Angola again offers potential for future growth – FGI expert
Johannesburg, 7 March. More often than not when I am talking to a client about Angola their eyes widen and they give you the ‘Are you mad?’ look. And rightly so, because the number of stories I have heard directly from companies who have lost millions of dollars in Angola are quite staggering.
In one case, a company in the oil industry had appointed an Angolan agent to manage its operation and discovered only after 18 months that the agent had delivered nothing in terms of setting up the necessary marketing and distribution channels. This had already cost the company dearly, being a multinational it was forced to eventually find a new Portugal-based agency that put its business back on the map in Angola.
Things have been tough in Angola over the last year, but are starting to look up and it is therefore a good time to research potential for business growth. According to the African Development Bank Group, “The Angolan economy was hard hit by the sharp decline in international oil prices, as well as a temporary reduction in oil output due to unscheduled maintenance of oil fields, and prolonged drought. Nonetheless, sound macroeconomic policies helped to ensure an economic growth rate of 4.5% in 2014, down from 6.8% in 2013. Angola will suffer from significantly lower oil prices over the 2015/16 horizon. Lower oil prices are expected to lead to sizeable cuts in public spending and a consequent deceleration of GDP growth to 3.8% in 2015. But growth is expected to rebound to 4.2% by 2016.”
The article goes on to explain some of the challenges, “Growth and equitable development are constrained by the adverse business environment, inadequate governance and transparency in the management of public resources, weak quality and maintenance of physical infrastructure, limited quality of human resources, weak agriculture growth, inefficient public service delivery to the poor, and difficulties in managing income from non-renewables to create savings for future generations.”
These challenges are real and an in-depth understanding of the business landscape is required to succeed in Angola and elsewhere in Africa. One needs to find the right contacts, understand how they work and strictly monitor performance.
This is a worthwhile enterprise, statistical projections show massive potential for business growth in Africa in the coming years. Ernst and Young in their ‘Growing in Africa: Opportunities for consumer product businesses’ forecast big things for the Africa of tomorrow. By 2020 there will be 28 million households with discretionary income and consumer spending will top US$1.4 trillion. By 2025 the total population in Africa will have reached 1.4 billion and by 2030 around 50% of Africans will be living in cities. As a result, there has been a rush by businesses to capitalise on the continent of opportunity.
Companies entering a new market or expanding in an existing market in Africa will benefit from market research solutions to help them better understand the supply and demand cycles unique to their business. To better understand the target market a company can do product testing, market segmentation and profiling, media efficacy measurement, supplier rating, and in the case of the retail stores, where best to locate outlets.