#28 Africa strategy as potential
Have you ever thought about tapping into African markets with your company? Listen to the podcast now and find out more about the potential!
Have you ever thought about tapping into African markets with your company? In this interview, Marc Peter Zander explains why there are many good reasons to take a closer look at the idea of an Africa strategy. He is the founder and CEO of africon - Germany's largest management consultancy specializing exclusively in Africa. In this interview, Marc takes you on a journey through Africa's hidden potential and explains how German SMEs can grow by expanding into Africa, what opportunities there are for cooperation and which countries are of particular interest.
SHOWNOTES:
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
SME Index Africa:https://www.mittelstandsindex-afrika.de/
Underwood GmbHhttps://www.underwood.de/
Hope is not a strategyhttps://www.hoffnungistkeinestrategie.de/
Pre-order the book Hoffnung ist keine Strategie herehttps://www.underwood.de/shop/buch-hoffnung-ist-keine-strategieDetaillierteEpisode description:
This interview features Marc Peter Zander - CEO and founder of africon GmbH, the largest German management consultancy with an exclusive focus on Africa. Marc and his team support clients in developing their individual strategy from market entry to local implementation. With seven representative offices in Africa, africon covers markets with around 1.4 billion consumers. This makes it a market comparable to India and China. Africon serves small and medium-sized companies and has already worked for brands such as Villeroy & Boch and Infineon Technologies. With more than 25 years of experience in Africa, Marc Zander is the expert for the African continent and the associated strategy for companies: He was General Manager for MAN Ferrostaal AG for three years and graduated from ISM Dortmund, which was followed by a position as Assistant to the CEO of MAXDATA. From 2008 to 2011 Marc was Sales Manager at Wincor Nixdorf for Sub-Sahara/Africa. Finally, 12 years ago, he founded africon GmbH.
Where can German SMEs still grow these days?
Which regional growth strategies and markets can German SMEs still tackle in the wake of globalization? Is Africa the last big opportunity?
This is a hotly debated question among Marc and his clients. When he started africon in 2011, Marc wanted to talk to SMEs about Africa, but that didn't work. At that time, the BRIC strategies were established. Brazil, Russia, India and China were in focus, while nobody was interested in Africa. Most German SMEs are now internationally positioned and are asking themselves where growth is still possible. As the last major continent, Africa offers a very exciting opportunity. The special thing about Africa is that there are 54 individual countries. The continent is inhabited by 1.4 billion people and is more challenging in terms of complexity than China or India, which means it requires a sophisticated strategy.
Has the train already left the station for German companies in terms of opening up 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 to hold talks. It was decided to draw up a global Africa strategy with China, which was set out in 200 pages. In comparison, Germany's Africa strategy comprises 17 pages. So at the moment, Germany is still a long way behind in terms of Africa potential. But the train has not yet missed the boat. Although China has been active in Africa over the last few years in the area of infrastructure and other issues, cheap roads and machinery have now run down. Africa would like to have more quality on the continent, which is why it is increasingly seeking dialog with Europe and Germany in particular in order to find alternatives to the current situation. Both China and Africa are learning how to work together economically and culturally. Marc believes that German companies still have around five to ten years to establish interesting economic relationships until China has learned how to do business in Africa.
Why are there so many prejudices about Africa in Germany?
Let's start with a figure: in 2011, 0.6% of all German companies were interested in Africa and/or working on an Africa strategy. This figure has now risen to 3.5%. These are figures that africon has collected itself. So interest is still very low, but it is increasing. 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 attributes such as poverty, famine or aid organizations with it. In discussions about market development in Africa, africon first looks at how political instability can be avoided. The first step is to dispel typical images in people's minds. The first step is to familiarize medium-sized and large companies with the topic of Africa in the first place. An example that Marc likes to give at this point is the question: How many Maggie cubes do you think are consumed in Nigeria every day?
