15 January 2013

Africa: Country Specific Knowledge Is Key to Successful Entrepreneurship in Africa

Photo: Stuart Price/UN
A market vendor in Southern Somalia.

opinion

What is considered "known" about sub-Saharan Africa is usually assumption, often gained from news headlines.

There is substantial confusion about real and perceived risks - many of the latter being down to cultural differences, which can be managed by being sensitive and aware.

I live in South Africa, and invest in 26 countries across sub-Saharan Africa. I am passionate about the opportunities, but also wary about avoiding pitfalls.

To succeed, it is essential to understand the landscape and diversity of the different countries that make up the region.

Our 'Hello Healthcare' company, for example, addresses primary health care, providing easily accessible and affordable health services and medical supplies primarily to the grassroots sector in the countries we operate in.

In Western economies there is reliable infrastructure and the health market is saturated. Societies are heavily urbanised with easily accessible healthcare facilities.

Public healthcare is poor and almost non-existent in many African countries. It is also inaccessible to masses of people living in outlying rural villages, where there is no transport, minimal disposable income and a great need for basic education on health care.

Africa's young population and strong economic growth in recent years present significant opportunities for entrepreneurship.

Through the telecommunications revolution that has swept the continent in recent years, new possibilities are opening up for consumer engagement through low cost marketing and advertising. Social media through cell phones plays a major role in marketing, business, and even in education.

The opportunities and potential returns Africa offer, I believe, can surpass those of developed markets in Europe and the US. In my experience the risks are no greater than in other countries.

While there are cowboy capitalists, corruption, nepotism and unsavoury tender processes happening daily, it is not something that troubles me. Such issues of governance should be expected in emerging and frontier economies. Desperately needed but poorly implemented empowerment initiatives that were put in place over a decade ago are now being improved and becoming more realistic and fair.

Challenges remain - not least poverty, crime and unemployment, which are ever present. A strong focus is required on investment in improved infrastructure in critical areas such as transportation.

Other risks cannot be overlooked. In order to operate effectively in Africa:

Choose your sector carefully before plunging into it.

Ensure you have local partners who know the landscape.

Find a trusted set of eyes and ears on the ground, whose ethics and interests are aligned with shared ethics and business standards

Research and check the viability of the investment, disregarding the shadow of Africa's perceived reputation.

Are there opportunities for entrepreneurship in Africa? Yes, but you need to be knowledgeable about each country's dynamics.

York Zucchi is founder of York Zucchi Partners, which invests in and runs enterprises across technology, IT, tourism, publishing and healthcare.

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