Four Challenges Western Businesses May Face When Entering The African Market

Four Challenges Western Businesses May Face When Entering The African Market

Four Challenges Western Businesses May Face When Entering The African Market

Artiom Anisimov is the CEO of EOS Data Analyticsa global provider of AI-powered satellite imagery analytics for 20+ industries.

Africa provides Western companies with a unique opportunity to become early entrants and establish businesses in promising niches. However, there are obstacles that entrepreneurs will have to overcome. Given the specifics of the business, economic and political environment, the African go-to-market demands meticulous and in-depth preparation.

Our company, EOS Data Analytics, offers satellite-powered solutions to businesses and individuals around the world. Between 2020 and 2022, we entered the sub-Saharan region—namely Ghana and Nigeria—through establishing local partnerships. We faced a number of challenges and learned a lot about how to mitigate expansion risks.

Challenge No. 1: Necessity for Local Presence

A business that intends to enter a foreign country typically has two options: Establish a representative office and grow relationships with potential clients from the ground up, or find a partner who understands the local community’s needs and can facilitate market penetration. We decided to go the second route and partner up with regional companies that could assist in introducing our products to the target audience.

Choosing a partner you can trust and collaborate with in the long run is critical, and this matter should be taken seriously. A company’s market coverage, portfolio, reliability, sustainability and ambitions are all factors that need to be accounted for before signing a partnership agreement. Also, it is crucial to understand whether both companies are looking to grow in the same way.

Challenge No. 2: Distrust Of New Technologies

In our experience, the African market can often hesitate when it comes to new technologies. In the case of EOSDA, even though some people are aware of space-driven solutions, they may not understand how to benefit from the tech.

We aim to educate our audience about the value of satellite-powered analytics by hosting free webinars and joint workshops with our local partners, reaching out to regional journalists to get insightful content published in news and business media, and spreading the word via social media. This strategy takes time to yield some dividends, yet we see it as a long-term investment in creating a strong brand image.

Challenge No. 3: Developing Infrastructure

Lately, internet access in Africa has significantly improved and become more affordable thanks to mobile data. Between 2019 and 2021, internet use in Africa increased by 23%. However, many regions remain offline. Mobile traffic is of low quality and quite expensive, and the adoption of broadband connections is complicated by the lack of enabling infrastructure such as reliable energy delivery.

Internet penetration rates differ from one African country to another. Whereas in Ghana, 53% of the population uses the web, in Tanzania—which has some of the largest forest coverage in the world—the internet coverage is only 25%. Unfortunately, we can’t directly influence the web connectivity issue. Thus, we primarily concentrate on the areas with broader internet access, hoping to expand into other territories later on.

Challenge No. 4: Delayed Payments

One more point to consider when doing business in Africa is a possible payment delay, a side effect of converting local currency to dollars. Sometimes, waiting for a favorable exchange rate, an African firm may take weeks to make a payment. Also, it could be complicated for local companies to withdraw a certain amount due to internal state regulations.

In a nutshell, an African go-to-market can be boiled down to three main steps:

  1. Establish local presence and choose a strong partner.
  2. Build brand awareness.
  3. Figure out how to work around limitations.

Even though a Western company may face multiple challenges when entering the African market today, the potential gains are significant.

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