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ACE Your Way to Africa

How micro and vary small businesses can access market opportunities in Africa

· Africa

Sub-Saharan Africa is on a roll and on the go as it redraws its map for business, investment and development. NOW is the time of opportunity. Africa is a highly attractive business expansion destination that U.S. businesses cannot ignore.

Don’t let the tendentious negative focus of the U.S. media on the negative aspects of Africa lead you astray and away. A growing number of African markets offer attractive opportunities for micro and very small U.S. business to grow their market reach organically without having to grow in size.

West African markets offer especially attractive opportunities for micro and very small U.S. companies with processes and technologies that can provide practical and functional solutions for inclusive economic diversification and value addition in a way that can address the growing needs and evolving demands of increasing social mobility and a flourishing middle class.

ACE Africa

You can use the Upboost ACE framework to define a winning strategy for expanding your market reach into Africa: Acclimate, Collaborate and Establish.

1. Acclimate your value domain

A domain is a specified sphere of activity or knowledge. In the context of business, a domain refers to your specific sector of activity, such as manufacturing, healthcare, education, IT, agriculture, etc. It points to the comprehension and understanding of the inner workings, processes, procedures and other key aspects of your solution adapted technically and functionally to a specific context.

Your business domain provides a big-picture view of your business and how it works. It defines who your customer is, what your product is and how it is sold, what the cost structure of the product is and where the money goes, how it is distributed or fulfilled, how it is produced or serviced, how you support the customer, how you market your product or service, what partners you work with and how you manage those relationships, what information is required and subsequently managed, what systems are used to manage it and who is responsible for creating, updating and retiring the information.

Your value domain refers to the real-world aspects of the solution you provide and includes all forms of value that are of importance, worth and usefulness in a specific context and that ultimately determine the long-term health and well-being of your firm in a specific market. For example, the value domain of the Oniva car designed and developed by Perscitus International LLC (U.S.) and Oferol S.A. (Uruguay) for the transport of people and goods in West Africa is low-cost, low-maintenance, high-quality, durable vehicle contextually adapted to the specific road conditions and load-bearing requirements in Africa during both the dry and rainy season and that includes post-sales maintenance support (see http://sbaic.org/private-sector-led-development-creating-partners-for-aid-investments/).

When working in Africa or any other cultural and business system different from yours, it’s important to build knowledge of how your business processes will and will not work in that context. Without understanding the contextual differences and consequent required adaptations, it can be nearly impossible to understand how to plan and to determine how to build or customize your product or service to respond to present market demands and their evolution.

2. Collaborate for Collective Impact

Being small and lacking in capital is no reason to be sidelined by U.S. trade support organizations for market expansion into Africa. The collective impact business consortium formula provides a path forward. It was developed by UpBoost LLC, a U.S. Virginia-based company with over 10 years of “boots-on-the-ground” experience in West Africa.

A consortium model makes it possible for micro and very small U.S. companies (50 < employees) to access market opportunities in low and lower-middle income countries through a collaborative approach to business and market development and funding and impact investment. An Upboost consortium is based on the combination of two concepts: collaboration and clustering.

Collaboration brings multiple partners to the table with different areas of expertise. It enables individual businesses to work together to achieve a common business purpose that generates a financial return alongside a measurable, beneficial, place-based social, environmental and economic impact. By pooling member capabilities and resources, a consortium reduces barriers to entry, reduces the cost of legal and due diligence and improves the scalability of bringing capital sources together, while at the same time supporting the destination country’s national strategic priorities for economic and social development.

A consortium consists of 5-8 micro and very small enterprises whose know-how, processes and technologies can provide sustainable solutions to local and regional market needs and demands. Member projects are linked by commonalities and complementarities that enhance and reinforce each other’s business and market development strategies.

 

The objective is not direct export but rather the transfer and adaptation of technology and processes in a way that can build local manufacturing capacity, develop local skills and competencies, create employment, promote local entrepreneurship, and strengthen national and regional market dynamics. The goal is to establish local operations through an adapted franchise model, whereby the technology and/or process is locally produced or assembled, once the original technology/process has been adapted to local functional, operational and market requirements. The aim of an Upboost consortium is to establish a network of business hubs, or sectoral development poles, connected by integrated supply and value chains.

 

The operational integration of consortium members ensures profit and purpose are mutually reinforcing. Pooled capital and expertise in business development build sustained financial health and market competitiveness through mutually-enhancing performance. Systems integration ensures that business development is effected through combined management, product, and project life cycle. Integrated business operations save time and money, increase organizational change readiness and responsiveness, improve data accuracy and strategic decision-making, and increase productivity without compromising quality. An inclusive stakeholder engagement process ensures measured and manageable scalability with increasing returns.

 

This collaborative approach has three main advantages:

 

1) Consortium members spread risk and aggregate their skills, experience and expertise. Shared development costs reduces overheads and provides economies of scale; improves resource allocation; maximizes human resources; increases market influence and reach; strengthens negotiation and purchasing power.

 

2) Investors benefit from a diversified portfolio of assets. Shared information on distributors, innovations, market developments, interior users, and historic investing habits prevents redundancy, lowers purchase expenses, diminishes tactical workload, and boosts consortium member performance.

 

3) The U.S. and African governments benefit from development of unrealized economic potential, empowerment of local communities, improved local skills and competencies, and assured participation of women and youth. Consortium members provide context-specific solutions with business and market development strategies that generate virtuous economic ecosystems. They also build capacity in critical technical and vocational skills by providing training on the use and benefits of consortium components and provide transferable best practices valuable for achieving a better foreign aid ROI.

