Global multinationals seeking to invest in Africa are no longer automatically opting for South Africa first before spreading their wings to the rest of the continent, but are instead increasingly setting up shop directly in the market they wish to enter.<\/p>\n
\u201cFrom the briefs we are receiving, it is clear that global companies expanding into Africa no longer favour South Africa as the obvious port of entry,\u201d said Debbie Goodman-Bhyat, CEO of executive search firm, Jack Hammer.<\/p>\n
Goodman-Bhyat said that while it used to be a matter of course for companies to start building their representative teams in South Africa when establishing a presence on the continent, this is happening less frequently than in the past.<\/p>\n
\u201cCompanies are now looking for country managers, executive leadership teams and sales offices based elsewhere on the continent in large part because they are starting to realise the value of having a physical presence. In part, this is due to a real and growing resistance by local businesses to doing business with counterparts who display limited commitment to future growth of the local economy.<\/p>\n
\u201cLocal markets want to see you there, and they want to see you making a commitment to the country, not just piggy-backing off market opportunities,\u201d noted Goodman-Bhyat.<\/p>\n
Additionally, multinationals are also coming to grips with the fact that there are more than 50 distinct markets in Africa, which all have their own unique regulatory, infrastructural, social and economic circumstances.<\/p>\n
\u201cAlthough South Africa certainly has its challenges, this move away from the country as the gateway to Africa is not purely because of push factors, but rather the pull factors of other African countries,\u201d Goodman-Bhyat said.<\/p>\n
\u201cThere is an ongoing influx of businesses from Lebanon, Israel the USA and so forth. While they still see South Africa as a solid market, they don\u2019t necessarily view it as the only option when investing infrastructure and resources.\u201d<\/p>\n
Goodman-Bhyat noted that the secretary-general of the UN Conference on Trade and Development (UNCTAD), Dr Mukhisa Kituyi, made a similar point in the most recent issue of The United Nations\u2019 Africa Renewal Magazine.<\/p>\n
While acknowledging that South Africa has the oldest and most developed market economy in the whole of Africa for historical reasons, he noted that things were changing as other African countries increasingly attracted big investors.<\/p>\n
\u201cIt\u2019s true South Africa has had a head start, but in net terms, there is faster growth in alternative centres for both manufacturing and service delivery than in South Africa. Today, the financial services industry is growing faster in Morocco than in South Africa,\u201d he said.<\/p>\n
He further noted that some multinational enterprises operating out of South Africa have relocated substantially.<\/p>\n
\u201cWe recently saw the opening of the Volvo truck-manufacturing plant in Mombasa. And similarly, we have seen many other services, particularly IT-based services and telecommunications, growing in new nodes like Nigeria, Kenya and Rwanda.\u201d<\/p>\n
Goodman-Bhyat said the anecdotal evidence of multinationals eyeing African countries outside of South Africa was further underscored by research conducted into hiring patterns on the continent.<\/p>\n
The latest Jack Hammer Executive Report, The Africa Report, researched 36 multinationals with representative offices outside of South Africa.<\/p>\n
In addition to setting up shop outside of South Africa, these organisations also increasingly appointed local leaders to top positions, rather than revert to the hitherto tried and tested approach of jetting in senior leaders from head office.<\/p>\n
\u201cWith the growth in the size of the pool of top leaders on the continent \u2013 leaders who are highly qualified and have international management experience \u2013 combined with perceptions that challenges throughout the rest of Africa are no longer as daunting as they appeared in the past, we expect a consistent and ongoing rise in the number of global multinationals setting down roots \u2013 or at least representative offices –\u00a0 in countries north of South Africa.<\/p>\n
\u201cCompanies are increasingly recognising the benefit of having a truly local presence, driven by leaders who know how to navigate the unique challenges there,\u201d Goodman-Bhyat said.<\/p>\n