The report by EIU, on behalf of DHL, showed that while many multinationals and state-owned companies see Africa’s potential and are taking advantage of the opportunities, 40 per cent of SMEs are anxious about the African market and have chosen to trade with other emerging markets.
Charles Brewer, managing director of DHL Express Sub Saharan Africa, reported that SMEs are discouraged by various factors such as Africa’s low average consumer spend, cultural and infrastructure challenges and inefficiencies such as corruption and political risk.
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A majority of the 480 SME executives and experts from business lobbying groups who were surveyed said familiarity with foreign markets’ culture and language is appealing. Most SMEs often expand into markets that resemble their own.
“This is evident in Africa, as companies looking to expand into the continent, often make use of a ‘one size fits all’ approach. Due to the various cultures, languages and customs on the continent, vast amounts of research need to be done into each region, and the services and products need to be specifically tailored to each country. Africa is not one country,” said Brewer.
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The findings also showed that despite the continent’s challenge to attract international SMEs, it still has great opportunities for investment.
“The fact that SMEs expect to generate up to 50 per cent of revenues internationally by 2019 is a massive positive and highlights the vast opportunities for Africa from an investment and job creation perspective,” said Brewer.