Thinking of Doing Business in Africa? Read This!
June 11, 2018
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Small businesses are constantly looking for new markets in which to launch their products. American businesses have already found many eager consumers in countries like China, Canada, Mexico and India. These countries are already manufacturing hubs and popular business destinations. So it comes as no surprise that some businesses are finding it difficult to expand their share of that market as much as they would have liked.
With South East Asia already being dominated by Chinese companies and South America offering competition from Mexico and Brazil, the race is on for another market large enough to absorb the products from small businesses in the US.
Chinese companies have been doing business on the African continent for years with great success. Recognising the economic promise awaiting them, some Chinese business owners have either set up export channels to African countries or have established factories there.
The potential for profit is remarkable. With a population almost as big as China’s, consumers in many African countries are willing, and able, to purchase quality goods.
This is where your business comes in.
Most small business owners know little to nothing about the African continent so it’s usually surprising to them to hear that Africa is made up of 54 countries, many of which have healthy economies and eager consumers.
The country you decide to do business in will likely depend on the product you have but some countries’ markets are expanding faster than others and so will be better locations for your first experience in Africa. Examples are Nigeria, Kenya, South Africa and Tunisia.
Aside from this, here are three important points you want to consider before choosing the African continent as your next export destination.
Do Your Research
Going in with only the knowledge you’ve picked up from a handful of news articles is one of the worst things you could do. Despite what most people think, South Africa isn’t the only country in Africa where US businesses are welcome. And your goods will be more successful in certain countries where there is an actual need for them.
Do your research. Understand the trade regulations of the countries and use that information to make your decision as well. If possible, build a relationship with other small business owners selling their products in that country. It’s likely they’ll be able to give you valuable advice.
Consider Outsourcing, or Manufacture on Site
Because of China’s long-held presence on the continent, it’s very easy to have goods shipped from South East Asia to Africa. It’s also significantly cheaper as well. Export costs are a potential concern for small business owners. So putting the manufacturing and shipping process in the hands of experienced companies that will do it for cheap could be a good idea.
Tunisia and Ethiopia are on a list of countries expected to dominate manufacturing outsourcing over the next couple of years. For a business owner looking to do business in Africa, this is great news. Big countries with young populations are a great location to establish a manufacturing base. Manufacturing in the country may likely be the best decision depending on where you want your goods to be sold.
For instance, Rwanda is known for the hefty taxes they impose on goods entering the country. But the country also actively encourages the creation of small businesses, allowing people to register their enterprise in less than 48 hours.
Find a reliable carrier
Even if you decide to produce your goods in the US, there are still reliable ways to send your products to African countries. For larger quantities, contacting a freight courier such as SC Logistics will help you to make a good deal in your favor.
For smaller quantities, you can use third party couriers. Popular ecommerce websites like Amazon and Ebay don’t ship most of their products to African countries. This means that you’ll have to find other companies like Jumia to do this for you.
Thankfully there are many choices such as Fly Crate or even your state mail system. It may seem like a lot of effort but the demand for quality products in many of these countries is such that you’ll be able to make your money back in no time.
Bonus: Don’t Sweat the Payments
Once you’ve figured out your manufacturing and shipping, there’s another important task waiting for you: ironing out payment processes. Business owners operating in African countries are victims of exorbitant prices charged by banks and independent money transfer companies to process their payments.
These payments are often delayed with no way for the senders or receivers to track them down if something goes wrong.
Don’t put yourself through this ordeal anymore.
The multirail payments platform has operations in over 80 countries including Kenya, Algeria, Uganda and South Africa.
Not only does Veem charge no wire fees to process your payments, you’re also able to track your payments so ensure secure delivery.
Sign up for a Veem account today and expand your business into new frontiers.