#28 Africa strategy as an opportunity

Have you ever thought about opening up African markets with your company? Listen to the podcast now and learn more about the potential!

Have you ever thought about opening up African markets with your company? In this interview, Marc Peter Zander explains why there are plenty of good reasons to take a closer look at an Africa strategy. He is the founder and CEO of africon, Germany's largest consulting firm focused exclusively on Africa. In this conversation, Marc takes you on a journey through Africa's hidden potential and explains how German mid-sized companies can grow by expanding into Africa, what forms of collaboration are possible and which countries are especially worth a look.

SHOW NOTES:

Christian Underwoodhttps://www.linkedin.com/in/christianunderwood/

Marc-Peter Zander:https://www.linkedin.com/in/marc-peter-zander-8203b910/

Africon GmbH:https://www.africon.de

Mittelstandsindex Afrika:https://www.mittelstandsindex-afrika.de/

Underwood GmbHhttps://www.underwood.de/

Hope Is Not a Strategyhttps://www.hoffnungistkeinestrategie.de/

Preorder the book Hope Is Not a Strategy herehttps://www.underwood.de/shop/buch-hoffnung-ist-keine-strategieDetailed episode description:

The guest in this interview is Marc Peter Zander, CEO and founder of africon GmbH, the largest German consulting firm focused exclusively on Africa. Marc and his team help clients develop their individual strategy, from market entry all the way to local implementation on the ground. With seven of its own offices in Africa, africon covers markets with around 1.4 billion consumers. That makes it a market comparable to India and China. Africon serves small and mid-sized companies and has already worked for brands such as Villeroy & Boch and Infineon Technologies. With more than 25 years of Africa experience, Marc Zander is the expert on the African continent and on the strategy companies need for it. He spent three years as General Manager for MAN Ferrostaal AG and earned his degree at ISM Dortmund, followed by a position as assistant to the CEO of MAXDATA. From 2008 to 2011, Marc was Sales Manager at Wincor Nixdorf for Sub-Saharan Africa. Twelve years ago, he founded africon GmbH.

Where can German mid-sized companies still grow today?

Which regional growth strategies and markets are still open to German mid-sized companies in the course of globalization? Is Africa the last big opportunity?

That is a hotly debated question among Marc and his clients. When he started africon in 2011, Marc wanted to talk to mid-sized companies about Africa, but it didn't work. At the time, BRIC strategies were being established. Brazil, Russia, India and China were the focus, while nobody had any interest in Africa. By now, most German mid-sized companies are set up internationally and are asking themselves where growth is still possible. As the last large continent, Africa offers a very exciting opportunity. What makes Africa special is that it consists of 54 individual countries. The continent is home to 1.4 billion people and is more challenging in terms of complexity than China or India, which means it takes a well-thought-out strategy.

Have German companies already missed the boat on Africa?

A look at the global picture shows that China and Russia already have a strong presence in Africa. Three years ago, the Chinese government invited all 54 African presidents to China for talks. The decision was made to create a global Africa strategy with China, laid out across 200 pages. Germany's Africa strategy, by comparison, runs to 17 pages. So at the moment, Germany is still far behind when it comes to Africa's potential. But the boat hasn't sailed yet. China has been active in Africa in infrastructure and other areas over the past years, but cheap roads and machines have since deteriorated. Africa wants more quality on the continent, so it is increasingly seeking dialogue with Europe, and with Germany in particular, to find alternatives to the current situation. Both China and Africa are currently learning how to work together economically and culturally. Marc believes German companies still have roughly five to ten years to build attractive business relationships before China has learned how to do business in Africa.

Why are there such strong prejudices about Africa in Germany?

Let's start with a number: in 2011, 0.6% of all German companies were interested in Africa and/or working on an Africa strategy. Today it is 3.5%. These are figures africon collected itself. So interest is still very low, but it is rising. Why is that?

Well, what comes to mind when you think about Africa for a few seconds?

