Nomava Zanazo: 4 myths and misunderstandings about doing business in Africa | TED

Transcriber:

I've got to be honest,

companies tend to underestimate me

and I want to change that.

I think that when companies talk about bringing their products and services

to my European and Asian peers,

they automatically consider things like, where those peers shop,

what are the considerations before purchasing a product,

are they brand-loyal and who are their influencers?

That's great.

It's smart business and good marketing.

But I'm not sure that those same considerations

are automatically being made

when companies talk about bringing their products to me.

In my job,

I advise companies and individuals that are looking at investing in

or expanding their African footprint.

And the more conversations I've had,

the more I realized

that there are still so many companies, organizations and individuals

that still completely misunderstand who I am,

not only as an African consumer,

but as a citizen of one of Africa's 55 countries.

South Africa, in case you're wondering.

That's a real shame,

because these misconceptions will make it hard

to win my share of wallet.

And obviously it's not just my wallet on the line,

but that of 1.3 billion potential customers.

There's a lot of money to be made in Africa.

And I think if you're a company

and you don't figure out how to get into Africa now,

in the right way,

you might sadly miss the window.

So let me help you by debunking some of these myths

and misunderstandings around Africa and its citizens.

The first myth:

Africans are cheap.

Maybe it's because of my continent's legacy of poverty and famine

that makes people think that we just go for the cheapest product.

There are still many companies that think

they can just push their cheapest product lines into Africa.

But that is a very dangerous assumption to make

because we don't want to just buy anything that appears in our stores.

But we are focused on buying things of good quality.

In fact, according to research done at my company

where we studied consumers that come from countries

that make up at least 80 percent of the continent's GDP,

we found that we actually make decisions of quality over price

more so than most developing economies and rapidly developed markets.

Price usually come second after durability,

functionality and efficiency in non grocery items.

And it comes second after taste and nutrition in grocery items.

Even in the poorest of consumers

who make up the largest socioeconomic group in many African nations,

they are still willing to pay a premium for quality.

On that note, let me tell you something else.

New African customers like myself are connected to the rest of the world.

Yes, we travel.

Yes, we have the internet.

So don't think that we don't notice the differences in the quality

and the seasonality of the clothes you push to your South African stores

versus the one that I can buy in your European branches.

And by the way,

don't think that my friends and I don't notice

that we have to pay a premium when we shop in your local stores

versus when we shop in your European stores.

So this has to end.

If you want to play in Africa,

it's not about pushing your cheapest product lines into the continent.

But it's about developing products specifically made for African consumers

that fit our desire for quality and our diverse budgets.

My second myth:

Africans don't value brands.

Just as you shouldn't push your cheapest product lines into the African market,

don't think that your product will take off without any work.

African consumers are highly brand-conscious

and are loyal to brands that have been around the longest.

Because -- I'm sure you know what I'm going to say next --

those brands are associated with quality.

But there's actually a little bit more nuance to our relationship with brands.

Because you see, we inherit brand preferences from our family and friends.

There was an interesting study done by one of my clients

looking into the cosmetics industry in East Africa.

The study found that when young girls enter high school,

their mothers introduce them to a specific brand of body lotion.

And even though those girls may change brands

once they become older and financially independent,

they too will give their daughters that same brand of body lotion

when they reach high school.

Brand-name recognition is huge.

I was actually talking to one of my research colleagues the other day

and we're actually laughing at how growing up in South Africa,

Mdantsane, to be specific,

when our parents had visitors,

they would send us to the nearest bazaar shop to buy Coke.

But before we leave, our parents would ask the visitor,

“Which flavor Coke do you want?

Do you want Fanta Orange?

Do you want Stoney or do you want Lemon Twist?"

And in fact, up to today, in many South African homes,

soft drink is referred to as "Coke,"

toothpaste is referred to as "Colgate,"

margarine is referred to as "Rama," and the list is endless.

So what does this mean?

This means that if you want to try and enter African markets,

you need to give African consumers a reason to believe

that your brand is the best

and your brand is of high quality.

You also need to spend the money to ensure

that your brand is present in all of the places that we Africans shop.

I'm talking high-end malls,

but I'm also talking about local open-air markets.

Bringing me to my third myth.

You see, there's still a misconception

that emerging markets, like the African continent,

and especially the African continent,

are laggards when it comes to innovation

or technological advancement.

Africa's leapfrog story is at least 10 years old now.

So why is this myth still around?

I think it's because when the leapfrog story gets told,

it stops at mobile,

when in fact, our leapfrog story goes far beyond

our massive mobile saturation.

But before I tell you that,

I think it's only fair that I give credit where credit is due.

Africa's leapfrog story is amazing.

I hope it blows your mind

that at least 60 percent of GDP in Kenya and Tanzania

goes through mobile money.

Speaking of that,

I spent a few months in the US a few years back.

I found a great apartment and was ready to move in

when my landlord asked me to cut him a check

for the first month's rental and deposit.

And I was like, "Sorry, what?"

Because I honestly could not remember back then

when was the last time someone back home asked me to cut them a check.

But like I said, Africa's digital transformation is so much more exciting.

We're seeing e-commerce fast taking off

and the new Africa trade agreement

will make it easier for cross-border transactions,

which means African-made products bought by African consumers

are crossing African borders easier and faster than before.

So if your company or your brand is looking to get a piece of the action,

now is probably the right time to come in.

Now, my last myth,

which really pains me to have to talk about in 2021:

Africa is one country.

I know that I've spoken in great length

about some of the common consumption habits

across the different African markets.

But it's important to remember that Africa is not one country

and African communities,

even within individual countries, are not homogeneous.

We speak over 2,100 languages.

Therefore, the customer positioning and target segments for different products

can vary substantially.

And if you want to get into Africa,

you need to get into the weeds.

Take tea and coffee consumption habits, for example.

Moroccans prefer to purchase their tea in traditional markets,

Kenyans prefer to purchase their tea and coffee in supermarkets,

while Ethiopians prefer to purchase their products in local kiosks.

Local culture also has a big influence on what we buy and where we buy.

Take me and my group of girlfriends, for example.

When you look at this group of 10 girlfriends,

on paper, we're the same.

Young, Black, middle-class females,

that grew up in one of South Africa's major townships,

came to Johannesburg to pursue tertiary education and employment.

Some segmentation studies refer to us as Black Diamonds,

members of South Africa's fast-growing,

affluent and influential Black community.

But if you really do your homework,

you will first appreciate that this group of 10 girlfriends

is made up of five

out of South Africa's 10 ethnic tribes.

And even though our tastes are heavily entrenched

into the urban culture of Johannesburg,

our respective traditional culture still influences what we consume

and how we consume it.

And it's easy to see if you just open our respective pantries.

So if you want your product to thrive in the diverse African markets,

you need to do your homework.

You need to take your traditional segmentation plans

one or two levels deeper.

Yes, it's more work,

but my continent is worth it.

I want to leave you with this.

A share of my wallet is here for the taking.

But not for long.

African businesses are booming

and trade across all 55 countries is getting easier and faster by the day.

So it won't be long before non-African products are less desirable

than the ones that we make here at home.

So if you want in, great, come join us.

But do it thoughtfully,

do it intentionally,

spend the money,

and for goodness sake, don't underestimate us.

Don't underestimate me.

Thank you.