The African Dream

UK exports to Sub-Saharan Africa are on the rise. SmallBusiness.co.uk speaks to some of the companies that instigated trade relationships in such lesser-known markets.

Last month, British businesses discussed opportunities to play a pivotal role in driving forward business development in Africa at a new Sub-Saharan Africa Task Force held in London.

The initiative enabled discussion on strategic issues relating to British business interests across a number of Sub-Saharan African markets.

Lord Green, minister of state for trade and investment, who chaired the event, said, ‘The inaugural meeting of the Sub-Saharan Africa Task Force represents a major step forward in helping British businesses to seize the growing commercial opportunities in the region. These are diverse and vibrant markets offering openings across almost every sector.’

There is a meaningful trend to interest exporters. UK exports to the whole of Sub-Saharan Africa were up by 25 per cent from £3.3 billion to £4.1 billion between January and June 2011, compared with the same period last year.

But what are the geographical trade patterns? Edward George, soft commodities specialist at pan-African bank Ecobank Capital, says, ‘Currently, if you look at the bilateral trade relationship between Africa and the UK, about 50 per cent is with South Africa and 15 per cent with Nigeria – and the latter is nearly all oil coming from Nigeria and manufacture and services coming from the UK. You have to dig down quite some way to find the smaller African countries. The flows of trade are still very low, but the potential to expand is enormous.’

On the export side in particular, George says that the UK has traditionally exported high-value manufactures to Africa, especially machinery, distilled products, vehicles, aircraft, electrical goods, steel and pharmaceuticals. ‘With urbanisation rates rising fast across Africa, demand for cars, white goods, computers, air conditioners and building machinery (such as bulldozers and cement mixers) and materials will continue to grow, and British companies could meet this demand,’ he adds.

TDSI is a manufacturer of electronic access control systems that started to export in 1984, and now has somewhat of an exporting culture. When owner John Davies bought the business in 2005, exports accounted for about 40 per cent of turnover. That has now increased to 50 per cent, with the volume of export sales growing about 70 per cent over the past five years.

The company’s first move into African markets was through project work with the Ministry of Defence in Sudan, but opportunities were also to be found in Nigeria. ‘We got involved with a trade show in Lagos and it was one of the better ones we’ve done for a long time. It was the first time that a security show has been hosted in the city, and within six weeks of the show we’d signed up a new distributor and had our first order,’ he says.

Davies sees the Nigerian market as the ‘keystone’ for the whole of West Africa including countries like Angola and Ghana. Why does he see such a promising trade relationship on the continent? ‘In the African marketplace they have security issues, but they don’t have the manufacturing capability to fulfil the demand internally,’ he says. ‘In the security sector at least, African buyers look to British companies for reliable products.’

Colonial legacy

Historical links are another reason for good trade relationships. Neil Kuschel, sales director at DHL Express, notes that countries in Africa are all generally linked with one of five European countries – the UK, France, Germany, Portugal and Belgium – due to the historical division of Africa during the colonial era.

He says, ‘UK SMEs will definitely find it easier to work with the Anglophile countries such as Ghana, Nigeria, Kenya and most of East and Southern Africa. However, English is spoken in nearly all countries, so other countries like the Ivory Coast, Angola, Senegal and the Democratic Republic of Congo should not be dismissed.’

Lance Hiley, vice president of market strategy at mobile networks infrastructure provider Cambridge Broadband Networks (CBN), saw an opportunity in Africa early in the company’s timeline. ‘For the majority of African nations, particularly those in sub-Saharan regions, there was, and still is to this day, a big challenge to provide communications to the people who need them due to there being very little fixed-line telecoms infrastructure,’ Hiley explains. This meant there was an absence of national telephone networks, internet access and, of course, high-speed broadband.

Wireless internet for Africa

In 2002, the company launched its first product for the African market, to provide wireless internet access for enterprises, and found that opportunities in Africa grew and changed as operators recognised the need for mobile communication networks.

In 2006, the company deployed its first African backhaul network (whereby phone calls and text messages are transmitted from a remote site to a central site from where they are re-transmitted) for MTN Cameroon, and soon afterwards it deployed a backhaul network for pan-African mobile telecommunications company Vodacom in Tanzania.

It was a considerable infrastructure challenge, and the pressures on working relationships that can be caused by such projects should not be underestimated. ‘When working with African companies it’s important to understand the challenges they face and the business etiquette of each nation. Each country is different; while one solution may suit one country this doesn’t necessarily mean the neighbouring country will be the same,’ says Hiley.

When international trade is a success, sometimes it is a natural decision to open a branch in the overseas location. Following the opening of an office in South Africa, CBN opened up in Kenya and Nigeria and now has a workforce of 28 and growing.

Hiley says that Africa is fast adopting mobile internet devices, smartphones and tablets, with CBN’s customers migrating their mobile networks to 3G. Hiley clearly has a vested interest in the infrastructure development in Africa. ‘We want to ensure that Africa’s mobile backhaul infrastructure is ready to scale to the exciting innovations ahead,’ he says.

Also on the communication front, there is evidence of considerable social networking in Africa, which can only facilitate international trade. Chams Diagne, Africa general manager at professional social network Viadeo, says that the site has a current base of one million African users, 50 per cent of whom reside in Sub-Saharan Africa. ‘We should be able to double the volume of members in Africa within a year, providing the UK with a substantial number of potentially very valuable connections in Sub-Saharan Africa,’ he adds.

At a time of increasing interest in African trade on the part of UK SMEs, there is nevertheless a sense that many export opportunities in Africa have been overlooked in recent times. TDSI’s Davies believes that, from an export point of view, Britain has taken the ‘line of least resistance’ over the past ten years. ‘We’ve continued to plough the same fields in the US and Europe while there is a huge opportunity in Africa,’ he says.

‘It’s not a tap you can turn on straight away; you need to do an awful lot of legwork in these emerging markets to develop relationships.’

However, with the latest export statistics revealing that UK companies are looking beyond the usual suspects for international trade, it is fair to say that a sea change could be well on the way.

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