Business Trends South Africa 2015
South Africa, also known as Republic of South Africa (RSA) is a country on the south with 2798 kilometers of coastline that connects South Atlantic and Indian Ocean. With a population close to 53 million people, it is ranked as the 25th largest country by land area and is also the 24th most populous nation. This multi-ethnic country encompasses a society with a wide variety of cultures, languages, and religions.
South Africa is considered to be a newly industrialized country and is ranked as an upper-middle income economy by the World Bank. Its economy stands at number two in Africa and the 34th largest in the world. Just like any other country, poverty and inequality remain a concern, with around one- fourth population unemployed and living on less than US$1.25 a day, yet the country has managed to achieve seventh-highest per capita income in Africa. It is also identified as a moderately powerful in international affairs and maintains significant regional influence.
In any country, clearly defining a business strategy generally involves setting goals, preparing actions to achieve the predetermined goals, mobilizing resources to pursue the strategy. Having a deep idea about the current market trends is a key to smart strategic planning in Africa. Some current business trends in South Africa which will increase profitability are:
- Rapidly-moving consumer goods
South Africa is a native place to one of the world’s fastest growing populations and an exploding middle class with more spending power. The demand for fast-moving consumer products such as apparel, food, hygiene, electronics etc. is increasing. A large proportion of these products is still imported. South Africa tends to move to a situation of “Made-in-Africa” so as to meet the growing demand in the market, create jobs for the public at large, and correct the imbalance of known as National Trade Deficit. With a rise in demand for consumer products, many very successful African entrepreneurs have started producing locally with a few hundred dollars in pocket. The aim of these entrepreneurs is to maximize the use of locally available material and craftsmanship and benefit out of it. With a strong vision of running successful businesses in Africa, they have started producing products like, shoes, luxury bags, soaps, household cleaning products, and kids’ clothing in their own workshops and have built successful companies, which are now widely recognized.
- The fast growing Intra-African trade
South Africa’s own exports are almost equal to the continent’s exports. The trend of exports in South Africa is on a rise and it also provides multiple opportunities. A development strategy for a producer or a service provider should certainly focus on regional expansion. Intra-African trade also opens opportunities in the logistics and transport sector, or other services and securities which actively support the traders and address some of the obstacles they face. Investors should think of newer and better ways on how they could add value in this regard.
- Electronic system of trading and business- E-commerce
The growing knowledge about trading through the internet has brought people closer to E-commerce, which is on the increase. E-commerce is possible only because of improved availability of various national and international payment systems. Some developing North African nations such as South Africa, Kenya are among the most advanced in this regard. E-shopping is termed as consumer’s favorite in South Africa. It is continuously stressing the middle class to put faith into online commerce. With increased use of cell phones and expected internet revolution over the next few years, this is the best time to position Africa’s E-commerce business.
- Expansion of export markets
The African government encourages exports to bring a positive trade balance and to allow companies to diversify their operations and trade in hard currency. Still the country faces obstacles like lack of knowledge about foreign markets, their accesses and regulations, and an inability to produce consistently to meet global export requirements. South Africa is continuously moving ahead by creating opportunities to facilitate market links and support African exporters and providing consultation, information & training.
Economic development is the main motive of the African government and it is working hard to promote value additions to fill huge gaps. To inject more money into the economy, manufacturing processes are designed in order to add value to raw products and materials. One very famous example of adding value to raw products to increase profitability is Nigeria, which is annually importing tropical fruit.
- Growth of East African community
In the process of removing trade barriers among its members, East African community is working hard to provide access to about 150 million people in a single market. It has become a top destination for African equity firms who appreciate the growth dynamics and overall stability in the region, human capital, and the opportunities that the market offers both for expansion and risk mitigation. Some very renowned examples of EAC are Nairobi, a buzzing hub and Kigali which offers valuable strategic choices for doing businesses. It is considered safe do continue business in Kigali as compared to other EAC member states. EAC also offers easy access to central Africa and particularly to large markets.
- Active women participation in businesses
A growing role for women is mandatory for a country which has become a trend and is vastly overlooked. Leading development organizations and some governments are putting efforts to make the Africa-rising narrative more inclusive by integrating women actively in economic development. To widely overlook Africa’s consumer market, choosing women as the target consumer group and focusing on the employment of women in the venture seems must. The concept of women-focused business is a unique one and successful media and government would move forward to promote such businesses.
Every business, big or small, needs people who are able to manage and lead processes in various capacities. The requirement for skilled senior-level staff and experienced managers creates a business of its own. The great demand poses a major challenge for equity firms, investors, large corporations and local manufacturing firms operating in the continent. Potential investors need to utilize this in their business strategy. The two main focuses of the investors should be:
- Facilitating recruitment of Africans in both the financial and engineering industries.
- Providing opportunities which can offer advantages for both start-up and existing companies.
South Africa has always been a leader in distinct market trends. Incorporation of various trends in respective business strategies will help the businesses to grow and increase profitability. Tapping into such powerful dynamics will not only lead to the growth of a particular business but also to the growth of the country as a whole. A business needs to have a deep understanding of the current and forecast market trends and utilizing these trends to connect with customers. It can be done in the following ways:
- Building consumer trust – experiences from the past show that consumer’s trust in business gives an advantage and avenue to turn consumers into regular patrons who generate repeat business. This trust, however, can be gained over a period of time any by educating the consumer on benefits offered.
- Connection with consumers – a business can connect with its actual and potential consumers by discovering what their customers need. This is mostly done by asking them progressive market research questions via quick and easy customized mobile applications.
- Mass media – technology in the market place is becoming increasingly popular and more widely accessible to consumers that businesses can use to their advantage for creating convenience and educating consumers.
Introducing profitable businesses in South Africa’s diverse and competitive market has its own challenges. A business has to take the advantage of the on-going consumer purchasing behaviors and trends to support economic growth fundamentally, create new business opportunities and meet target market’s needs while simultaneously achieving win-win situations for themselves as well as their customers. Businesses should mainly focus on environment- friendly, wealth re-distributive and customer cost-saving marketing strategy that gives customers solid reasons to choose a particular brand. In a nutshell, a business should go ahead in compilation with the trends which are most liked by its consumers. Using powerful business strategies will create profits for the business, the country and for the society as a whole.