2 days ago
Why Africa Could Be Your Next Growth Engine
Adam Fayed, CEO of
By 2100, Nigeria's GDP is projected to be $6.91 trillion, bigger than the current economies of France, Germany, Japan and the U.K., with a population of 500 million to 600 million people.
Across Africa, the population is set to quadruple, reaching 4.4 billion people.
This is within a context whereby most countries will see falling or aging populations—including in Europe, China, Japan, South Korea and in a few decades in India's case.
While nothing is certain and things can change, especially in a region known for geopolitical instability, it is quite likely that Africa could be the world's growth engine within the next few decades.
How can companies take advantage of this?
Create An Online Presence
Firstly, as a young population, the number of people who are willing to do things online is immense.
Some of my organizations have been doing business online in various African countries for years, and we have found that the number of people willing to conduct business remotely is massive.
The African market was our second biggest market in 2021, to give one example.
As English and French are widely spoken in most African countries, this gives numerous businesses the opportunity to take advantage of the African markets from afar.
With that being said, having the right local partners can make a big difference. As scams have been prevalent across the continent in the past, some prospective clients do appreciate some local presence, coupled with a good online presence.
More regulations and licenses can also help in this regard, which is why I recently announced a push to get more licenses across the continent.
Beyond that, there are a number of steps businesses in the financial services industry need to take to succeed in the African market.
Understand The Needs Of Your Customers
Like all markets, businesses need to listen to clients and understand their needs. Many come into foreign markets and push what they see as 'best practice' down the throats of locals.
It is very easy for financial services businesses that are coming from developed countries to assume that local markets are always 'behind' them and, with due course, all markets will converge.
This isn't always the case. Local tastes can differ even once countries develop, as local conditions aren't the same globally.
In reality, the wants and needs of clients do have to be considered, not just what you think is the best option.
For example, when it comes to fixed income, many clients in East and West Africa are used to high returns offered by the banks.
They often expect high fixed-return USD returns as well. This comes with risks, and a certain percentage will have selective memory if things go wrong, as I have discussed before.
Clearly Explain The Risks
It can be difficult to deal with mismatches between client expectations of returns versus risk and the reality.
Therefore, the process of explaining risks to clients is important. That risk includes currency risks because getting 7% a year in USD terms might be higher than 14% a year in local currency in some instances.
As the market gets more sophisticated, it is also important to ensure that more products are offered to cater to these needs, such as truss, foundations, high-net-worth insurance and much else.
This might not be a huge market now, but it will likely grow dramatically in the years ahead.
All businesses will get things wrong when it comes to international expansion, both in terms of physical and remote/online expansion.
Yet going with a learning mentality is one of the keys to succeeding in adapting to any market.
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