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7 Myths About Doing Business In Sub-Saharan Africa

7 Myths About Doing Business In Sub-Saharan Africa

From HarvardBusinessReview. Story by Anna Rosenberg.

Even latecomers among multinational corporations have decided to include African countries in their emerging market portfolios. However, many companies are not making the most of the Sub-Saharan Africa opportunity because of misconceptions about what it takes to succeed in the region.

Leveraging a combination of economic analysis and forecasting, on-the-ground interviews with policymakers, and a dialogue with executives responsible for Africa strategy and operations, we have identified 7 myths about doing business in sub-Saharan Africa that skew companies’ perceptions—and what executives can do to overcome them.

Myth No. 7: South Africa is the natural hub from which to manage a Sub-Saharan Africa business.

Many companies locate their African headquarters in South Africa as they usually already have a presence there for historic legacy reasons since South Africa is more integrated in global markets than other African economies. However, South African businesses are sometimes regarded with a certain amount of resentment in many countries in the region. Moreover, with scarce and expensive talent and increasingly unreliable power, South Africa does not offer a particularly welcoming business environment.

Leading companies are already beginning to think creatively about how different cities might be better suited to different priorities. For example, GE relocated its headquarters from Johannesburg to Nairobi, because the latter is known for benefiting from a strong talent pool and strategic geographic location.

Companies should accelerate their expansion into Sub-Saharan Africa as the region continues to grow, becomes increasingly competitive, and is unlikely to be derailed despite sporadic volatility. To succeed in the continent, executives must develop long-term plans while remaining prepared to weather short-term disruptions.

Read more at HarvardBusinessReview.