 

3. Establish a maker system

 

The maker movement is a social movement born of the artisan spirit that today has entered business culture. Initiated in 2005 with the launch of Make: magazine, it emphasizes active learning (learning by doing) through networked and shared learning driven by self-fulfillment. What distinguishes “maker spaces” today from those that have existed throughout history is the focus on collaboration to make things with a distinctive local and customized character. In the realm of economic development and growth, the Kauffman Foundation provides extensive research on how the maker economy in action represents an opportunity to improve local economies by diversifying opportunities, by supporting creativity integrating design and production activities and by providing new pathways for entrepreneurs to become self-reliant.

Applied to international business and investment, the maker movement promotes “on shoring” rather than off-shoring to ensure local content and added value. It focuses resources on product and process innovation that supports expansion of endogenous capacity and capabilities in a way that maximizes potential of place-based micro-makers, manufacturers and global innovator to generate local economic growth and employment opportunities, build domestic supply chains and stimulate consumer demand for locally and regionally-made products.

For U.S. businesses looking to enter African markets, the “maker” approach is key to building projects that will grow and succeed by scaling in reach and impact rather than just size. The unfolding “started/made in Africa” mind-set is remaking what Africans buy. Emphasis and focus is increasingly on using local expertise, know-how and hands-on skills to solve problems in a way that empowers Africans to lead and drive their own development.

Africans are not waiting for others to give them fishing rods so they can fish. They want to transform their creative power into homegrown alternatives that create solutions appropriate for their challenges as defined by them and in a way that taps into the brainpower of Africans to seed shared value and prosperity.

U.S. microenterprises are uniquely capable of providing maker solutions to African challenges. Spurred by an undaunted entrepreneurial spirit, micro and small businesses have always been and still are the backbone of the U.S. economy. They prove that even in the age of corporations and growing monopolies, small is beautiful and powerful and makes it possible to follow one’s dreams. As entrepreneurs and small-business owners across America continue to expand and develop new ideas and business models, they have the distinctive potential to turn more and more Africans into makers by giving them the right tools and inspiration.

Just as small businesses have forever changed the business landscape of America, they can also foster unique, profit-turning businesses in Africa in areas such as access to clean water, renewable energy, health care, food processing, warehousing and cold storage, transport and logistics. To do so, they need to shrug away the limiting shackles of the product exporting pushed by the American international trade and export support organizations and replace it with a maker mind-set.

ACE also contributes to Prosper Africa

In December 2018, the Trump Administration launched Prosper Africa to support U.S. investment across the continent, grow Africa’s middle class, and improve the overall business climate in the region. Applying the ACE concept to support U.S. businesses to access market opportunities in Africa is the most direct, effective and efficient way to make this initiative a reality.

ACE fosters productive partnerships by taking a context-specific approach to economic development that supports and adds value to the generalized “development pole” concept being implemented throughout the continent. It operationalizes the concept of shared risk for higher returns. It takes a multi-stakeholder approach that enables the packaging of U.S. skills and solutions in a way that can best address production constraints. It can address the concerns of African Investment Promotion Agencies, which merit a specific communications outreach strategy.

A cluster-like approach also enables the packaging of local skills to add value to U.S. skills. It enables overcoming supply and value chain limitations and barriers by building bridges between foreign and endogenous knowledge, competence and capacity. It minimizes risk in uncertain environments by enabling functional diversification. It provides financially viable solutions for the delivery of profitable yet positively impactful delivery of processes, technologies and services that will be fully responsive to African conditions and realities. In sum, a cluster provides an integrated synergetic solution to ensuring a long-lasting and sustainable U.S. economic footprint in Africa.

What does success look like?

If you want to expand your market reach into and throughout Africa, you need to innovate enabling solutions to local problems. This means focusing on the functionality of your product or service to ensure it can respond to distinct African challenges in a way that will enable your growth and success through scaling in reach and impact rather than size.

Success in Africa is built on actively developing supply and value chains that are financially, socially and environmentally responsive and enhance long-lasting local economic growth.

Value Proposition: clearly stated and ensure it contributes to celebrating local distinctiveness, to the diffusion of local and/or traditional knowledge and skills, to building the “soft” infrastructure of working together, partnership building and social learning, and to fostering local entrepreneurship by providing opportunities for local makers to build on your solution with new products and services.

Revenues: An Upboost consortium is expected to begin generating revenues in 2-3 years. Profit is incremental as the consortium evolves and attracts mainstream investors looking for niche markets.

Impact: Each business hub is tailored to the unique system and process requirements of its geographical location. Aggregate geographical integration ensures the hub system delivers an overarching impact.

Scale: Scaling of success is achieved in tandem with social impact. The social mission is secured and protected through measurable results.

Additional investment: A successful consortium attracts additional investments that can stimulate entrepreneurial growth, develop local supply chains, generate employment, and generate tax revenues.

Results: The end result is a functionally-conducive maker system that translates impact investing from a compelling concept into sound strategies for responsible investment and sustainable business development.

Your solution

Your solution should incorporate the input of consumers, foster networking and community-building, facilitate local value-added, promote gender and generational sensitivity, and provide a method for access to financing. It should also factor in technical assistance and/or support and a sales and marketing platform adapted to the context at local, national and regional levels.

The next great opportunity for your busi­ness is waiting in Africa. You cannot afford to ignore this highly attractive business and investment destination. If you want to be benefit from the massive transformation on the continent, act now. You can ACE opportunities in West Africa with Upboost LLC. Visit our web page (www.upboostllc.com) to find out more about our consortium for Senegal.

Astrid Ruiz Thierry, Principal, Upboost LLC

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