Competitiveness key to penetrating regional markets � Jefferis
Brian Benza | Tuesday November 15, 2016 16:13
Speaking at a Standard Chartered Bank Botswana business banking breakfast meeting held recently, Jefferis said the majority of Botswana firms largely depend on government tenders for support, a business model that will not be effective if they want to expand regionally.
“Depending on government spending for growth is not a business model that can help Botswana companies expand into outside markets. Most of the Botswana companies that have penetrated the outside markets are run efficiently and competitively,” he said.
With growth in government spending slowing in the past years, Jefferis urged local companies to adopt measures that can make them competitive in any environment not just in Botswana.
Among some of the Botswana domiciled companies that have successfully penetrated regional markets include Letshego, Choppies, Sefalana, RDC Properties, PrimeTime, Furnmart, BancABC, Wilderness Safaris, Chobe Holdings and BIHL. The business breakfast meeting aimed at sharing thought leadership insights on growing local businesses and the transition from local to international focus. At the event, Standard Chartered Bank also showcased the portfolio of services and facilities it has in place to support each stage of business banking growth.
Jefferis also advised companies that are planning to expand outside to always conduct a thorough due diligence and study the markets before committing.
“There are a lot of opportunities out there, but you always need to be careful and do your homework about the market you want to enter. If it means getting a local partner, then you should do that. And in the event things don’t work, do not hesitate to pull out before losing a lot of money,” he cautioned.
Although Botswana companies that have expanded into the region have been largely successful, others have encountered challenges driven by economic and political factors.
Hardly a year after extending operations into South Sudan, Letshego was two years ago forced to pull out of that country due to political instability.
In their last financial results for the year ended June 30, 2016 Choppies said it incurred losses in Zimbabwe and South Africa due to depressed trading conditions in mining towns of the latter and liquidity constraints in the former.
The company is also facing tough competition from Shoprite in Zambia, a market it entered this year opening five stores.
BSE-listed Furnmart also recently announced that it was pulling out of Zambia due to a tough trading environment.
RDC Properties has also failed to successfully implement their expansion plans in Madagascar.
In spite of the challenges faced when companies expand regionally, Jefferis said, they are more success stories than failures.
Fast Moving Consumer Goods (FMCG) giant, Sefalana recently announced that it was entering the Lesotho market through the acquisition of another retailer. Sefalana is also finalising plans to follow Choppies into the South African market.