Africa is a continent that presents huge opportunities for corporate companies and many other organizations. But often, these have been for a select few. This may be changing as Africa's most ambitious companies are providing some important insights for others - win by absorbing more into the continent.
African companies are now realizing that the key to more growth and more profits is intricately linked to the continent. That it is closely related to growing more on the continent, expanding more into other regional areas within the continent. That the way to go is being pan-African.
Many leading companies in Africa are expanding their businesses across borders in order to get more returns. Companies in areas such as finance, manufacturing, media, retail and transportation are realizing the ingredient to more success is by expanding into other African countries. As simple as that. African Development Bank (AfDB) noted that a pool of 300 companies are showing more confidence in the continent’s long-term growth, tailoring their business models to regional markets, hiring and training local talent, and building private-public partnerships.
It is a very commendable path that will be the key for the success of other African companies keen on furthering their foothold on the continent. A particular example by the AfDB is Ethiopian Airlines, which has made some significant and unprecedented strides in becoming Africa's largest airline. Ethiopian Airlines has achieved this glorious status through strategic investments, airline acquisitions, and pan-African partnership. Another good example is Togo's Ecobank, an excellent financial institution. Standard Group from South Africa and Kenya Commercial Bank were also lauded for adopting flexible cross-border strategies, promoting diversity in their business portfolio, and pushing governments to embrace regional integration.
Intra-African trade looks good too. According to AfDB, intra-African greenfield investments grew from $4 billion to $10 billion between 2006 and 2016. The number of intra-regional mergers and acquisitions also doubled from 238 deals in 2006 to more than 418 in 2016.
So, basically, African companies are increasing their regional footprint. And this is being achieved through more integrated trade and the volatile global environment is helping to push nations to promote intra-regional investment as one way to shore up against external shocks.
Business reforms are also improving. But before any company thinks of growing big through all the methods mentioned here, the first thing they must be obsessed with is working on building a strong domestic base first before launching regional or continental operations.
Header image credit: Quartz Africa