With an expected economic growth rate of 5.7% in Africa in 2015, or an increase of 1.4% on the previous year, according to the African Development Bank, alongside headline-grabbing infrastructure developments, you could be forgiven for overlooking the SME market.
However, medium-sized enterprises make up 91% of formal businesses in South Africa, as an example from the Banking Association of South Africa, providing employment to approximately 60% of the country’s total labour force and contributing 34% to the GDP.
As a result, many international companies are now turning their attention towards the opportunity present in Africa’s SMEs, a sector where as Marc-Peter Zander, CEO and managing partner of XCOM Africa, one of the key issues become the choice of a partner.
“One of the key challenges is finding the right local partners,” he explains. “However, a lot of the business discussed at the forum today have focused on the industrial scale.
“As an example, if you have $300m, businessmen such as Dangote will make excellent local partners, but the for the SME market which maybe have $500,000 or $1m to invest, finding a good local partner that can deliver can be extremely difficult.”
Having established XCOM Africa five years ago, Zander quickly identified the requirement for sourcing credible businesses and matching them with potential partners from the all over the world. Five years on, the company has four offices within Africa based in Nigeria, Ghana, Kenya and Rwanda and is continuing to support the SME market from a consultancy role.
Commenting on what lies ahead, Zander notes: “I believe there’s a huge demand from the GCC, although the bulk of that interest is in the form of large-scale investment, rather than commerce. But people say is agriculture is the new oil, so let’s see how that market develops in the next few years.”