Sweet Africa: How to enter the market without being eaten

Africa is the richest region, a gold mine for engineering companies. At the same time, the African market is very specific, and you need to approach it with knowledge of the matter. In this article, I will tell you about the specifics of doing business and how to avoid mistakes.

Why Africa?

The continent accounts for almost a third of the world's mineral reserves: about 40% of gold, up to 90% of chromium and cobalt, as well as vast deposits of platinum, diamonds, uranium, bauxite and much more are located here.

“Since the beginning of the year, Russia's exports to African countries have reached $16.3 billion. By 2030, growth is expected to reach $50-60 billion,” said Andrey Gromov, executive secretary of the African-Russian Energy Association (AREA).

The region is the future of the mining industry. The number of enterprises will only increase, and then the demand for equipment. So, from the investment point of view, the region will remain the most promising in the next 30 years.

The future of economic development and strengthening cooperation with Russia add points to the export direction, so manufacturers should study the possibilities of entering this market.

Features of cooperation

The African continent has 55 countries with very different economies and infrastructures. Even within one region, the differences can be significant. For example, if South Africa is a highly developed, export-oriented country with a large mining industry and high requirements for service and maintenance, then in most of Angola there is no electricity or even generators.

However, personal connections that develop over the years are traditionally strong everywhere. Without the "right" people, sales cannot be built, and negotiations will be ineffective. Therefore, in each country it will be necessary to find a local agent - an intermediary partner. In some places, like South Africa, the requirement is enshrined in law, while in some countries, including Angola and Zimbabwe, it is an unspoken rule.

You can find an agent by contacting a sales representative of the Russian Federation or by finding out who companies that have already entered this market work with. You can also make useful contacts at specialized events such as the Russia-Africa forum.

Sometimes you can get to a specific country through neighboring countries. It is common practice for African companies to purchase products for specific projects and tasks, and then resell them.

Where to start?

Classic sales methods such as cold calling, participation in large international specialized exhibitions, events, and submitting relevant requests to sales offices continue to work abroad. However, practice shows that it is ineffective to immediately look for end users-operators.

It is much easier to enter the market through companies that already sell related equipment in the region along the technological chain and have service capacities. Thus, suppliers of quarry excavators and dump trucks, as well as road construction equipment, may be interested in expanding their product line with bulldozers.

Unlike the domestic market, abroad you should choose one dealer per country or even a group of countries.

When choosing, the player's authority, activity, work experience, availability of a client base and service capabilities are important.

The Key to Success

First of all, you need to understand that the African market is quite well developed by manufacturers from the USA, China, Japan, Germany, South Korea. There are no countries that are experiencing a lack of attention. Having an extensive regional network of their own representative offices, competitors are already cooperating with key players in the special equipment market. By the way, this also applies to the Asian and pan-African digital product markets, where BigTech giants from China and the USA have long and firmly established themselves.

Therefore, reference projects are indispensable. For example, at the beginning of sales in Morocco, we were asked to demonstrate how the equipment had already worked in similar conditions, soils, climate, and in the presence of an aggressive environment.

It is worth remembering that consumers of complex technical devices value product maintenance and prompt delivery of the required spare parts and consumables, so look for partners in the right countries who can provide these services at the proper level.

It is also important to understand the peculiarities of the local climate.

A similar scheme will suit developers of digital products - when entering new markets, you will have to prepare business cases for potential customers and dealers with examples of successful sales of your solution in other regions. The IT industry also needs to localize as many points of contact with consumers as possible into local languages.

Main difficulties and risks

For successful work, exporters will have to think through the organization of deliveries. It is better to work with transport companies that have already established logistics routes and are ready to solve problems of varying levels of complexity.

The main risks in trade are associated with sanctions restrictions. Payment issues require special attention. It is safest to use currencies of friendly countries for settlements.

In some cases, the problem may be the Russian origin of the equipment. Such issues can be solved by localizing production, for example, in Egypt or South Africa. Then the products will be considered local, which sometimes allows you to supply goods under government procurement and receive preferences.

Conclusion

African countries are an extremely promising market. Special equipment for mining enterprises is in great demand here, and, despite the high competition, with the right approach, Russian suppliers have every chance of competing with the best world manufacturers.