Doing business in Africa is challenging and rewarding

A difficult 2014 has done little to tarnish sub-Saharan Africa's appeal as a
business destination for South African companies looking to expand their businesses.
But to succeed in this challenging and rewarding environment, companies must be
willing to weather volatility and adapt the way that they do business.

 

That's the word from Gerhard Hartman, Head of Department at Sage HR Africa. He says
that with the IMF projecting growth in excess of 5% for the region as a whole in
2014 and 2015, sub-Saharan Africa continues to offer a range of exciting
possibilities for businesses seeking to grow into new markets.

 

Yet as recent instability in countries like Nigeria and Kenya illustrates, companies
cannot expect a completely smooth ride when they move into new African territories.
They can expect to encounter obstacles as varied as high connectivity costs,
bewildering bureaucracy, and a lack of electricity in some countries.

 

However, the environment is improving all the time, says Hartman, with governance
and infrastructure rapidly improving through the continent. Though a battered oil
price and lower demand for commodities may hurt some African economies, there is
still plenty of growth as governments build out infrastructure such as roads and
power generation and as African agricultural exports boom.

 

Less red tape

 

"From our perspective, we entered Africa several years ago, and we have seen the
business environment mature at a rapid speed," says Hartman. "Thanks to the efforts
African governments have made to reduce red tape, it is easier and more attractive
to do business here than ever before."

 

Hartman says that to succeed in Africa, companies need to be attuned to the nuances
in different regions and countries - a one-size-fits-all approach will not work.
This means it's important to have boots on the ground to serve customers - just as
anywhere else in the world, businesses in Africa value face time and localised
support.

 

"We believe that you need a mix of your own people on the ground to put your systems
and processes in the place with local staff members and business partners who have
the contacts and expertise to help you succeed," Hartman says. "It's important to
have the humility to listen to them and accept their guidance."

 

Mistakes to avoid

 

Common mistakes that companies make when expanding into Africa include not having
sufficient knowledge of the country and a lack of operational planning. Preparation
is essential as is a solid understanding of the local tax laws, exchange control
regulations and company legislation. Finding trusted local partners and doing the
necessary homework can help companies avoid costly mistakes, Hartman says.

 

It's also important not to underestimate the time and money it takes to expand into
Africa, says Hartman. For example, it's expensive but essential to set up business
systems, train local staff and resellers, and meet with customers and provide on the
ground support.

 

From Sage HR's perspective, it is growing into Africa off the back of the Sage
Pastel and Sage VIP brands, which are both highly respected in South Africa. Africa
is an irresistible growth opportunity since companies in Africa are starting to
realise the importance of automating HR and payroll software. In addition, Sage HR's
South African clients expect the company to be able to support them wherever they do
business in Africa, says Hartman.

 

"We are seeing more demand in Africa for software that helps companies improve
record-keeping and decision making, become more efficient, and drive productivity.
They also want to ensure compliance with stricter tax and labour laws," he adds. "HR
and payroll is becoming a priority because it is an essential part of any company's
strategic advantage."

 

Thanks to mobile broadband prices falling and infrastructure improving, there is a
big demand for cloud-based solutions that allow people to be mobile and productive,
says Hartman. The cloud is helping African businesses to get up-and-running on the
HR solutions they need at a rapid pace and with minimal upfront spending.

 

Sage HR Africa