Success strategies for business development of Multinational Enterprises in sub-Saharan Africa

Abstract

The African continent still holds large reserves of raw materials and the continent as a whole is largely under-developed. The real GDP growth in the last decade has been 5.7% and it is forecasted that countries such as Angola, Ethiopia, Chad, Mozambique and Rwanda will have GDP growth of 7.0% over the next five years. The population of sub- Saharan Africa is roughly 860 million with an average GDP per capita of over USD 2,200. The current infrastructure deficits coupled with recession in other parts of the world is driving massive investments from Multinational Enterprises (MNEs) into sub-Saharan Africa (SSA). It is foreseen that SSA will be a significant growth area for businesses for many years to come. This research was undertaken to investigate the challenges facing MNEs and to find out key strategies for success in SSA. The research was qualitative in nature and data were gathered from literature reviews and validated through in- depth semi-structured interviews with business executives who are experienced in doing business in SSA. The following are the key findings of the research. The main business challenges are: infrastructure deficit; poor governance; high levels of corruption; inefficient bureaucracy; weak financial institutions; culture differences and skill shortages. The success strategies are: market entry through turnkey projects; exports and acquisitions; choosing partnership with due diligence; localisation strategy; establish dialogues with authorities; prioritise using a few countries first; and to pay attention to culture amongst others. Entry into SSA is no easy feat; however, MNEs cannot afford to miss this opportunity and now is the time to invest.