Tuesday, 27 March 2018 saw us host our first GROW Summit for 2018. There, we shared with our clients, views from a range of experts on matters pertaining to business growth. Amongst our speakers was Deloitte Associate Director, Rutendo Hwindingwi, who shared his thoughts on what SME’s should do when considering business opportunities in Africa:
The African landscape is strewn with SMEs that had a brilliant vision of expanding into the rest of Africa only to have plunged to their premature death by underestimating the environment that they were trying to operate in. Research* published in 2017 shows that 5 out of 7 SMEs in Africa fail in their first year – largely due to the misconception of the dynamics of the new territory.
To help SME leaders think about expansion across Africa, Rutendo draws on a 1974 boxing match of cataclysmic proportion that happened on African soil. In this fight, the ‘World Heavyweight Champion’ George Foreman, lost to the ‘Underdog’ Muhammed Ali. The fight entitled ‘Rumble in the Jungle’ gives us 5 key nuggets that an SME expanding into Africa can glean.
Ali flew in a few weeks earlier than Foremen and this allowed him to train and engage with the locals. To such an extent that on fight day in a stadium packed with over 60 000 people, the crowd was overwhelmingly supporting Ali before the fight had even begun.
For an SME expanding into the African continent, know that you are entering a cauldron of all sorts that is boiling with diversity in culture, leadership and economics.
When considering expansion, #SME leaders need to travel to their targeted African markets and get in touch with the people.
You will be surprised what a simple handshake in Africa can do to building a long-term relationship.
In order to beat Foreman, Ali knew he had to be innovative and think out of the box. He applied a technique called ‘Rope-a-dope’, which is when a boxer uses the ropes of the ring to absorb the punches of the opponent. This allowed Ali to cleverly outwit Foreman by tiring him and eventually knocking him out.
Africa has a number of challenges for the SME such as limited infrastructure and significant start-up costs. In order for the SME to grow, it needs to be nimble. They can do this innovatively by leveraging off technology to drive their sales and marketing strategy or outsourcing non-core functions such as their bookkeeping and payroll management.
There is an African proverb that says ‘A roaring lion kills no game’. Ali in the 8th round, seeing that Foreman was weak, saw the opportunity and grabbed it.
SMEs, as they capitalise on business opportunities in Africa, must realise that opportunities will come before them and when they do they must leverage off their ‘entrepreneurship spirit’ and grab them.
Development in Accra, Ghana
Pound for pound, fist for fist, Foreman was stronger than Ali and a true threat. As SMEs enter new markets they do not usually have the resources to identify and mitigate the risk of unknown factors. Such factors could be legislation or tariff policies. It is thus crucial, in order to mitigate such threats, that they have strategic partnerships with local entities.
Lastly, Ali displayed a deep and unstoppable drive and determination to win even before the fight began. It was not defined by how strong and talented he was but more-so by sheer willpower.
Leaders of SMEs expanding their businesses into the rest of Africa need to have that raw determination and drive to be successful. As the saying goes ‘Africa is not for sissies’.
As a continent, Africa is open for Business for the SME. In fact, it was never closed. The question for the SME is: are you truly ready to expand into the African continent?
*Reference: African SMEs Contributions, Challenges and Solutions enterprises
About the writer
Dr Rutendo Hwindingwi is an executive with Deloitte South Africa. He was also an executive at Sage Africa and the Middle East, providing business management software solutions to small, medium and large corporates. Dr RH has an insatiable appetite to see the exponential growth of Africa’s greatest resource – its people.
For more information on Rutendo or to get him to speak at your event, send an email to: brooke@uniquespeakerbureau.com.