The Success Drivers and the Opportunities
With its diverse geography and rich history, West Africa is rightly famous. But it’s the region’s economic prowess and its giant labour force that has investors and businessmen more interested. To put it shortly, there are opportunities that investors can tap in West Africa but as most nuanced markets do, they require knowledge and a robust strategy for market entry to succeed.
The GDP was at 3.3 % in 2018 and was projected to be 4.4% before to the pandemic. Of course, the oil prices too contributed to the contraction in 2020 in the region as a whole, however, despite that, the GDP growth in West Africa has been underpinned by strong domestic demand, says UN’s 2020 report of World Economic Situation Prospects.
So, let us examine the opportunities the region offers and ways to enter this promising market by identifying the various success factors while planning the market entry strategy. These observations are an indicator of the possibilities and potential of a surplus labour force.
Entrepreneurs and Businessmen in West Africa
Now that we have discussed the GDP and the strong domestic demand as a driver, let us discuss what the existing businessmen and entrepreneurs are doing in this economy. There were 129 active start-ups in 2020 in West Africa that raised around US$ 100, 000 up from just 22 five years prior, as per Crunchbase.
E-commerce sales too saw a double-fold increase from US$409.7 million to US$ 892.4 million during 2014-2018, according to UNCTAD.
In terms of export of professional and IT services delivered electronically, the number grew from US$1476.8 million to US$7 032.0 million during 2014-18, said UNCTAD.
E-commerce, Technology and Digital Payments
It is a known fact that the West African labour market is dominated by informal employment. This is attributed to obstacles in accessing credit and red tape.
Also, agriculture and service sectors happen to be the largest reservoirs of jobs in West Africa. However, these sectors lack big companies that are capable of a large pool of financial resources and investing in innovative technologies for scaling and productivity.
Digital tools here could facilitate credit, formalisation processes and tax payment.
This is because of the rapidly improving communications infrastructure, West Africa, with the help of submarine cables, saw a 3-5% increase in internet penetration, as compared to the rest of the African continent. (Cariolle, 2020).
As per Africa’s Development Dynamics 202, Digital Transformation for Quality Jobs report while Nigeria, Ghana, Côte d’Ivoire and Senegal happen to have above-average digital interconnectivity, there are open opportunities in countries like Benin, Burkina Faso and Togo.
The enhanced internet connectivity will bring not just consumers towards financial inclusion and e-commerce supply chains but open ways for businesses looking to tap into this potential market in the same vein. This is because up until 2018, only 26.1 had their website, the World Bank has said.