There are 80 million Maggie cubes per day for a Nigerian population of 210 million people. How does that translate into Africa's potential? These Maggie cubes have to be produced. There is a raw material for this, which is partly imported locally and partly from external suppliers. These cubes are formed by 1320 machines from German manufacturers and then packed in aluminum foil, which is also supplied by German manufacturers. This packaging in turn has a paper wrapper. Various German SMEs are involved in the process of producing a Maggie cube, and they have discovered very high potential for themselves in Nigeria. This is an example that shows that although prejudices exist, there are opportunities for cooperation on the African continent that are different and worth discovering. Marc recommends taking a closer look at the topic of Africa strategy in order to understand exactly whether there is also potential for your own company on the ground.
How does the cooperation with africon work?
Africon does 99 % active sales. Companies are therefore contacted by africon to ask whether the African market has ever been considered for development. The companies often reply that they did not know that there was a management consultancy specializing in Africa and they are open to a discussion.
In the first meeting, market potential slides are already prepared for the client in order to discuss whether Africa is an exciting market for cooperation or not. This question can often be answered in around 60 to 90 minutes during this meeting. If the client is interested, a classic strategy project follows, which is divided into three phases:
Country prioritization of the 54 African markets, some of which speak English, French, Spanish or Portuguese. Here, SMEs can decide where exactly the potential lies and what a more precise clustering might look like. The potential markets are examined more closely. This includes really experiencing the markets on site and seeing local production. This phase is usually particularly exciting for customers. The feedback is often that Africa is different than expected. What has been learned is used to work on the Africa strategy.
The aim is to arouse people's interest and make Africa a tangible experience.
Which African countries are really interesting for German companies?
There is no general answer to this question. If SMEs need a large number of consumers in the markets they are looking for, such as for light bulbs, filters for the automotive industry or packaging materials, Nigeria, with 210 million inhabitants and a now large middle class, is a market that should not be neglected. Marc would always prioritize this market - even if Nigeria has its problems. Anyone who does not have a Nigeria strategy in the consumer area of their Africa strategy is doing something wrong, says Marc. Ethiopia is also just emerging in the consumer sector with 110 million inhabitants, as are Kenya, Tanzania and South Africa. Countries such as Zambia, Congo and Botswana are interesting for customers from the mining industry. It is important to weigh up the markets that are interesting for development on the basis of individual factors. africon is happy to help with this. africon is currently experiencing a strong demand for discussions on how to reduce dependencies on Asia. Markets such as Egypt, Tunisia and Morocco, which are very close to Europe, play a major role here.
Concrete local approach to opening up an African market
There are various issues. If we assume that a company wants to expand into Africa and make sales there, sales potential is already identified locally in the second phase mentioned above. This could be a distribution channel, for example. Marc's colleagues conduct on-site discussions with local customers and distributors and make recommendations for cooperation. These are visited during the trip. As a rule, the project ends for africon when the customer has successfully made the first deliveries to Africa. Since it is sometimes difficult to find personnel for Africa, africon provides local support in setting up the business, so that africon employees are available locally for 18 to 24 months until the customer feels that they can manage the African business on their own. Africon has a local presence on the African continent with 20 permanent employees in seven countries. These seven countries cover around 30 markets. There are also countries such as Somalia and Burkina Faso that Africon does not cover. Conclusion Africa strategy - What is the first step if you want to examine the potential for your company in Africa?
Marc advises starting by creating an understanding within the company that Africa can be an exciting continent. As a second step, it would be good to have a person in the management who drives the topic forward and is dedicated to it. Otherwise it is often neglected. Marc strongly recommends assigning the topic to someone on the Board of Directors or management.
It is also important to obtain initial information about Africa. This can be via africon or via various providers in Germany in order to prioritize the markets. Africon has developed an index for SMEs in which companies can find out about the markets in Africa and get a good overview. The recommendation is to travel to the African continent. Being on the ground and getting to know the culture is essential.