Determinants of business success and failure for South African financial services companies doing business in West Africa

Abstract

West Africa has a population of over 300 million people and is viewed as an attractive market by companies from both South Africa and outside the continent (Grant, 2001; Akinboade & Lalthapersad-Pillay, 2009; Luiz & Charalambous, 2009; Kudaisi, 2014; Anyanwu & Yameogo, 2015; Doucoure & Çankaya, 2021; Africa Business, 2023). The West African region is not a uniform region with a common language, currency, culture and business practices. The region is mainly divided into Anglophone and Francophone countries. South African companies have successfully explored many business opportunities in sub-Saharan Africa in general; however, in West Africa particularly, they have encountered challenges and subsequently exited the countries concerned (Chizema, Kleynhans, Bezuidenhout & Mhonyera, 2021; South African Institute of International Affairs, 2005; Wits Business School, 2019). In the financial services industry, both South African banks and insurance companies have a presence in West Africa; however, there are common factors that contribute towards the success and failure of South African financial service firms in that region. This study aimed to provide an in-depth analysis of the factors that enable South African financial services firms to succeed in West Africa. Qualitative research methodology, specifically case study research, was selected for this study with access to various South African financial institutions such as Sanlam, Absa, Hollard and Momentum Metropolitan. The contribution of this study is threefold: Firstly, this study has added to the existing frameworks by developing common factors that are applicable to South African financial services firms specifically, drawing from and expanding the existing theories and frameworks. Theories such as the Internationalisation Process Theory, The Network Theory, Agency Theory, and A Resource-Based View explained the empirical data gathered. The main framework that underpinned the majority of this study is the CAGE Distance Framework, but all the three dominant frameworks, thus PESTEL and the Country Portfolio Analysis, were considered. 7 Secondly, the study developed a framework that will enable South African companies (specifically in the financial services industry) to have an increased success rate when entering and doing business in West Africa. A conceptual framework was developed which South African executives can use when they plan to enter the West African region. Thirdly, from a methodological perspective, this is one of the few studies to date that uses case study methodology to provide insights on factors which cause South African financial services firms to succeed or to fail in West Africa.