A global expansion allows businesses to diversify their markets, obtain top talents, improve brand reputation, increase income potential, and grow their client base. Business leaders must be able to determine which markets provide the most prospects for their organization to expand.
Most of them take their chances with stable economies in America, Europe, Asia. Most of my clients did well with these markets throughout the years. However, some business owners want to explore emerging markets where they can capitalize as trailblazers of their industries.
Meanwhile, economists and business analysts saw impressive growth rates in the African region as political stability and intercontinental cooperation were established. The trade agreements between African countries and their exchange of rich natural resources make the continent independent from other outside markets.
Here are some reasons to set your targets in Africa as one of the promising prospects to expand globally.
Growing Middle-Class Population and Urbanization
The African population has a total of nearly 1.4 billion potential consumers. It has the greatest population rate over other continents in the world. The rise of the middle-class and working-class will lead to 80% of the population moving to major cities over the next decade.
Hence, the purchasing capabilities of Africans with their disposable income will create new business opportunities in their consumer market.
It’s better to expand early in the African continent to take advantage of the trends and capitalize on local market knowledge, distribution channels, and business connections.
Promising Economic Projections
The global economy was affected by the Covid-19 pandemic. However, predictions about the overall African economy remain strong and promising from a business perspective. It remains at a consistent 6% growth rate until 2023.
Based on UN projections, 10 out of 20 world’s fastest-growing cities will be in Africa by 2035.
Infrastructure Gaps Are Clearing Up
Back then, businesses saw the African continent with poor infrastructure and government projects such as utilities and basic commodities. However, progress has been made to this developing region doubling infrastructure funding and making major projects such as pipelines that will link every African country.
Moreover, with improved logistics and trading routes, African countries can utilize their natural resources that will create new revenue streams and profits for foreign investors.
A recent study shows that more than half of the most improved countries in doing business are in Africa. Business reforms in many African countries like Rwanda, Kenya, and Morocco outperformed countries like India, Russia, and Brazil.
Furthermore, the political efforts of many African governments have improved the business landscape in Africa. Hence, foreign investors may expect higher ROI and an easier process to explore its growing markets with lower expenditures.
New Free Trade Zones
The African Continental Free Trade Area (AfCFTA) is a trade agreement by 54 African countries to form the world’s largest free trade area. The treaty was signed in 2018 and became operational in 2020.
Through improved harmonization and coordination of trade, the AfCFTA is intended to expand intra-Africa business from its current level of around 13% to 25% or more. The accompanying Single African Air Transport Market and the Protocol on Free Movement of Persons will propel this ahead.
Hence, the business climate in Africa is poised to become much more favorable to expansion. Moreover, expanding in any African nation allows investors to operate across the African continent.
How to Expand in the African Market
There are several aspects to consider before entering the African market. Deploying an employer of record (EOR) service provider is a cost-effective and competitive option.
Business organizations should work with skilled local experts like EOR providers who have a thorough grasp of the legislation to help them mitigate the risks to their operations in the new market.
Employ is an EOR provider that helps international businesses expand their global reach by handling HR, Payroll, and other administrative tasks to ensure compliance. Successful companies always collaborate with local partners like us so that they can focus more on strategic roles and activities for business growth.
Let’s explore the opportunities of Africa together. Reach us today to talk about your business expansion plans.
Olivia Yu has decades of experience in the Human Resources industry. She’s the Regional Director for Asia Pacific of a famous international HR company. Olivia’s international experience inspires her to write articles about human resources and global staffing.