Four Tips for Doing Business in Africa

4 Tips for Doing Business in Africa

Africa is undergoing a drastic shift toward financial stability. Investors expect that this continent may host several emerging markets in the near future, which bodes well for doing business in Africa. The country's increased infrastructure in communications, technology, finances, and legal environment makes the continent more tempting for investors.

With all this excitement, companies looking to expand internationally should consider this growing market. Below, we’ve laid out our top four tips to help companies find success when doing business in Africa.

 

1. Understand Employment Regulations

Before expanding into any country, it’s crucial to understand the specific employment regulations in order to keep your business compliant. Here is a high-level overview of Africa’s regulations and how they could affect your business expansion:

  • Africa as a whole is not as stringent with employee regulations, compared to western Europe. For example, regulations designed to protect workers, such as the establishment of minimum wages and regulation for overnight work, are often bypassed for the benefit of the employer. Because of regulations like this, employees are not as protected in the same sense as they are in Europe or Latin America.
  • Employer contributions are very low. Because social systems in Africa are poorer, it is less expensive to employ people and provide benefits. Consequentially, this decreases the total cost of supporting an employee as well.
  • Acquiring work permits and visas are difficult. In an effort to spur local employment, South Africa heavily favors organizations hiring locally for the majority of its positions. If they’re able to prove that no South Africans are qualified for the job, only then can it sponsor a foreigner for a general work visa. Because it can be a timely and arduous process, it is likely best to recruit and hire local African nationals.

2. Identify The Top Markets

Despite the economic conditions, there are benefits to entering into African markets. Consider looking into the following areas that have strong potential for growth in the coming year.

  • Morocco is a leader in Africa with renewable energy with a goal to obtain 40 percent of their energy through renewable means by 2020. A bridge to Europe, the King has made a series of business development trips across the continent to promote those relationships.
  • Kenya has the largest, most diversified economy in East Africa. In recent years, the country has continued to push strongly for increased infrastructure development. With this comes various growth initiatives in the country’s telecom sector.
  • Ghana has increased its economic growth due to its easy port access and increase in digital goods exports. The country has extensive software and technology development talent, which it continues to showcase in areas like its most recent digital address system.

3. Find Growth Industries

There are a number of prospective industries to watch for growth in Africa. These major areas are poised for growth as the African economy continues to develop.

  • Africa’s technology advances skip the wired stage of communication, generating exciting innovation in the financial technology sector.
  • Online retail has not caught on the way it has in the western world, but that could change in the near future. Many countries have increasing internet connection, especially through smart phones, making this a growth opportunity.
  • Mobile solutions are driving amazing tech innovation in Africa, especially in healthcare because there are so few doctors and so many patients. An enterprising company may be able to glean fresh ideas from Africa to take to the rest of the world.
  • With a rapidly urbanizing population, more cities will need good public transportation options. Investors expect governments to start upgrading their transportation infrastructure to meet the need.
  • You may have noticed how many of these exciting sectors reflect technological innovation through communications. Africa’s innovation in tech drives much of their growth.

4. Utilize International PEO to Simplify Expansion

Expanding into Africa on your own can be very costly. Partnering with an International PEO provider can help you take advantage of the global business benefits and simplify the expansion process.

International PEO (Professional Employer Organization) allows companies to gain a presence in Africa (or anywhere in the world) without setting up a legal entity. By utilizing International PEO, companies can expand into Africa in a matter of days and reduce overall global expansion costs. International PEO also helps companies gain a better understanding of local labor laws and business climate to stay compliant, mitigate risks, and develop a successful operation in Africa.
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Expand into Africa with Confidence

A global expansion partner can provide expertise and simplify an expansion into Africa. If you’re ready to take your business internationally, consider using a trusted in-country partner like Velocity Global. Learn how to capture a piece of this developing market quickly and compliantly, with our international expansion services such as International PEO. Contact us today.

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