also rich in crude-oil. It is estimated that by 2025 the domestic gas market in Africa will grow by 9%.

3. Digital and mobile access increase

Africa has over 120 million active mobile accounts, which is over 50% of the global total. This trend will allow companies and businesses to have access to a wider range of consumers, make transactions faster and improve productivity of companies and businesses.

These reasons and so many others have made Africa a gold-mine for startups.

Business starter tips

Whether you are a person with a passion for Africa and a great business idea, or you are a person of the African diaspora with a desire for home or an entrepreneur with no African background but a love for its people and culture you need to consider these tips before embarking on the journey of starting a business in Africa.

1. Go to the market.

Is there a demand for your product or service in the market? What is the ongoing trend in your chosen industry and what are its challenges? Do you know the market well?

These questions are impossible to find online, therefore you need to spend a lot of time doing market research or spend money paying someone to do it for you.

Collecting and analyzing data and creating a body of knowledge around your chosen field can be time and money consuming, but if done well, you will have an edge over your competitors who started blindly. It will also help you have a deep understanding of the changes in the market and how to use them to your own advantage.

2. Accommodate changes early, quickly, and strategically

As soon as you know all you need to know about your market and its challenges, do trials to decide whether your solution would fit.

Do these trials with definite time frames, direct parameters and coherent goals. Repeat these trials and each time accommodating changes and taking into consideration the opinions of your customers.

Accommodating and implementing changes is very important in startups, the earlier you do that, the easier it is to build and manage customer relationships and team expectations. Also, the faster you direct your business in the right direction, the faster your business reaches its growth phase.

2. Use local people

Using people from the country and society your business is located is very vital to the growth of your business. The more local workforce your business has, the better and faster your business will blend into the African society. It will also help the local authorities regard your business and increase your potential customers.

3. Be in complete agreement with regulators

Regulation in many African countries can be difficult to navigate, as overregulation and taxation can be a problem for foreign businesses operating on the continent. Notwithstanding the level of regulation, have a plan for engaging regulators and making them advocates for your business.

Make sure you get all the licenses you need and pay all fees and levies. A good entrepreneur should learn to balance obeying and adhering to all the rules and regulations with the immediate correction of conditions that may put the business under undue burdens.

Conclusion

In the near future, businesses in Africa would be at the forefront of economic leadership. The recent trend in the African continent is projecting Africa to be the future economic engine of the world.