Africa’s rapidly growing population, burgeoning economy, maturing infrastructure and increasingly favorable investment policies are making the continent light up on the world stage for savvy multinational companies (MNCs), investors and entrepreneurs.
We recently caught up with Ashwin Tirvassen, our Associate Director of Client Solutions in Africa, to learn more about why the ‘Mother Continent’ is attracting international businesses in droves for expanding operations, tapping into new consumer markets and engaging up-and-coming talent.
How would you describe Africa as an emerging market?
Twenty years ago, Africa was considered the future. But Africa is here and now – a land of opportunities with a wealth of resources and valuable talent.
Africa’s size – larger than China, the US, Europe and India combined – is difficult to comprehend. The continent spans over 30 million sq. kilometers (11.73 million sq. miles) and 54 countries. More than 1.3 billion people speak over 1,500 languages. The continent is also quite young, with a median age of 20.
On the flipside, how would you say is Africa perceived by the international business community?
Most businesspeople underestimate Africa’s size and potential as a market. They also tend to overestimate the continent’s challenges.
When participants at events like the World Economic Forum are asked to guess how many companies in Africa earn annual revenues of $1 billion or more, many guess around the 50-mark.
In reality, there are more than 400 such companies operating on the continent currently. They are, on average, both faster growing and more profitable than their global peers.
Why should organizations consider Africa for global expansion plans?
Africa is largely underdeveloped and therefore faces big challenges, like healthcare, urbanization and infrastructure. But, whenever there are challenges, there is a need for solutions.
For example, much of Africa’s population lives in remote, rural areas and are disconnected from modern technology. However, the recent expansion of mobile networks and internet access is gradually making it possible for technology companies to reach more customers – even those in the most remote areas of the continent.
Can you name another example of an untapped industry?
Opportunities abound for those in agribusiness. Food is a basic need for everyone.
Africa imports about $40 billion of food annually. However, many parts of the continent offer ideal conditions to grow locally.
According to Business Standard, Africa’s food industry recorded a growth of 3.6% in 2020-21 and 3.9% in 2021-22. These numbers will likely jump in upcoming years.
What should international businesses know about real estate?
Demand is already soaring for commercial and residential properties. By 2050, 800 million more people are expected to move into African cities.
Massive development will be required to accommodate this great migration, creating more opportunities for real estate development, urban infrastructure, urban planning, architecture, etc.
What are some other ‘hot’ industry opportunities?
According to McKinsey, Africa is the world’s second-fastest-growing payments and banking market after Latin America. It is also home to over 500 financial technology firms, primarily in Nigeria, South Africa and Kenya. According to The World Bank, about 66% of Sub-Saharan Africa’s population is unbanked – a figure that will inevitably change as the economy matures.
E-commerce is another fast-growing sector. According to Africa Business Communities, the e-commerce industry is expected to generate annual revenue of $46.1 billion by 2025. Jumia, eBay, Konga and Kilimall are a few examples of African e-commerce platforms pushing the industry forward.
Why are many companies turning to Africa for expanding operations in professional services?
Africa presents unique propositions to companies looking to expand, such as hosting multiple time zones that overlap with one another and happen to have close time-zone affinity with European countries.
Since Africa is a hub of developing nations, labor and operating costs are also naturally lower than in industrialized countries worldwide. Furthermore, the cost of living is relatively low.
What might companies be surprised to learn about recruiting and hiring in Africa?
Africa’s immense pool of untapped talent is willing to learn—they just need an opportunity.
Africa is the continent with the youngest and fastest-growing population in the world, boasting an annual growth rate of 2.45% in 2021. As Africa’s education systems advance, many global businesses are taking note of highly skilled talent pools in key sectors like IT, engineering, business management and finance.
What role is technology playing in developing Africa’s workforce?
The adoption of technology in the education sector is a game changer for human capital development in Africa.
Today, an African sitting in Kenya can access a world-class curriculum by attending classes virtually from Harvard Business School, Cambridge, Oxford, MIT, etc. These graduates are able to compete with graduates from Stanford, Harvard and Yale. Companies like Google, Facebook, McKinsey and Goldman Sachs are lining up to hire them.
What are a few of the challenges of expanding into Africa?
While there is a mismatch between global perception and the on-the-ground reality, I will not pretend Africa is an easy place to do business given its geopolitical complexities, infrastructure gaps, and relative economic volatility. Setting up shop can quickly become daunting when you factor in complex labor regulations, bureaucratic delays and limited access to skilled talent databases.
How can an EOR help bridge these gaps?
In order to unlock Africa’s significant economic opportunities, businesses must establish creative business models and robust strategies specific to their target market.
Partnering with an EOR is the fastest, easiest way to compliantly employ staff in a targeted country. Not only are existing HR teams relieved from cross-border payroll processing, the EOR model removes the requirement to set up a local entity. Companies can test market potential, deploy sales teams and focus on core business development – all with controlled risk.
Many companies choose to pair EOR solutions with GoGlobal’s recently launched Recruit & Hire solution to fill hard-to-fill roles, like technology, sales and client services. This covers the end-to-end hiring process, including talent sourcing, onboarding, benefits and even offboarding.
What advice do you have for companies looking to expand to Africa?
Africa’s large, underserved markets and infrastructure gaps represent business opportunities if companies have the right vision and strategy. However, strategic choices are not enough to prosper.
Successful companies realize their role is not simply to make profit but also to contribute to the development of a whole country – and the whole continent.
When you’re in Africa, you’re not just doing business. You’re touching lives, you’re transforming societies, you’re creating history and you’re building the future.