A new study has shown that approximately 40% of global SMEs don’t see the growth opportunity Africa offers, despite positive economic growth. This doesn’t bode all too well for flexibility to the region’s unique ecosystems.
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The study — conducted by the Economist Intelligence Unit (EIU) on behalf of logistics giant DHL Express — surveyed 480 SME executives and experts from business lobbying groups, and further found that many multinationals and state-owned companies do however take advantage of the opportunities the African continent presents.
Charles Brewer, Managing Director of DHL Express Sub Saharan Africa, says that despite current challenges to attract global SME interest, the findings of the study highlight the untapped potential that still exists in the continent.
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“The fact that SMEs expect to generate up to 50% of revenues internationally by 2019 is a massive positive and highlights the vast opportunities for Africa from an investment and job creation perspective,” he says.
According to Brewer, SMEs are deterred by Africa’s low average consumer spend, cultural and infrastructure challenges, as well as inefficiencies such as corruption and political risk in the region. He argues that unfamiliarity to the unique regions is the most common obstacle for foreign businesses.
The unfamiliarity of foreign markets received particular attention, with 84% of respondents describing understanding a target market’s culture or language as important or very important in determining its attractiveness. This also explains why most SMEs often expand into markets that resemble their own.
DHL notes that, with its strong networks, the multinational can help SMEs grow. “With the support of the right partners, a well-designed supply chain, clear understanding of their competitive strengths and the right mindset, SMEs can break through any border and make the world their market,” concludes Brewer.
