The board and Africa’s new markets

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Bothwell P. Nyajeka

THERE are moments in life when a conver­sation shifts one’s perspective in a major way. This past week was one of those mo­ments.

I had the privilege of attending a practical and insightful workshop on investing in Africa, where I interacted with some of the continent’s leading minds, notably Dr Rutendo Hwindingwi, a re­spected business school professor and author.

One of the most striking insights from the workshop is that Africa cannot be approached with yesterday’s solutions. With internet pene­tration now estimated at over 50 percent across the continent, technology is the primary lever for solving Africa’s challenges. Whether in financial services, agriculture, health, education or logis­tics, digital innovation is unlocking opportunities that did not exist a decade ago.

For boards, this means that technology and innovation must sit at the centre of corporate strat­egy.

Equally important is the reality that Africa is not a homogenous market. Africa is diverse in terms economies, cultures, regulatory systems, and consumer behaviours. What works in Zimba­bwe may not work in Botswana, Mozambique, or Nigeria. The temptation to apply a “one-size-fits-all” strategy is one of the most common and costly mistakes companies make. Successful market en­try requires rigorous research, local insight, and a willingness to adapt business models.

Another powerful takeaway is the scale and importance of Africa’s informal sector. Contrib­uting an estimated 42 percent of GDP across the continent, the informal economy cannot be ig­nored. Traditional business models that focus only on formal channels risk missing the bulk of eco­nomic activity. Companies must innovate around distribution, pricing, and customer engagement to tap into this segment. Mobile money platforms, agent networks, and community-based models are becoming primary routes to market.

Then there is the demographic reality. By 2050, Africa is expected to account for nearly 30-40 percent of the world’s youth population. Young people are not only a market, they are also innovators and entrepreneurs. Businesses that fail to engage with this demographic risk irrelevance.

At the macro level, it is also important to rec­ognise that nearly half of Africa’s GDP is con­centrated in just five countries ― South Africa, Nigeria, Ethiopia, Egypt, and Algeria. This con­centration presents a contradiction. On one hand, these large economies offer scale. On the other, smaller economies present significant market growth opportunities for companies willing to take a long-term view.

For boards, the key question is not where the largest mar­kets are, but where the greatest strategic fit and future growth lie.

No discussion on investing in Africa would be complete without acknowledging the role of China. Over the past two decades, China has emerged as the continent’s largest inves­tor, with a footprint that spans Anglophone, Francophone, and Portuguese speaking Africa. This has reshaped com­petitive dynamics. African companies must understand this landscape as a reality and plan for it.

Equally critical is the role of government. In Africa, pol­icy, regulation, and the actions of public officials can signifi­cantly influence business outcomes. Governments are not just regulators; they are often enablers, or barriers to invest­ment. Building constructive relationships with policymakers and understanding the regulatory environment is therefore strategically important.

The African Continental Free Trade Area (AfCFTA) rep­resents one of the most exciting developments on the conti­nent. By promoting intra-African trade, it has the potential to transform the way African businesses operate. For the first time, companies can begin to think of Africa not as frag­mented national markets, but as a more integrated economic space.

Reflecting on these insights, I was reminded of my own boardroom experiences dating back to the late 1990s. At that time, most discussions on Africa were centred on exporting Zimbabwean products into neighbouring markets, primarily within English-speaking regions. In the 2000s, the conver­sation evolved. Companies began establishing operations across the continent, particularly in banking, insurance, hos­pitality and other service sectors. Zimbabwe’s strong human capital base became a key export, enabling businesses to rep­licate their models in new markets.

The main drivers for this change were diversification of country risk and the need to generate foreign currency in a constrained domestic environment. However, a number of companies underestimated the complexity of operating in African markets, which resulted in some failures.

Today, the opportunities in Africa are still there. In my view, every board must have a clear Africa strategy. This strategy may take the form of exports, partnerships, or direct investment.

However, investing in Africa is not for the faint-hearted. It requires resilience, patience, and a long-term perspective. Boards must insist on thorough preparation before commit­ting capital. This begins with a comprehensive environmen­tal scan of the target country, covering economic, political, social factors and distance from home country. Such analysis helps determine whether the market is viable and aligns with the company’s strategic objectives.

A detailed market study is equally critical. Companies must understand customer needs, competitive dynamics, and the most effective routes to market. Without this, even the most promising opportunities can quickly unravel.

Human capital is another key consideration. Successful expansion often depends on deploying experienced person­nel from Zimbabwe, and integrating with local talent. This blend of Zimbabwe capability and local knowledge is essen­tial.

From a financial and internal management systems per­spective, robust planning is critical. Boards should demand robust evaluation of financial projections and expected re­turns complemented by a comprehensive analysis of internal management systems to safeguard assets and ensure the in­vestment is successful. Scenario planning showing base case, best case, and worst case, is particularly important. In Africa, the unexpected is often the norm. Preparing for the worst while striving for the best is a prudent approach.

Investment decisions must ultimately be anchored on re­turn on capital. The expected return should exceed the com­pany’s hurdle rate, which must incorporate both industry and country risk premiums. Anything less is a misallocation of scarce capital.

One of the most critical success factors is the choice of a local partner in the target market. In many African markets, local equity participation is either a regulatory requirement or a practical necessity. The right partner can open doors to government, facilitate regulatory approvals, and provide valuable market intelligence. The wrong partner can derail the entire venture.

Finally, before making an investment, executives and a board representative (usually the chairperson) should visit the target country, meet key stakeholders, and build rela­tionships. In Africa, trust is key. Decision makers need to see you, understand your intentions, and believe that you are committed to creating value, not merely extracting it.

Africa has tremendous business opportunities. However, it requires a new mindset that embraces innovation, diversity, and is willing to understand and engage with the continent’s unique realities. Boards must make their companies Africa ready to take full advantage of these opportunities to increase shareholder wealth.

Nyajeka is a Business Consultant and Board Advisor. He has vast experience as a corporate executive and has sat on various boards in Zimbabwe, Botswana, South Africa and Uganda. He is currently chairman of ACR Solutions and is also a seasoned trainer and facilitator for the Institute of Directors Zimbabwe (IoDZ). For business consulting, board advisory and executive coaching Email him on: bnyajeka@acr4solutions.com