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3 Transformational Forces That Are Driving Business in Africa

by Amanda McKeon

December 4, 2013

While the economy is clearly growing, conducting business in many African countries can still be a challenge for some organizations. Luis Murguia, Senior Vice President of Ecosystem and Channels for SAP in Europe, Middle East, and Africa, shares some insights on how SAP ensures success in an unpredictable market.

“The most important thing to do when you come to Africa to do business is the same thing you would do if you went to do business in France; you learn French,” says Murguia. “Make sure that you recruit local talent and bring foreign talent only to do knowledge transfer. Africa needs to be run by Africans the same way that the French like to be run by the French.”

According to Murguia, there are three major transformational forces that are making African countries critical economies in the world.

“First is the demand for commodities. With the rise of the middle class, there has been increased demand for devices, food, and other products and services,” he says, adding that Africa is a “great source of commodities.”

“The second force is the surge of family conglomerates. These local economic groups that started in trading are suddenly diversifying at a time when the second generation of family owners are getting training in the US and Europe and coming back with new ideas on innovation and taking these business across the continent.”

And finally, Murguia says the e-government initiatives being adopted in most African countries will “have massive impact on the economy.”

While the opportunities are vast, there are still some risks that need to be considered before companies jump head first into the African economy.

“The number one risk they will find is Africa’s lack of strong credit system… but what I am seeing now is many financial institutions are adopting the latest technologies in terms of techniques to manage fraud management,” says Murguia. “As financial institutions adopt mobile and other smart technologies, we will see a strengthening of the financial system which will then be the oil that will lubricate the transformation happening in Africa.”

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