Navigating the Scale and Paradox of Africa’s Complexity

Two decades ago, it was not uncommon for Asia, South America and Africa to be talked about in the same breath as the world’s engines of growth.

So why after almost two decades to be the next big thing, for most global companies, Africa is still just that – the Next big thing? Why have only a handful of global companies managed to establish a strong presence on the continent? What makes Africa’s promise a little enigmatic where potential continues to outweigh reality?

For many companies, knowledge (and perceptions) of Africa is shaped by what they know about a small set of countries, such as:

  • Egypt
  • South Africa
  • Nigeria, and
  • Kenya.

In fact, Africa is a lot more complex. After all, the continent has 20.3% of the world’s land mass and is home to 17% of the world’s population. If Africa itself is complex, so is understanding Africa.

First, there is numerical complexity. At 54, there are more countries in Africa than any other continent on the planet. Culturally, these countries are not homogeneous either.

For example, some of the countries in the North might be culturally closer to the Middle East than countries in other parts of Africa. Within the sub-Saharan region, the regions of East, Central, West and Southern Africa each have their own distinct cultures.

The continent has peaceful countries and others facing massive conflicts and political instability. We have a French-speaking Africa that is different from English-speaking Africa, which in turn functions very differently from Portuguese-speaking Africa.

The cuisine changes every few hundred miles, as does the language and people’s belief systems.

Simply put, Africa is too complex to have an “Africa strategy”. It takes a global company to invest effort and money over many years (sometimes decades), to get under the skin of this complexity and create a truly successful business across the continent.

Therein lies the challenge of scale, or lack thereof.

Africa accounts for

If you purely looking at Africa on the scale of its potential is exciting. But if you zoom in and try to understand the continent intimately, the complexity can be daunting.

This is what we call the scale-complexity paradox.

In Africa, a business must deal with a disproportionate degree of complexity compared to the size of the price. While this understanding comes naturally to companies originating in Africa, their global competitors find it much more difficult.

Most end up entering Africa with great fanfare, but are then intimidated by the sheer complexity of the continent. This results in an awareness of the lack of scale and a reprioritization of investments towards other parts of the world where the size of the price is similar, but the returns on effort are higher or faster.

This is the (very) abbreviated common story of the trip to Africa of several global consumer giants, banks and car manufacturers.

Fortunately, there are also notable exceptions. In the book The Trade Revolution in Africa: How to Succeed in the Next Big Growing Global Marketpublished by Havard Business Review Press, the authors explain two fundamental conditions for businesses to succeed in Africa:

  1. the imagination to see the unmet needs of the continent as opportunities for growth, and
  2. long-term commitment to building businesses of significant scale.

There are a few global companies that have understood this paradox and have succeeded on the continent. Sectors that have done well include beverages and telecommunications.

By studying these successful approaches and having had the opportunity to work with some of these brands, we have identified five crucial lessons about companies that have successfully adapted to the complexity of Africa:

1. They respect complexity, without being overwhelmed.
They recognize that there is no one formula that will work across Africa. They often grant each market significant autonomy, while following certain common principles.

2. They find the right mix of global and local talent in their teams to combine global thinking with local nuance.

3. They understand that bringing global brands to Africa is not enough.
You must head to Africa. This could mean complementing global brands with highly localized products and go-to-market combinations.

4. They treat each country with the respect it deserves.
It is often tempting for a global company to seek out learnings that it can seek out and reapply. While apprenticeships are valuable, they almost never work if not supplemented with in-depth local knowledge.

5. Above all, they are in Africa for the long term.
When the scale is small and the complexity immense, it takes time for a business to grow and succeed. The continent needs – and tests – your patience as a business before it succeeds. But when you really engage in Africa, success is a matter of when, not if.

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Sharon D. Cole