International SMEs Still Don’t Recognize Africa as A Potential Growth Market
A report tabled by the Economist Intelligence Unit (EIU) show that 40 percent of international SMEs don’t perceive the African market as a growth opportunity. EIU conducted the research on behalf of DHL Express. The tabling of this report comes against the backdrop of economic figures from the African continent showing that the continent is experiencing an impressive economic growth and the growing of the middle class.
In contrast, the report also shows that most multinational and state-run companies are actively capitalizing on the economic opportunities that are emerging in Africa. However, the SMEs are very apprehensive about the African market and would rather choose other emerging world markets instead.
Charles Brewer, the Managing Director of DHL Express sub-Saharan Africa said that as much as Africa faces several challenges in attracting global SMEs, the report also highlights other economic growths opportunities present in Africa that are untapped.
“The fact that SMEs expect to generate up to 50 percent of revenues internationally by 2019 is a massive positive and highlights the vast opportunities for Africa from an investment and job creation perspective.”
According to Brewer, the report tabled by EIU surveyed 480 SME executives and professional from various business lobbying groups. The report showed the reason behind SMEs not willing to invest in Africa is attributed to the continent’s low average consumer expenditure, infrastructure and cultural challenges and inefficiencies brought about by corruption and political instability.
“The unfamiliarity of foreign markets received particular attention, with 84 percent of respondents describing understanding a target market’s culture or language as important or very important in determining its attractiveness. This also explains why most SMEs often expand into markets that resemble their own.
This is evident if Africa, as companies looking to expand into the continent often make use of a ‘one-size-fits-all’ approach. Due to the various cultures, languages and customs on the continent, vast amounts of research need to be done into each region, and the services and products need to be specifically tailored to each country. Africa is not one country,” said Brewer.
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