Six Things to Consider When Doing Business in Sub-Saharan Africa

Over the past two decades, Sub-Saharan Africa has caught the attention of an increasing number of investors who are looking for new and promising opportunities. While growth has slowed in some of the region’s oil exporting countries, the “Africa Rising” narrative continues due to the region’s youthful population of 1 billion people (70 percent are under 30), rapid urbanization, and ongoing improvements in democratic governance, economic management, and peace and security. Sub-Saharan Africa remains ripe with potential and opportunity but there are important factors to consider when seeking to do business in the region.

Market Boundaries Don’t Necessarily Map Onto Country Borders

When looking to define the market, it is important to remember that not only is Africa a large and heterogeneous continent but that market boundaries do not necessarily map onto country boundaries. Moreover, there are approximately 50 cities in Africa with one million or more people. As a consequence, one can define the market in terms of regional blocs, or countries (especially if the country is particularly populous, like Ethiopia or Nigeria), urban corridors, or sub-markets within or across countries. In certain cases, trading communities that exist on both sides of a border, or along a particular trading route, are economically similar and might be considered when defining the geography of the market. Similarly, it can make sense to look at an entire sub-region as one market; for example, the East African Community is trying to encourage precisely this outlook as it works to harmonize tariffs and standards across its five members.