Africa: New uncharted territory for SMEs

29 May, 2020 - 00:05 0 Views

eBusiness Weekly

Joseline Sithole

In the 1980s and early 1990s my sister used to participate in a foreign exchange programme. The aim of this programme was to enable foreign students to appreciate the diversity of African cultures. Every year, these impressionable young men and women from the Western world poured into Zimbabwe. To them, all African countries were named “Africa”.  There was no delineation between individual countries such as Zimbabwe and Botswana or any African country.

As a high school student I spent copious amounts of time trying to explain the differences.  One particular year a student called Chloe, from Colombia University, was especially relieved to find on her arrival at the then Harare International airport, she was not greeted by her perceived welcoming party of elephants, lions and baboons.

She gushed, when she was given her morning breakfast; Africa did indeed have oranges and apples and toast. She also could not believe that my sister’s house was “bigger than hers back home” and seemingly “more luxurious”.

But despite these huge misconceptions about our beautiful continent, we still call it home and we are so proud of the huge opportunities that this great big continent offers to those with an entrepreneurial spirit. A quick look at African statistics will suffice here.

The Africa Natural Resources Centre (ANRC) a non -lending entity established by the African development Bank (AFDB) to boost the capacity of African policy maker’s points out these positive facts about the potential of African economic prowess.

Africa has the largest arable landmass. The continent has the second largest and longest rivers, the Nile and the Congo. It also has the second largest tropical forest, the Congo basin. According to the ANRC, 30 percent of global mineral reserves are found in Africa, and the continent has proven 8 percent of the world’s oil reserves stock. In addition, minerals account for 70 percent of the total African exports and 28percent of gross domestic product.

The continent though still has to benefit from the optimum use of its rich mineral and agricultural resources. It’s against this background that African Continental Free Trade (AFCTA) has come into being though some countries still need to ratify the agreement. Ajay Kumar Bramdeo, permanent observer to the United Nations Office of Geneva and other International organisations points out that this vast continent of 1,27 billion offers vast opportunities for the business fraternity. The population is predicted to rise to 1,7 billion in 2030.

So what are the opportunities for SMEs in this vast labyrinth of culture and business possibilities? And what should SMEs do to tap into this vast market. For example, according to the International Trade Centre, Zimbabwe’s export potential in crops such as fresh peas, nuts, coniferous and grapefruit is relatively high.

Adopt a professional

and growth mentality

Big companies in both emerging and developed markets are always on the lookout for partnerships with like minded companies.  In countries such as South Africa, partnering with local companies is actually entrenched into their policy frameworks. Technology transfer and the growth of local entities is one example of the benefits of Joint Ventures. SMEs can benefit from joint ventures by extending those small businesses’ marketing reach. In addition they can access needed information, resources and an improved skills set. SMEs can also access new markets that would be normally inaccessible without the partner. In conclusion SMEs can access new revenue streams.

Value addition

At last count I was a member of more than in 15 agricultural related Whatsapp groups. SMEs in the agricultural sector are big on production but rarely add any value to their goods. As Africa grows it is important that African companies start exporting half or fully processed goods. It is also imperative that they start being selective on produce that will yield maximum returns in the developed countries.

Of particular interest is building a powerful Afro centric health brand. Joseph Mugumbate an organic farming enthusiast and Mathematics teacher based in South Africa feels that for African SMEs to build strong organic brands they will need to improve transportation logistics and aim towards meeting international standards.

Online retail

As witnessed in other developed economies, there is a growing trend towards online retail. This will be buoyed by the growth of the African middle class who traditionally are positively predisposed to online shopping. According to Bramdeo, the African middle class is predicted to grow to 600 million by the year 2030. However, the E-Marketer Africa magazine argues that online retailing has to be conducted in the “African way”. For example Africa has a strong sense of community within their traditional markets. To this end online platforms should reflect the true nature of African enterprise. The E-Marketer magazine suggests that this can be done through “online clusters” offering multiple brands that are selling various wares in a single hub.


It is generally agreed that Africa’s infrastructure needs a lot of improvement. SMEs now need to participate in this conversation and participate in the building of robust infrastructural networks. SMEs thus need to participate in the building of this infrastructure to ensure ease of movement of goods.

Proudly Africa brand

According to a recent research, 63 percent of African respondents prefer to buy their own African brands whenever possible. According to a report published in June 2017, entitled “How we made it in Africa” the bulk of new consumers in the continent are moving on finding more “local status symbols” .

As a result, this is the time to build a strong African related brand that will compete with international brands in all industry segments. With its rich diversity of talent there is no doubt that this is possible.

In conclusion there are many opportunities and possibilities in Africa which are buoyed by a favourite trade enablement policy.

Hoping you had a beautiful Africa Day. It feels like God visits everywhere else but lives in Africa.”

Joseline Sithole is an SME Consultant and founder of Southern Africa Development Consultants (SODECO). For comments write to her on [email protected] or whatsapp +263773634062

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