Africa: Lucrative, but not for sissies

Written by Perry Hutton • Online since 11.03.2016 • Filed under Press Release • From Issue 3 - March 2016 - August 2016 page(s) 60
Africa: Lucrative, but not for sissies

Africa, with the highest concentration of high growth and rapidly emerging markets in the world, presents huge potential growth opportunities. But it’s not a market for the faint-hearted.

‘OUR business started in South Africa before we began actively expanding into other African regions from 2007. Now South Africa forms less than half of our business in Africa, and some markets – such as North Africa – are achieving nearly 50% growth yearon- year,’ says Perry Hutton, Regional Director – Africa at Fortinet.

In an environment where Information & Communication Technology (ICT) vendors battle to achieve double digit growth, these figures may sound too good to be true. Hutton notes that not every international vendor expanding into Africa has been this fortunate – some have tried and failed, some have placed expat staff in African countries and had to close offices when security risks became too high, and some have found the business culture too foreign for them to operate successfully.

Hutton attributes Fortinet’s success to its model of hiring local staff to represent the company in key regions, who then service local channel partners in their countries and neighbouring countries.

‘We hire our own direct touch people in countries to engage with and develop the channel. They understand the local market and business culture and are more successful than foreign representatives in engaging with the channel in those areas. We now have staff in Nigeria, Ivory Coast, Morocco, Tunisia, Algeria, Egypt, Kenya and South Africa and this model has been hugely successful for the company. ‘Strong network growth and rapid moves to high-speed broadband and LTE across Africa present a number of opportunities for IT vendors and service providers,’ says

Hutton. ‘We see LTE becoming mainstream in Africa over the next few years. With it comes certain potential information security risks. For Fortinet, strong business opportunities are emerging as securing the network becomes a top priority for telcos and carriers

The harsh realities

‘Some international vendors including large Chinese firms, and some US, Israeli and European vendors, are making inroads into the market,’ he notes. ‘But not every company has the appetite for the harsh realities of doing business in Africa.’ Hutton points out: ‘You have to understand the market conditions, and only the tough survive. For example, central Africa tends to be home-grown – companies in Kenya, Ethiopia and Uganda only want to deal with local businesses. Further north, we see challenges such as the availability of currency in Nigeria – they’ve run out of dollars and it’s becoming more difficult to lay your hands on dollars to do business. We recently changed our policies to reduce the time customers had to register a product down to 100 days. This was done for accounting purposes, but it instantly became a problem in places like Egypt, where it can take up to three months for goods just to clear customs. We see these delays in many areas and often we must use clearing houses to clear goods into country at horrific premiums.’ In addition, in many countries, there are myriad ‘service  fees’ required to oil the wheels of business. ‘Corruption is a problem in many African countries, and business protocols are often quite different from what Western businesses are used to,’ Hutton warns. ‘Because our partner channel understands the local markets, they know how best to operate successfully within these environments.’

Issue 3 - March 2016 - August 2016

Issue 3 - March 2016 - August 2016

This article was featured on page 60 of SABI Magazine Issue 3 - March 2016 - August 2016 .

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