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Unlocking opportunities in Africa – looking beyond effects of Brexit on Africa

Brexit

Clearly the dust will take time to settle before the impact of Brexit on Africa and trade is more fully appreciated. However, when scenario planning a post-Brexit context for Africa, it’s worth tech-focussed entrepreneurs and investors, as well as others, both monitoring analysis of Brexit’s potential impact as well as maintaining their focus on what is key to unlocking opportunities in Africa – Boko Inyundo.

In my humble opinion, the role of strategy, product design and marketing take on even greater importance in today’s even more complex and ambiguous conditions.

Indeed Boris Johnson, during his February 2017 official visit to The Gambia and Ghana, talked up Britain’s Brexit trade opportunities in west Africa whilst last year Tanzania cited post-Brexit turmoil in the EU in its rationale to ditch a proposed deal between Brussels and the East Africa Community (ECA) countries.

The uncertainty that has followed the result of Britain’s June 2016 referendum triggered heightened market volatility in, as well as beyond, the UK and Europe. The UK credit rating was downgraded, global equities fell and currencies worldwide slid whilst gilt yields dropped to record lows.

Many forecast that Brexit will result in a drag on growth and crush confidence in Europe and this, together with Donald Trump’s recent victory in the US presidential election and uncertainty about how much he knows about Africa, has many anticipating trade, investment, remittances and development aid in Africa to be negatively affected, at least in the short term. Market observers have indicated that, post-Brexit, growth in sub-Saharan Africa will halve to just 1.4% in 2016, the slowest pace in decades.

However, once Britain and the EU progress negotiations on the terms of Britain’s exit and any new trade agreements that are to underpin this relationship going forward, we can expect to also see shifts in Britain’s engagement with its other trading partners, including Africa. Whilst in the short term the lengthy negotiation process may lead to reductions in trade volumes, we may in the medium to long term see existing bilateral ties with African nation states reinvigorated or new agreements made.

So, what is key to unlocking opportunities in Africa?
Market entry, or expansion across Africa, is most effective when strategy, product design and marketing are integrated and combined with a mindset that frames Africa as a place of opportunity rather than risk. Furthermore, organisational intent to enter, or expand operations across, the continent should be underpinned by a genuine understanding of consumer needs and aspirations in this inspiring and entrepreneurial continent.

Compared with the past, there is now a relative abundance of data and analysis that better frames the size of addressable markets across Africa, an important input when designing strategic, product and marketing plans.



With the media spotlight on Africa’s stand-out GDP growth over the past decade, we’ve seen an erosion of the historical narrative that market information about Africa is unavailable. Whilst the continent has faced challenges amid global headwinds in recent years, the resilience of Africa’s growth was evident with real GDP in 2015 estimated at 3.6%, higher than 1.5% for the euro area.

In the past, when the availability of data about African markets was relatively poor, many focussed on examining the uncertainty surrounding operating in Africa. However, with more accessible analytics about Africa today, and with the impact of rapid expansion of mobile and Internet penetration across many nation states, more and more investors now engage with the continent inspired by the increasingly measurable opportunities the continent offers.

Yes, there are inherent risks in operating in Africa, as there are in most, if not all, parts of the world (as ‘Brexit’ shows). In Africa legacy infrastructural, political, economic and regulatory conditions continue to present challenges. However, today the growing data and analysis surfacing about individual nation states in Africa, as well as its own regional trading blocs, sees start-ups, funds, high-net-worth individuals, Development Finance Institutions, foundations, Corporates and advisory firms more insightfully analyse and navigate the nuances that arise in Africa.

Today best practice calls for organisations and investors interested in markets in Africa to:
Better connect with consumers on the continent by taking advantage of the opportunities offered via mobile and digital platforms to more effectively segment, target and reach audiences in Africa;

  • Recognise that the continent’s fragmented retail market presents distribution challenges that must be smartly managed if products are to find a place in the shopping baskets of the middle class, a constituency that has available and rising disposable income;
  • Analyse shifts in discretionary income across various demographics as well as to undertake qualitative research into the willingness of specific groups to spend their growing income on products beyond the basic need for food and shelter;
  • Engage the youth, whilst recognising the difficulties of reaching this audience given low literacy levels. Also, challenges can arise when bringing this talent into the workforce, noting African governments’ historical underinvestment in nurturing this constituency’s skill base;
  • Invest capital in infrastructure, acknowledging the increased deployment of capital these past few years in the expansion of Africa’s road, rail, port, power and telecommunications networks, though this represents only a start from a relatively low base;
  • Recognise that Africa contains multiple, distinct markets and that this requires greater understanding as to how best to address linguistically and culturally diverse markets and calls for organisations to be more agile in their response to different consumer behaviours and tastes;
  • Understand urbanisation and how this societal transition presents complex conditions. Whilst city dwellers may be easier to reach, there is significant underlying risk of social unrest from Africa’s rapid, and often unplanned, urbanization, particularly when coupled with the high unemployment rates across the continent;
  • Empathise with Africa’s prevalence of low incomes and high unemployment and to recognise how this places greater responsibility on investment strategies stimulating inclusion rather than focussing entirely on delivering profit for shareholders;
  • Leverage political influence with skill and understanding as to how tribal ethnicity and a generational changing of the guard is adding layers of complexity in this, Africa’s disproportionately powerful, stakeholder group.

So, since the transition of power in the US from Barack Obama, a President with Kenyan ancestry, to a Donald Trump-led administration has taken place, and as the UK and the EU progress post Brexit trade negotiations, market participants with an interest in UK-Africa and/or EU-Africa trade corridors should monitor and look to influence how trade relationships with Africa are to evolve.

As and when new bilateral agreements with Africa take shape, or as existing partnership agreements are revitalised, anyone looking to build a sustained and profitable presence in Africa should focus on what is key to unlocking opportunities in Africa, namely: understanding consumer preferences; using that knowledge to influence the engineering of products and the creation of compelling value propositions; and communicating these expertly through industry value chains and to consumers via traditional as well as digital media.

Furthermore, it’s most effective if this is done with an authentic, overriding belief that Africa primarily offers opportunity rather than risk.

Boko Inyundo is: a Senior Marketing Manager aligned to the Technology Sector at the global law firm DLA Piper International LLP; a Non-Executive Advisor with De Charles LLP; a Council Member of the Royal African Society; and a Board Member with the African Foundation for Development.

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