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What companies need to know before expanding into Africa

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Doing business in Africa can become a complex maze. Image credit: Eva Blue on Unspalsh.

16 March 2021 – The African market is a lucrative business opportunity, with returns being notably higher than in existing, saturated markets.  Several companies are considering expanding their footprint across Africa. This is what companies need to know before expanding into Africa.

Africa is a rapidly developing market with massive growth being seen across numerous sectors of business in the last few years. From the perspective of a Multinational Enterprise (MNE), breaking into the African market can be a lucrative business opportunity, with returns in a developing market being notably higher than those in existing or saturated markets. With the opportunity to increase revenue tenfold, it is no wonder that many MNEs wish to expand their footprint across the continent.

“However, Africa’s unique regional profiles, cultural protocols and legislative diversity means that partnering with a resource-rich legal and tax expert is a key component to success,” says Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting South Africa.

He advises that there are certain vital traits that an MNE must insist on in their partner, to ensure their success in navigating Africa.

Extensive experience

In a continent as unique as Africa, with its rich and varied perspectives on business and diplomacy, it is essential to have the right partner. An experienced partner understands how to best navigate its divergent leadership styles, legal structures, and cultural values. To a company wanting to launch operations efficiently and successfully, this kind of insight is invaluable to its progress. Those who set-out unprepared may find themselves facing many intangible barriers to entry, which can only be overcome with the know-how that comes from experience.

Continental network

Companies coming to Africa for the first time need to establish trusted relationships with and between many different parties and agents in their target countries. Starting from scratch can result in years of lost opportunities, but an exceptional partner brings pre-existing alliances to the table. For an eager MNE, with no time to waste, it is a requirement they cannot afford to overlook.

In-country expertise

A cross-border network is only as good as the quality of the in-country agents who anchor it in their region. A great partner does not just offer high-calibre legal and tax services in their own right but has replicated their excellence at all operational touchpoints. Getting this formula right takes time, energy, and resources, which is exactly what MNEs are trying to save.

Strong leadership team

A cohesive leadership team is the driving force that pushes an expansion campaign forward. The right partner exhibits a client-first approach to strategic decision-making and assesses localised progress on that basis. Whether it is a simple tax return for an expatriate employee, restructuring an entire payroll, incorporating a new entity in-country, or providing company secretarial services, a strong leadership team aligns their execution with their client’s desired outcomes.

Centralised command

Ultimately, MNEs moving into Africa want to achieve command-and-control as quickly as possible. And this is what the ideal legal and tax partner provides: a single point of access to a wide array of local and remote resources not otherwise immediately available to their client. That should include both advisory and technical services they can leverage to achieve their goals.

MNEs wishing to expand their presence across Africa do better when delegating to a legal and tax partner with a time-tested, continent-wide network of in-country experts. This ensures the MNE’s corporate strategy remains centralised, and efficiently coordinated throughout the process, saving the MNE precious time and money.

“Most importantly, through such an agent, the MNE gains total command of their expansion and that accelerates their time to launch, as well as the stability of the entire rollout,” says Baijoo.

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