Critical success factors determining the effective expansion of South African financial services firms into sub-Sahara Africa

Abstract

ABSTRACT For over a decade, sub-Sahara Africa (ex. SA) has been identified as a region of rapid economic growth potential. Recognising this, several South African companies have attempted to take advantage of the opportunities on the rest of the continent but have returned mixed results. Focusing on financial services, this research aimed to identify common themes and success factors that influence an effective expansion strategy into the rest of the continent. Research data was gathered through a qualitive approach. Using a semi-structured, open-ended questionnaire, nine senior executives and business leaders of prominent firms were interviewed. Several key findings from the research were noted. Firstly, while the literature suggested that companies ought to adapt their business models and customise products, this was not conclusively supported by the data in the case of financial services, where standardisation has its merits. Second, though most participants agreed that partnerships where important, there were notable differences in the approach to partnerships. Third, instead of diversifying as much as possible regionally, most respondents supported expanding only into key and relevant markets. Lastly, most participants agreed that to win on the continent firms should focus on rolling out their firm specific advantages and developing economies of scale, which cannot be easily replicated by the local competition. Various key messages emerged from the study. As a starting point, executives should be clear about their goal on the continent. They should seek to establish partnerships with allies that share one’s goal and ensure that the partnerships are appropriately designed to align interests. The temptation to spread resources in the quest to be in as many geographies as possible should be avoided. Recognition should be given that local competitors are often formidable rivals, so focus on core competencies and avoid too much adaptation and trying to be everything to all. Finally, firms should be patient and take a long-term investment horizon.