DHL IT eyes Africa’s one billion consumers
Windhoek – China’s dominance of Africa’s consumer electronics industry is to be challenged by the entry of some of the world’s biggest brands onto the continent. This is according to Scott Allison, head of DHL’s technology business unit, who recently met with representatives of 34 of the world’s leading technology companies and says Africa’s time has come.
“The high risk nature of doing business in Africa meant that a large number of the traditional market leaders previously limited their involvement to North and South Africa, opting to partner with distributors in the rest of Africa. This left the market wide open to the more risk-averse Chinese manufacturers.”
He says China’s first mover advantage has resulted in exports of technology-based goods to Africa reaching N$80 billion in 2012.
“Africa’s 1 billion plus consumers who collectively spend N$4 trillion per year have a voracious appetite for electronics with an increased disposable income,” says Allison. “African consumers are demanding good quality products tailored to suit their environment. The combination of all these factors is very appealing to the technology sector.”
While the potential for manufacturing in Africa is being championed by some, many feel that they will import and distribute goods that have been manufactured abroad for the foreseeable future. However, even this comes with significant risk.
“The group identified risks associated with the transportation and storing of high-value consumer goods, restrictions to the free movement of goods through customs and the uncertain legislative environments as their key concerns,” he adds.
The success of companies operating in this sector depends on their ability to understand and respond to the complex nuances of the continent and the localised demands of its consumers. There is also pent up demand from Original Equipment Manufacturers (OEM) with risks of doing business in Africa a significant concern for them.
“DHL provides solutions to the world’s leading technology companies and boasts 30 years on the ground experience moving goods in Africa, serving over 50 countries on the continent. This makes us well placed to provide a low risk solution for high value goods,” concludes Allison.
The sector has collectively agreed that the most desirable distribution hubs would include Nigeria (serving Nigeria only), Ghana (covering the rest of West Africa), Kenya (serving East Africa), South Africa (distributing throughout Southern Africa) and Egypt.