Building a Doable Business Model for the African Consumer Markets
Lauri Edwina Elliott
April 18, 2009
Africa has many business opportunities. The challenge is sorting through them and implementing a "doable" business model and operations. The best equation for success, particularly the first time, is start "Strategic, Simple, Small & Sustainable." A more refined and robust business model will emerge as you implement.
"Strategic" means identify a business opportunity that will serve as an anchor to bigger and better things within a particular market and channels. It means one that serves the market well.
When helping small and mid-size business people and investors identify a strategic business opportunity in Africa, I always start them with a few bits of knowledge. First, the continent of Africa has a population close to one billion. Second, the majority of those individuals are under the age of 40. Third, there is a burgeoning middle class but their individual purchasing power per year is no more than one-third that of countries in the West. Fourth, there is much greater demand than supply for basic needs and services.
Just these simple facts present innumerable opportunities. Looking at the water sector, people need healthy water to drink and support life. Some communities lack sufficient water and need systems to help them obtain it, while others have plenty of water but it is not clean. In both cases, there is not sufficient infrastructure to assure the demand is met. If you can deliver water to support healthy living, you create a business channel through which you can present other product and services. This allows you to multiply the impact of your original implementation.
If we look at the Democratic Republic of Congo (DRC) as an example, it has enough water to power the entire African continent yet less than 20% of the water is clean. This leads to many preventable diseases and illnesses. The demand and support for clean is there, even the DRC government identifies clean water as a key priority as a part of development. Providing clean water does not need to be a non-profit venture, it can serve well as a for-profit venture that benefits the entire business and social ecosystem.
Part of the "Strategic" element is the structures to support the opportunity. With little infrastructure, it seems a daunting task to deliver clean water solutions. However, if you look at the local landscape, it is manageable because of the informal networks that reach the majority of settlements throughout the country. So, there are existing structures that can help you deliver your product.
Another part of the "Strategic" element is packaging a solution that is accessible, available, affordable and attractive to the market. Due to the nature of the DRC market, you need something portable that families and individuals can manage. Also, this will help in the distribution of the product due to the modes of transport and transfer available through the informal networks.
In this case, we are exploring a water cleaning system by AquaClara (www.aquaclara.org). Not only is it portable and inexpensive, it can also be manufactured locally in many cases.
Once the "Strategic" element is addressed, you can focus more closely on how to implement the "Simple," "Small" and "Sustainable" elements. We will explore one of these in the next article. In the meantime, why not join us to learn more about opportunities meeting the basic needs of African consumers on our online radio broadcast at www.blogtalkradio.com/afribiz. As always, you can learn more about navigating business in Africa at our website – www.afribiz.info.
"Strategic" means identify a business opportunity that will serve as an anchor to bigger and better things within a particular market and channels. It means one that serves the market well.
When helping small and mid-size business people and investors identify a strategic business opportunity in Africa, I always start them with a few bits of knowledge. First, the continent of Africa has a population close to one billion. Second, the majority of those individuals are under the age of 40. Third, there is a burgeoning middle class but their individual purchasing power per year is no more than one-third that of countries in the West. Fourth, there is much greater demand than supply for basic needs and services.
Just these simple facts present innumerable opportunities. Looking at the water sector, people need healthy water to drink and support life. Some communities lack sufficient water and need systems to help them obtain it, while others have plenty of water but it is not clean. In both cases, there is not sufficient infrastructure to assure the demand is met. If you can deliver water to support healthy living, you create a business channel through which you can present other product and services. This allows you to multiply the impact of your original implementation.
If we look at the Democratic Republic of Congo (DRC) as an example, it has enough water to power the entire African continent yet less than 20% of the water is clean. This leads to many preventable diseases and illnesses. The demand and support for clean is there, even the DRC government identifies clean water as a key priority as a part of development. Providing clean water does not need to be a non-profit venture, it can serve well as a for-profit venture that benefits the entire business and social ecosystem.
Part of the "Strategic" element is the structures to support the opportunity. With little infrastructure, it seems a daunting task to deliver clean water solutions. However, if you look at the local landscape, it is manageable because of the informal networks that reach the majority of settlements throughout the country. So, there are existing structures that can help you deliver your product.
Another part of the "Strategic" element is packaging a solution that is accessible, available, affordable and attractive to the market. Due to the nature of the DRC market, you need something portable that families and individuals can manage. Also, this will help in the distribution of the product due to the modes of transport and transfer available through the informal networks.
In this case, we are exploring a water cleaning system by AquaClara (www.aquaclara.org). Not only is it portable and inexpensive, it can also be manufactured locally in many cases.
Once the "Strategic" element is addressed, you can focus more closely on how to implement the "Simple," "Small" and "Sustainable" elements. We will explore one of these in the next article. In the meantime, why not join us to learn more about opportunities meeting the basic needs of African consumers on our online radio broadcast at www.blogtalkradio.com/afribiz. As always, you can learn more about navigating business in Africa at our website – www.afribiz.info.
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