The best countries for South African companies considering expanding into Africa

‘Expand your business into Africa’

It sounds simple enough, but in reality, expanding into Africa is complicated, time consuming and often an expensive process. Understanding the markets you are planning to target is probably the most important aspect of any African expansion programme and for that you need to engage the services of experienced specialists who have a deep understanding of how to set up a businesses, navigate red tape, where to go and what to do when registering a business on foreign soil.

For South African companies wanting to expand their operations, Africa seems to be the logical choice. It is however a complicated process that is littered with hurdles and challenges that vary from country to country. Listed below are some of the preferred countries for South African companies expanding into Africa to consider (Note: For certain Industry’s this would not be relevant), but before you make any decisions we strongly advise that you consult with other business leaders who have been successful with their African expansion. Start small and then build on your successes. Focus on neighbouring countries first and once you have had success in those territories, only then consider expanding further North.

Botswana

Strategically located at the heart of South Africa, Botswana offers unique business opportunities in the mining, textiles, leather, beef, food production, jewellery, pharmaceutical, printing, publishing, packaging, auto motive and other export-oriented industries. Over the past 24 years Botswana has been one the world’s best performing economies. This success can be attributed to high quality mineral, tourism and agricultural resources, modern transport and communications infrastructure and a combination of prudent macroeconomic management, consistent policies, political stability and good governance.

Mozambique

With an economy growing at around 7% each year, the country’s economy is one of Africa’s strongest performers. Foreign companies have increasingly chosen to invest here, particularly in mining ventures. Mozambique has a wealth of natural resources, including deposits of iron ore, gold, bauxite, graphite, marble and limestone. There are also rare and important minerals such as tantalite and ilmenite (a source of titanium). The Tete highlands have large reserves of coal, which is exported to places like India and China. The most important earner for Mozambique is aluminium and natural gas. Since the opening of a large smelter near Maputo in 2000 (the country’s largest foreign investment project to date), aluminum became the most valuable export. With its tax-friendly stance towards foreign investors, Mozambique is certainly worth consideration.

Zambia

Zambia is looking to diversify its economy, with tourism and agriculture becoming increasingly important. The mining industry is already well established.  With instability in neighbouring Zimbabwe, visitors are choosing Zambia as their base to see the Victoria Falls and Livingstone has exploded in recent years as a result. Crops like sugar, tobacco, cotton and maize are exported in quantity. Vegetables and flowers are increasingly grown for foreign markets. But in order to expand, commercial agriculture requires further investment and access to electricity.

Always engage with specialists who have hands on experience of expanding businesses into Africa

Africa is a continent like no other. What you read in books and on the web is nothing compared to hands on, practical experience of conducting business in these African territories. Nothing you read will prepare you for the way Africa does business. There are “African Specialists” who consult with companies expanding their business into the continent. These companies, like The Finance Team, have part time or interim financial directors and financial managers who have had African experience that can assist and advise you when embarking on an African expansion programme. We also have a wide network of partners who can assist in many non-finance related complexities that you are bound to encounter. Engaging with an African specialist should be the first step for any company investigating the best countries for South Africans expanding into Africa.

Africa is the “next big thing” and South African companies are strategically based to make super profits in the coming decades as Africa explodes economically. Africa is where you want to be in the coming decades if you are looking for opportunity. If you are not considering an expansion programme into Africa, maybe now is the time that you should.

Africa business potential at a glance:

• The 1 billion people that live on the African continent comprises 14% of the global population, half of which are under the age of 35 and nearly half live in cities.
• The African economy of $1,6-trillion is expected to grow to 2,6-trillion by 2020.
• Since 2009, Angola, Nigeria, Ghana, Zambia and DRC have been top investment destinations.
• In 2014 Ghana is expected to show the strongest GDP growth, with Nigeria in fourth position.
• New investment destinations also include Equatorial Guinea, Guinea, Madagascar, Gabon, Cameroon, Mozambique, Liberia and the Congo.
• The main sectors for investment in Africa include mining, construction, property development, retail, supplier services to the oil, gas and mobile telephone industries, ICT, security, agriculture, tourism and hospitality.

Photo credit: economist.com