Creating Companies in African Frontier Markets
About a week ago the business giant Clay Christiansen passed away. I knew of him, in a very general sense. But his passing caused me to learn a lot more about his legacy. I discovered he recently published The Prosperity Paradox, and with a bit of research, also learned that one of the coauthors Efosa Ojoma, was featured on an episode of HBR’s Ideacast that just happened to be in my Spotify queue. The episode is titled How Innovative Companies Help Frontier Markets Grow.
One of the ways to implement Market innovative solutions in frontier markets is to go through the non-consumption route. The non-consumption idea is essentially the fact that people need a certain product, but they aren’t using the product, because of a lack of access due to cost or being too technical.
The main point of this episode was essentially how you can build a company and simultaneously help build a nation in frontier markets.
Take for example the Sudanese entrepreneur Mo Ibrahim’s who built a Telco’s company in a continent with very low overall penetration in the use of cell phones. Part of the reason for this Non-consumption of mobile phones was a lack of access. This was due to a lack of infrastructure and the cost of cell phones for the average middle-class individual.
So he went on to create the infrastructure, educate the workforce, and employed thousands of people. And in less than a decade had created a product and industry that’s worth over 200 Billion dollars to the African Economy.
South Korea was formerly a country dependent on AID and in about 50 years, has morphed into a country that dispenses it. One of the core mechanisms for this transformation was Market Creating Innovation by home-based entrepreneurs. They created Kia which was built initially for South Koreans and the landscape/roads they had. For them to succeed, they had to create a product that was accessible to the home population they also had to create a product that was symbiotic with other industries.
If an entrepreneur can create an innovative solution for frontier markets that is accessible to the average individual, and is ready to play the long game, there is a great potential for amazing monetary returns
TBH I think individuals interested in investing in certain African Economies are actually currently in a sweet spot. Yes, investments in places like Nigeria and Kenya are still riskier than in more developed markets, but because of the technological revolution over the past decade, market penetration has been made easier. Don’t get me wrong of course markets here can still be quite volatile. The government policies seem to change with the weather, there’s the constant corruption, and using expensive data that is riddled with poor performance is quite burdensome.
But thanks to products such as MPesa, flutterwave, paystack, the ubiquitination of cellphones, and the availability of the internet and social media, it is easier for startups in Africa to thrive. We no longer have to meld the tools from scratch to tackle the customer’s “Job to be done”, instead, we can skip ahead and build on these infrastructural elements. And in a shorter time, create innovative companies with sustainable solutions that simultaneously improve lives and contribute to nation-building.
TLDR: To succeed in frontier markets you have the play the long game. The core mechanism for success was is to create a product that is both simple and affordable hence affordable to the masses. The success of building a product that makes people’s lives easier helps build industries and Nations.
Originally published at https://www.linkedin.com.
