There are two main approaches to setting up a business in the sub-Saharan African region. The first, and possibly the least complicated, is to take over an existing entity. The other option is to set up a business from scratch. Whichever approach is followed, there are a number of aspects to consider before embarking on your journey.
Firstly, take into consideration whether the business you plan to set up is viable in that particular region. What is worthwhile in a South African context is not necessarily valued or needed elsewhere. Useful insight into the regional economy can usually be garnered by meeting with chambers of business and analysts or from the local South African expat business community. These groups have regular meetings which all SA expats are invited to join.
Also, local rules and regulations pose the greatest obstacle and it is important to have all your bases covered. An existing entity will usually be legislatively compliant, however, whether starting from scratch or taking over a business, get in touch with a local accounting or auditing firm to assist with municipality rules, government rules and council taxes, among others. Remember also that different countries have different quirks, such as in some African countries it is required that you hang a picture of the local president in your office.
Finding skilled staff is currently a challenge faced by companies worldwide and the same applies to a business in sub-Saharan Africa. While some locals have education and therefore theoretical skills, the shortfall is often encountered through very little relevant practical experience. Once obtained, the task of retaining that skilled talent in your company can also become a challenge, as skilled staff members are often poached by other companies.
Obtaining the right balance in terms of a starting salary can be tricky. A new operation cannot have the mindset of paying either South African or local salaries. Rather a happy medium needs to be found. There is the added pressure that many local employees demand a higher salary from a South African-based company due to the perception that such a company has a larger budget. It is best to speak with the relevant authorities to find out the average salary or conduct a thorough salary survey, because while you might end up paying slightly more, productivity will not be dramatically increased due to above average salaries.
Should you find that you are leaning towards setting up some of your South African staff in the local market, consider the set up costs in this regard, such as housing, transport and schooling. There are also work permits and local rules with regards to foreign workers to consider.
Bringing in South African staff could also impact on the culture of the organisation. The local culture will be vastly different to that of South Africa and it will take some patience and perseverance in establishing the right mix of people. One thing to bear in mind is that even if you have someone from South Africa in the local office to drive business adaptation, you are most likely going to have to adapt to the style of the local culture. Plus, you will need to work with local partners to build up business relationships, and locals are always more responsive when dealing with their own people.
Then, of course, there are always the technical issues to take into consideration, for instance, is your financial and enterprise resource planning system conducive for local conditions. You may also run into business constraints such as limited bandwidth and fluctuating electricity supplies.
Always remember that when establishing your business in another country, you will be competing against established players with established relationships. Therefore, a long-term view is required, as you will most likely need to invest for a few years before you start making healthy returns.
There is no central repository for information on starting a business in an African country, so it will be a learning curve for the first few months. However, if you go into the African market with your eyes wide open, you will most likely reap the revenue opportunities.
Share
Editorial contacts