What image do you have of Africa? Many people associate it with things like poverty, famine or aid organizations. In conversations about opening up African markets, africon first addresses how to navigate political instability. The typical images in people's heads have to be cleared away first. The initial step is simply to familiarize mid-sized and large companies with the topic of Africa at all. One example Marc likes to use here is this question: How many Maggi cubes do you think are consumed in Nigeria every day?

It's 80 million Maggi cubes a day, in a Nigerian population of 210 million people. How does that translate into Africa's potential? These Maggi cubes have to be produced. There is a raw mass for them, sourced partly locally and partly imported from external suppliers. The cubes are formed by 1,320 machines from German manufacturers and then wrapped in aluminum foil, which also comes from German manufacturers. That wrapping in turn has a paper package. All kinds of German mid-sized companies are involved in the production process of a single Maggi cube, and they have discovered enormous potential for themselves in Nigeria. That example shows that while the prejudices do exist, there are opportunities for collaboration on the African continent that are different and well worth discovering. Marc recommends taking a closer look at the topic of an Africa strategy to understand precisely whether there is potential on the ground for your own company as well.

What does working with africon look like?

Africon does 99% active outreach. So africon contacts companies and asks whether they have ever considered entering the African market. Companies often reply that they didn't know there was a consulting firm specialized in Africa, and they are open to a conversation.

For that first conversation, slides on market potential are already prepared for the client, so the discussion can focus on whether Africa is an interesting market for collaboration or not. In that conversation, the question can often be answered in about 60 to 90 minutes. If the client is interested, a classic strategy project follows, divided into three phases:

Prioritizing countries among the 54 African markets, which variously speak English, French, Spanish or Portuguese. Here the company decides where exactly the potential lies and what a more precise clustering could look like. The potential markets are examined in more detail. That includes experiencing the markets on the ground and seeing local production. This phase is usually the most exciting one for clients. The feedback is often that Africa is different from what they expected. With those insights, the Africa strategy takes shape.

It's about sparking people's interest and making Africa tangible.

Which African countries are genuinely interesting for German companies?

There's no one-size-fits-all answer. If mid-sized companies need a large number of consumers in the markets they're looking for, say for light bulbs, filters for the automotive industry or packaging material, then Nigeria, with 210 million people and a now sizable middle class, is a market you can't ignore. Marc would always make this market a priority, even though Nigeria has its problems. Anyone in the consumer space whose Africa strategy doesn't include a Nigeria strategy is doing something wrong, says Marc. Ethiopia, with 110 million people, is also emerging in the consumer space, as are Kenya, Tanzania and South Africa. For clients in mining, countries like Zambia, Congo or Botswana are interesting. The point is to weigh the markets worth entering against individual factors. africon is happy to help with that. Right now, africon sees strong demand for the discussion of how to reduce dependence on Asia. Markets close to Europe, like Egypt, Tunisia and Morocco, play a big role here.

What entering an African market actually looks like on the ground

There are various angles. If a company wants to expand into Africa and sell there, sales potential is identified on the ground as early as the second phase mentioned above. That could be a distribution channel, for example. Marc's colleagues hold meetings on site with local customers and distributors and make recommendations on who to work with. These partners are visited during the trip. As a rule, the project ends for africon once the client has successfully completed its first deliveries to Africa. Since it can be difficult to find staff for Africa, africon supports the build-up of the business locally, with africon employees available on the ground for 18 to 24 months, until the client feels ready to manage the Africa business on its own. africon has 20 permanent employees on the African continent and its own local offices in seven countries. Those seven countries cover roughly 30 markets. There are also countries africon doesn't cover, such as Somalia or Burkina Faso. Africa strategy takeaway: what's the first step if you want to assess the potential of Africa for your company?

Marc advises starting by building an understanding within the company that Africa can be an exciting continent. The second step is to have someone in management who drives the topic and commits to it. Otherwise it often gets neglected. Marc strongly recommends assigning the topic to someone on the board or in the management team.

It's also important to gather initial information about Africa. That can come through africon or through various providers in Germany, in order to prioritize markets. africon has developed an index for mid-sized companies that lets them research African markets and get a solid overview. After that, the recommendation is to travel to the African continent. Being there and engaging with the culture is essential.