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African 'Lions' ready to roar

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No African team made it past the quarterfinals of the World Cup. Nonetheless, the monthlong global soccer tournament that concluded Sunday in South Africa was in many ways a showcase for the economic potential not just of the host country but of the entire continent.

Racked in many places by civil war, disease, poverty and kleptocracy, Africa has long been relegated to the financial sidelines. Now, however, the continent is quietly serving notice that its economies are ready to get in the game. A report released last month by the McKinsey Global Institute said the collective GDP for the continent grew at a 4.9% compound annual rate from 2000 to 2008.

The lead sponsors for the World Cup were consumer brands such as Adidas and Coca-Cola. But much of the future opportunity in Africa’s 53 countries may lie with global b-to-b marketers such as Motorola Inc., Siemens and others in sectors that include agriculture, energy, financial services, infrastructure and telecommunications.

“Early entry into African econo-
mies provides opportunities to create markets, establish brands, shape industry structure, influence customer preferences and establish long-term relationships,” according to the McKinsey report, titled
“Lions on the Move.” “Business can help build the Africa of the future.”

In 2008, the African continent had a collective GDP of $1.6 trillion, about equal to the economy of Brazil or Russia, according to the McKinsey report. In 2020, the aggregate GDP of the continent is expected to total $2.6 trillion, led by Africa’s most advanced economies—Egypt, Morocco, South Africa and Tunisia.

The report attributed the growth of the African economies to a number of factors, including the surge in oil prices. The reduction of war (despite continued fighting in Sudan and elsewhere), lower inflation, reduced foreign debt and diminished budget deficits also contributed. The report concludes, “The long-term economic prospects are quite strong.”

Many b-to-b companies, even ones that have had a long history in Africa, are placing bets that the growth will continue. Siemens has been active in South Africa for 150 years and expects its presence to grow in the next decade as the infrastructure products the company manufactures will be in demand, according to the McKinsey report, which anticipates African spending on infrastructure will total $200 billion annually.

Greg Gibbons, a native of South Africa, is now VP-communications for Siemens Industry in the U.S. Until last year, he was the head of communications for the company in Africa.

Marketing value in Africa

Gibbons said U.S. companies have tended to be more sophisticated in their use of integrated marketing than businesses in most African countries, including the more advanced economies such as South Africa, where Gibbons was based. “The commitment to marketing is greater here [in the U.S.],” he said. “The value is more widely recognized and more entrenched in the business value chain, where in Africa it’s slightly less-developed.”

Nonetheless, the basic adherence to integrated marketing practices is followed throughout Africa. Gibbons said that often the targets are well-known, and companies use face-to-face meetings, trade shows and direct marketing to reach them. Print is also valued, and Internet and mobile marketing are growing in importance as connectivity of all kinds increases. (Currently, there are 316 million mobile phone subscribers in Africa, according to the McKinsey report.) “It’s well understood here in the U.S. that the digital and online space are keys to b-to-b marketing,” Gibbons said. “In Africa, the jury is still out a bit.”

Viewpoints vary widely on the business potential of Africa, where English is the dominant language in the east and south, Arabic in the north and French in many other areas. ECI Telecom, which is based in Israel and markets networking infrastructure solutions to the telecommunications industry and governments, has found e-mail marketing to be effective.

“Open rates are very strong, five to six times that of developed markets,” said Michelle Levy, associate VP-marketing programs and sales tools, ECI Telecom. “This market is in its infancy, and we can get 40% open rates. In a developed country, you’ll be under a 10% open rate.”

ECI has 2,200 employees around the world and focuses on emerging markets. Because of the lack of trained personnel at many potential customers, ECI uses its marketing communications to put forward a complete solution. “In Africa, we are facing a lot more turnkey opportunities, where we really deal with whole business problems,” said Matthias Nass, VP-field marketing, EMEA, ECI Telecom. “We also try to talk about total cost of ownership. This, I believe, is our key message.”

Motorola is another player in telecommunications in Africa. Yasmin Khaliq, who is based in Dubai, United Arab Emirates, is EMEA marketing manager for Motorola’s networks division.

Khaliq said Motorola often uses trade shows to reach potential customers but cautions that events are “mushrooming” in Africa. “We have to be very selective to make sure the right corporate customers are there,” she said.

Additionally, Motorola produces its own custom road shows on the continent. In countries with established infrastructures, such as South Africa, producing this kind of event can be relatively painless; not so elsewhere. “Other parts of Africa are a bit more remote,” Khaliq said. “It takes more planning.”

Face-to-face focus

Much of b-to-b marketing in Africa is focused on face-to-face marketing in one form or another. Liza Kok, marketing and project manager at insurance brokerage Aon in South Africa, said, “We do a lot of relationship-building through interaction with our clients and prospects.”

Aon plans to leverage its sponsorship of soccer club Manchester United in its marketing efforts across Africa, where the English Premiere League is revered. “The brand [Aon] is not a household name in South Africa, and I don’t think it is in the rest of Africa,” Kok said. “This gives us an opportunity to become just that.”

As Africa and its marketing potential grow, traditional trade publications are launching editions on the continent. Last year, a version of International Data Group’s CIO, based in Nairobi, Kenya, debuted to cover information technology in East Africa. The publication has a circulation of 8,000 and 1,500 registered users online.

Seven Seas Technologies, a Nairobi-based technology company, advertises in the magazine. But, echoing others, Martin Gitari, Seven Seas’ service experience manager, said the primary marketing tool at the company is “personal selling, account management.”

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