Top tips for smarter business in South Africa

Ever considered South Africa as a new market to move into? Matthew Furneaux, head of international ID registration at GBGroup, provides an introduction to trading with the nation.

The world is fast recognising the rising importance and extraordinary business opportunities that lie in Africa.

According to the IMF in 2014, six of the ten fastest growing economies in the world are from sub-Saharan Africa. South Africa, with a population of 51 million people, is considered to be the gateway country for the continent with the most developed economy and greatest political stability and business transparency.

Moreover, while confidence in financial markets has been eroded in other parts of the world, South Africa’s remains strong with its financial market development ranked 3rd globally in the 2013/14 World Economic Forum’s (WEF) Global Competitiveness Index. South Africa offers businesses the opportunity to expand in a well regulated and growing market that has links with not only to the rest of Africa but also to the BRIC countries (Brazil, Russia, India and China).

Know your market

Before entering a market, it’s important to learn as much as you can beforehand about a country’s business environment, its customs and social norms, as well as its political and legal systems.

South Africa is a multi-cultural society, home to diverse groups of people with varying cultural, linguistic and religious backgrounds resulting in a complex national identity. The population consists of four main ethnic groups; black African (79 per cent), coloured (9 per cent), white (9 per cent) and Asian (3 per cent) with 11 national languages spoken, including English, Afrikaans, Zulu and Xhosa. Its business community has historically been conservative and risk averse and this is reflected in the use of detailed contracts there.

Take good advice

If you want to start up a business in South Africa or sell to it, be well advised. Make use of the knowledge and services of institutes, branch organisations and government authorities. It is also important to do due diligence prior to entering into contracts or other commercial arrangements so do contact reliable consultants and law firms for legal advice and don’t underestimate the need for quality checking in South Africa.

Think global but build local

Building up and maintaining good relations are essential for doing business in South Africa. Invest time and effort in building up and maintaining relations and it will pay dividends. Don’t focus on potential business partners only, but also on South African institutes, such as local authorities and branch organisations. If possible find a reliable local partner to speed up market entry, especially in the early stages. Your partner will help you understand the cultural expectations of consumers and introduce you to local companies and business contacts that can add value to your product or service.

Exploit online growth

E-commerce is set to grow on the continent of Africa. South Africa is following online shopping markets such as the US, where an estimated 50 per cent of shopping will be via the internet.

A study by Mastercard in 2014 revealed that last year South Africans spent R3.3 billion on the internet and were expected to spend up to R4.6 billion on online shopping by the end of 2014.

Similarly, a study by Google and published by World Wide Worx in 2012 found that online shopping was growing at about 30 per cent a year in South Africa.

Three factors are propelling growth of e-commerce in the country: the use of credit cards and the propensity to use them online, improved logistics for delivering goods to customers, and the reduced price of connectivity. Moreover, the local mobile industry is booming and as the penetration of internet enabled phone increases, it will drive m-commerce growth there. Currently, there are roughly 7.9 million Android phone users in South Africa and about 2.48 million South Africans accessing the internet solely on their mobile phones.

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Trade securely online and instill trust

Although online shopping is growing in South Africa, there are still consumers that stay away from e-commerce sites because of security concerns. If you want your business to prosper, you need to make potential customers feel comfortable shopping with you and to trust the site they are buying from. This means investing in safeguards like identity verification and secure payment on your site, and implementing auto-complete, contact data validation systems that validate name, address, email, mobile and landline data and help to create a frictionless experience for the end-user. Luckily for businesses, technology now exists to help companies succeed internationally and all you need to do is shop around for the right solution for your business.

See also: Africa offers ‘huge prospects for business growth’, says Bassim Haidar

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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