CEO to CEO: Looking to Africa for business growth prospects

As a South African CEO navigating these challenging times, I wanted to reach out to other CEOs and share my personal insights around pressing issues, but also opportunities, in the hope this opens up dialogue around the current climate and topical matters impacting South African businesses.

African prospects for South African business growth

Despite the economic slowdown as a result of the Covid-19 pandemic, all signs are that South Africa's more robust businesses will recover within the next year.

The World Bank projects GDP growth of 4% in 2021 for South Africa, with the global recovery aiding South Africa's economic revival. The strong rebound in China and the United States in particular, two of SA's key trading partners, is fuelling this recovery.

So where to from here for businesses riding that recovery wave - businesses that before the pandemic, were ready to look to new markets for growth prospects?

To the rest of Africa, that's where. Beyond our borders lies an entire continent bursting with opportunity for intrepid businesses wanting to pursue stable, sustainable growth in rapidly expanding markets.

Africa set for post-pandemic recovery

According to the African Development Bank Group (ADBG), Africa will recover in 2021. 'Real GDP in Africa is projected to grow by 3.4% in 2021, after contracting by 2.1% in 2020. This projected recovery from the worst recession in more than half a century will be underpinned by a resumption of tourism, a rebound in commodity prices, and the rollback of pandemic-induced restrictions,' says the ADBG in the 2021 edition of its African Economic Outlook.

Naturally, this positive outlook is subject to uncertainty around country-specific external and domestic risks. However these risks can be mitigated by partnering with sector specialists in those countries that have first-hand experience in overcoming language, cultural and other barriers to entry.

Given this, the continent's fast-growing populations and markets present intriguing opportunities for South African businesses that have reached market saturation here at home or that want to expand their existing international footprints.

In their Brookings report Spotlighting opportunities for business in Africa and strategies to succeed in the world's next big growth market, authors Acha Leke and Landry Signé pose a question: How many companies in Africa earn annual revenues of $1 billion or more? 'Most global executives and academics we speak with guess there are fewer than a hundred. Many answer "zero." The reality? More than 400 such companies exist-and they are, on average, both faster growing and more profitable than their global peers,' the two note in the report.

This exercise points to the vastly underestimated and misunderstood potential of Africa as a business growth market.

Doing business in Africa

Granted, businesses looking to the continent for growth are apprehensive, given its past political, economic and social instabilities.

The PwC 24th Annual Global CEO Survey (2021) unpacks, among others, perceived business threats from the perspective of African CEOs, who rate policy uncertainty, tax policy uncertainty, cyber threats and over-regulation among their top concerns.

These threats vary from country to country, with some states making it relatively easy to establish new operations. In looking specifically at Sub-Saharan Africa, the World Bank Group's 2020 Doing Business report ranks Mauritius and Rwanda as the two African countries with the highest 'ease of business' scores, followed by Kenya, South Africa, Ghana, Nigeria and the Democratic Republic of Congo.

Hyperlocal - a strategy for success

Although united in the opportunities they offer prospecting South African businesses, each of these markets requires a different strategy in reaching and tapping into the needs of consumers there.

If there's one golden rule when it comes to expanding into Africa, it's that one size does not fit all. Due diligence must be done to inform hyperlocal approaches on the ground that successfully connect businesses to their new target audiences in that country.

This is where cross-border partnerships are invaluable; teaming up with partners that understand the local landscape can make or break expansion strategies. That, and what Leke and Signé call 'the imagination to see the continent's unmet needs as opportunities for entrepreneurship, and the long-term commitment required to build businesses of meaningful scale'.

They maintain that the fastest growing and most profitable businesses in Africa see challenges as a spur for innovation.

As CEO of a company with years of experience and knowledge of operating in African countries, I can attest to that. Vision and tenacity are absolute musts when establishing a presence in Africa - two qualities that, in my experience, bold, brave South African businesses possess in abundance.