Just like in other parts of the world, there are several challenges of doing business in Africa. At first glance, 2022 might appear to be the year that African businesses finally get some good news. Business growth is predicted to pick up in Africa at a rate higher than a few other countries in other continents.
It is worth mentioning that the majority of the world is recovering from covid-19 thanks to vaccines. However, less than 10% of African countries had been fully vaccinated by October 2021. The IMF predicts a 0.1 percentage point improvement in growth to 3.8 percent in Sub-Saharan Africa in 2022. Regardless of these facts, deep divergences abound.
Before Covid-19, the business sectors in South Africa, Nigeria, and Angola, were in dire straits. We should note that these three countries account for roughly half of Sub-Saharan Africa’s GDP.
Possible Challenges of Doing Business in Africa in 2022
In 2022, several challenges of doing business in Africa might slow things down further. Several variables may also propel the region forward in the coming year. However, several will have a significant impact on the continent’s recovery prospects. Let’s briefly discuss the five top challenges of doing business in Africa in 2022
COVID’s Long-Term Effects
The residual consequences of the Covid19 pandemic, as well as the hazards connected with future waves of illness, are at the top of the list, especially given Africa’s poor vaccination rates. Successive waves of illness and the ebb and flow of containment efforts, including protracted international travel restrictions, would jeopardize business continuity, investment, and revenue-generation potential. The risks to our 2022 1.8 percent GDP projection are to the downside, thanks to a fourth Covid-19 wave and additional virus strains.
Over the next six months, the risks to inflation appear to be heavily skewed to the upside. This is mainly based on increased exogenous price pressures, which are already seen in local goods, the impact of a weaker rand on softer terms of trade, forecasts of tighter global monetary policies, and recent border closures as a result of the virus’s Omicron variant’s spread.
Insecurity Issues and Exchange Rate Pressures
For many African countries, exchange-rate pressures and foreign debt repayment concerns would come to a head in 2022. This could prompt calls for actual debt restructuring but it would also work great hardship on the African business sector. Furthermore, in 2022 conflict hotspots across the continent will continue to rage. The Sahel region appears to be in the midst of an unsolvable catastrophe, with militias and jihadists controlling or projecting a deadly shadow presence throughout vast swaths of rural communities. Meanwhile, Ethiopia’s conflict will be a huge source of instability in one of the continent’s most promising countries.
Adoption of Digital Technology
The COVID-19 pandemic impressed the need for the adoption of digital technology on businesses across the world. Digitalization is more important than ever for businesses in today’s environment. Several years of digital transformation efforts were compressed into only a few months by the pandemic. Still, for all its benefits, digitalization is a complex and time-consuming process. It could pose some problems for African businesses in 2022. Realizing how you can deliver value to your clients through the Internet is a herculean task. You must construct a digital brand presence and adapt marketing strategies. Also, you should develop an effective software solution that matches the needs of your clients amongst others. Clearly, there is no single digitalization strategy. The entire strategy centers around your company’s requirements.
The most important piece of business advice here is to take software development seriously. It’s difficult to make a software solution that answers customer problems and operates flawlessly by trial and error. You can’t handle all of the variables in the software development life cycle on your own. When it comes to app or website creation, it’s best to entrust the task to a trusted software development firm.
Cybersecurity challenges posed by Hackers.
Hackers and scammers target enterprise-level corporations and small businesses. As the number of users’ personal data grows, so do the dangers of data leaks due to overlooked vulnerabilities. Cybersecurity will be one of the most important corporate concerns in 2022, and it should be taken very seriously. In relation to African SMEs, the use of secure firewalls and routers are scarce because of the question of funds. This situation provides hackers with additional opportunities to test their attacks on the devices and networks of employees.
With an anticipated 30 billion connected devices by 2025, hackers will undoubtedly look into more possibilities in 2022. If your business has an online presence, you should consider putting serious cyber security measures in place. This cost should form a considerable part of your budget for 2022. Otherwise, the activities of hackers could have a detrimental impact on your business.
Balancing Product Quality with Business Growth
In an ideal world, all business owners would be able to provide quality services while steadily growing. The reality is that such things aren’t as straightforward as they tend to appear. This is one of the challenges of doing business in Africa. Many businesses find this balance exceedingly difficult to achieve. If your business expenses exceed the revenue of a particular market, your product quality may deteriorate.
To overcome this business obstacle, you must understand your growth objectives and what you intend to accomplish. Excessively accelerating your growth trajectory may result in operational irregularities, a worsened customer experience, and a tarnished brand image. Instead of pushing for immediate profits, handle business growth issues with ease. Keeping up with consumer needs will set you apart from other businesses in the race for profit in 2022.
Conclusion
There’s no doubt that the COVID-19 epidemic will continue to cause significant disruption to African businesses in 2022. Still, we believe that the opportunities for many organizations in 2022 are real and exciting. Despite the numerous substantial opportunities for investors, the markets will be marked by severe operational and political unpredictability.
As a business owner, expanding your sales channels and retaining present clients would be vital elements of your success in 2022. To attract new consumers, you must first understand who your current customers are. Knowing your client’s gender and age is no longer sufficient to speed up purchases. You need to know why people are interested in your product and how you may expand your sales to new customers.
Check other insightful articles on SME360 to learn how best to establish businesses in 2022.