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5 Reasons Why African Entrepreneurs May Fail In The West, But Hit The Jackpot In Africa

The number of African entrepreneurs and those of African descent is growing significantly these days across the world. What wonderful news, because frankly, I think nothing will be more empowering to us psychologically, economically, and politically in the long-run. Entrepreneurship is not a job, it’s a way of life that can potentially put you in control, enable you to expand your potential, increase your influence, and ultimately allow more freedom.

But there is more to it: You can actually make a significant impact in this world! And when you focus on Africa, you will contribute towards the future of a continent that had struggled to shine for far too long.

I think lack of knowledge is a key obstacle that is hindering many of us to strive towards entrepreneurial and business success in Africa one way or the other. Too many – be it on the continent or in the Diaspora – are still looking for jobs or think that fortune will be better found in the West.

Well, we all have our own circumstances and preferences. I myself am based in Europe, but even there I managed to start a new business that revolves around Africa, and the fulfillment and potential it holds excites me each day. So I thought, it may help to summarise why the potential for you to realize entrepreneurial success and financial freedom may be so much greater in AFRICA than anywhere else.

1. Demand is far greater than supply across markets and industries

While consumers in the West have almost everything that their hearts desire, the African consumer is just waking up to new spending power abilities. According to the McKinsey Global Institute, by next year Africa’s consumer spending will be in the region of $1 trillion, driven by Africa’s exploding new middle class of over 300 million people. In fact, analysts fear that the demand for many products and services cannot be sufficiently met. Right now, there is a huge demand for an entire range of products and services across markets and industries – simply not enough is available or quality is poor. This does not only allow faster growth within a market, but often also enables you to expand fast and relatively easy across borders.

2. You can compete with your new product

The level of market competition is one of your biggest challenge in the West. Let’s be random: Take bottled water, for example, or baby diapers, pasta, or make up. The store shelves in the West are filled with a huge range and variety, but above all, with leading international brands that are hard or sheer impossible to compete with.

Now in many African countries you will only find one or two brands – often they are hugely overpriced if they are imported, which means there is a lot of room for local production. Or they are of such poor quality that they don’t meet the standards of the more affluent African. Or they simply don’t exist. Take entrepreneur Mary Cherop for example – she was a working mum who recently manage to get her simple ‘frozen vegetables’ into a leading supermarket chain in Kenya. Come on, you can do this!

Although competition in Africa is increasing and you should develop a sense of urgency, the amazing thing is that you can still have a clear first mover advantage with many simple concepts in Africa right now.

3. Your investment can reap super returns

Ok, the return on investment (ROI) on average in the US was about 2.3% in 2015. In fact, many investors in the West have started complaining that the returns were so small that they felt discouraged or started looking elsewhere. Foreign investors in Africa widely report ‘super returns’, many making 15-25% return on their investment. The figures speak for themselves and are not based on stocks (I still got to do some research on those), but on direct investment into local companies.

Tom Speechley, a senior partner of Abraaj Group, a leading private equity investor in global growth markets, said at an event at the end of 2013: “The interesting thing about Africa and emerging markets is you can make a lot of return just with equity—you don’t need to use leverage to generate return. We typically don’t use any […] We just put in equity and hope the business grows three or four times over three or four years and you make three or four times your money.”

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4. Africa is embracing the African Diaspora

Yes I know, some of those who have returned to Africa report of the personal challenge to fit into the society, but I believe that this will probably only be temporary and sometimes it is also down to how critical you tend to look at life and people.

But here is the thing: In the West you are more often than not a ‘nobody’ and especially in Europe (except perhaps the UK), it is extremely difficult to even find a high-paying job as an African, let alone become a widely respected CEO. While you may face some societal challenges when returning back to Africa, fact is that people there will usually welcome you and look up to you admiring the skills and experiences you are bringing into the community. There is currently also a very visible shift happening: driving localization of executive leadership and cutting down the number of expats in Africa. In short, being African will work for you, not against you if you want to grow into a new business leader.

5. You can start from scratch and build an empire

Seriously, in Africa you actually have the potential to create a business empire. From scratch. You will be amazed to hear that many of the new generation of incredible successful millionaire-entrepreneurs in Africa have not started off with a rich dad or an investor. They started with nothing. You want to know how? One step at a time with vision, hard work, and the right concept.

Let’s take Patrick Ngowi. Tanzanian. Just 29 years old. About ten years ago, aged 19, Patrick received a small loan from his mother to start a business. It was just a  little over US$1,000 that she gave him. He started off selling Chinese mobile phones, but then discovered that only a tiny fraction of Tanzanians enjoyed access to electricity, so he saw a gap he wanted to fill. He continued travelling to China, but now bought small solar supply and installation systems instead. To make it short: A couple of years ago, his company Helvetic Solar did more than $5 million in revenues and KPMG East Africa recently valued the company at $15 million ! Yes exactly, let’s repeat: he had no real capital, no investors, no prestigious position or friends in the government, and not even experience when he started in Africa and today Patrick belongs to the richest under 30 CEOs on the continent He started from scratch without having really invented anything. He simply met a basic demand – and had no serious competition.

[Read also my post: ‘$100 – How These Poor African Entrepreneurs Started Extremely Successful Businesses]

6) African entrepreneurs work with a greater sense of purpose

The success of your business depends vastly on the passion you have for it, of course, on the right business model, and on your determination and creativity. Operating in Africa has many challenges (patience is a virtue!), but having worked in Africa myself, I know nothing can beat the level of appreciation, personal engagement, and fulfillment you get when serving the needs of Africans. While your attempts in the West may go unnoticed and you can be replaced only too easily, any venture you start in Africa can be turned into one with a purpose. You are someone who makes a difference and people notice you, respect you, and appreciate you for it. And I think we can all do with a little of that!

There are so many products and services Africa needs right now. You will find that many of your business ideas may meet basic needs, yet chances are, that it will be very easy to turn any business model into one with purpose.

How To Stay In The Loop

So here you go, these are some of the most important facts that accelerate your chances of doing business in Africa – the gates are open. Of course, truth is that many entrepreneurs and businesses in Africa still fail or just make enough to get by, so it’s still very important you do your research properly, know your industry & market, and plan accordingly in order to be successful. That’s what Africa Business Jumpstart is here for. If you want to receive my FREE monthly Africa Intelligence and stay in the loop, so you can make informed and confident decisions just sign up on the right.

I hope Africa will win you over – but above all, you will be amazed about your own transformation in life, once you manage to win over Africa.

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Written by PH

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