African pioneers seek to expand

15 March 2013

JOHANNESBURG: Pioneering African firms like Aspen, United Bank and Scangroup are seeking to expand their presence across the region, a move which requires overcoming significant obstacles.

Aspen, a South African pharmaceutical group and the biggest local operator in this sector, has a presence in 42 nations across sub-Saharan Africa, as well as parts of Asia and Latin America.

Stephen Saad, the firm's CEO, said growing in Africa is "not for the faint hearted" and demands "patience and perseverance". This was shown by Aspen's recent withdrawal of staff from Nigeria due to military action, and from Kenya because of the recent elections.

"It's a bit like venture capital," he told the Financial Times. "You know at any one stage you are going to have four or five of those with potential problems, but they come right."

Other examples of this trend include United Bank, a Nigerian financial services provider, which now trades in 19 nations, and Ecobank, which was founded in Togo and is active in 32 countries.

By contrast, Standard Bank, the continent's biggest bank in terms of assets, operates in a rather more modest 17 countries, despite the seeming advantages that come with its greater scale.

Nakumatt, a retailer, and Bidco, which makes soaps and edible oils, have both moved from Kenya into other eastern nations, but face difficulties expanding further afield.

"The brand can travel but I think east Africa does not know west Africa well," Vimal Shah, chief executive of Bidco, said.

Some of the issues facing organisations attempting to establish themselves in other local markets relate to variations in culture and languages; others are more linked to logistics and the legislative climate.

Scangroup, a Kenyan marketing and advertising firm boasting clients including Airtel, Nestlé and Unilever, has bucked such a trend by opening branches in both Ghana and Nigeria.

"Nigeria is bigger than combined east Africa – east African companies are all scared of west Africa but they all have to go there," Bharat Thakrar, the chief executive of Scangroup, said. "If they want to grow they have to become pan-African."

Data sourced from Financial Times; additional content by Warc staff