Africa, SME & Manufacturing: Importance Of Exports To Other African Countries
Exports and manufacturing in Africa over the years has increased the opportunities for SMEs in Africa to boost their export rates and productivity. As a result, any company or business that is well invested in exportation has a lot to benefit from it. Exporting goods and services give business owners the competitive advantage needed to break even in both the local and international markets.
When a country starts to export goods and services in which it has a competitive advantage, it boosts the entire economy. However, exportation is not restricted to countries alone. SMEs in Africa can also leverage their potential to take their businesses to the next level.
What Are Exports?
Exports refer to goods and services produced within a country and sold to residents of another country. Regardless of what category these goods and services fall into, as long as they are domestically produced and sold internationally, they are called exports.
Benefits Of Exports For SMEs In Africa
Quite a number of businesses across Africa engage in the exportation of their goods and services. Carrying out this single act can result in some benefits for such business owners. Some of these benefits include:
Increased Sales
The prospect of making more sales increases with exportation. SMEs in Africa stand the chance of landing more viable leads by leveraging the diverse global markets out there. The result of this is higher sales which leads to an increase in revenue.
Diversification
Exporting goods and services to foreign markets allows businesses to diversify hence, spreading their risks. The advantage of this is that it saves business owners from being tied down to changes in a specific market or country. For example, a business that deals with soap production can expand its market across several parts of the world. This diversification will bring about a boost in sales.
Newer Concepts
Venturing into exportation grants business owners an opportunity to venture into diverse aspects of international trade. The deeper the understanding of this trade area, the more SMEs in Africa broaden their horizons and try new concepts. The acquisition of this knowledge can boost production without an increase in associated costs.
Competitive Advantage
Day-to-day involvement in the exportation world helps businesses grow stronger. Also, it gives rise to a solid reputation and stability for the business owners. In return, such a business owner has a more competitive advantage over non-exporting counterparts. Before SMEs in Africa can serve international markets with products and services, they must adhere to certain regulations and product qualities. Adherence to these regulations makes it easier for business owners to adapt both in the domestic and international markets.
Benefits of Exports To African Countries
African countries work hard to promote their export rates, and the reason isn’t far-fetched. Exportation provides several economic benefits to a nation’s economy. Let’s take a look at the important roles exportation plays in the growth of a nation:
Increase in Employment Rate
The higher the export rate in a country, the higher the demand for labour. Suffice to say that exportation leads to an increase in a nation’s rate of employment. Manufacturing in Africa gives room for both direct employment and a spillover effect. The spillover effect in this case, means that once export workers get paid for their services, the income earned in return is spent on the consumption of goods and services. As a result, there is a general economic development.
Take China, for instance. The rate of unemployment has drastically reduced over the years. A huge part of this growth is due to policies that are export-oriented being put in place by the government. When there is a decrease in exports, there is every tendency of an impending economic recession.
Foreign Exchange Earnings
One of the most important currencies in the world is the dollar. More often than not, international trades get conducted in either gold or dollars. What this means is that virtually all the countries in the world require dollars for their growth. One way to earn in dollars is through foreign exchange, which is why exports are essential to the solvency of a country.
Economic Growth
One of the aggregate demand components of any economy is exports. An increase in the rate of exportation will lead to an increase in aggregate demand. Such an increase results in economic growth. Furthermore, GDP can be used to measure a country’s economic growth. Exports contribute to a nation’s GDP. In a situation where the net exports number stays positive, it increases the GDP of a nation. On the other hand, if it’s negative, it reduces the GDP.
Conclusion
Manufacturing and exports lead to the growth of a nation. Also, they provide SMEs in Africa with a wide range of opportunities for growth and development. SMEs get to expand their businesses by reaching out to a wider market. When you think of it, foreign orders more often than not are larger than locally placed orders. An added advantage would be when your products as a business owner are innovative and unique. A combination of these will result in rapid orders and sales in no time.
If you ever get to that point where it feels like your local market is no longer serving you, and you could use an expansion, you might want to consider exports.
