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Africa: lucrative, but not for sissies

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Africa, with the highest concentration of high growth and rapidly emerging markets in the world, presents huge potential growth opportunities. But it’s not a market for the faint-hearted, says Perry Hutton, regional director: Africa at Fortinet.
“Our business started in South Africa, developed nicely, and then we started actively expanding into other African regions from 2007. Now South Africa is less than half of our business in Africa, and some markets – like North Africa – are achieving near 50% growth year on year,” he says.
In an environment where ICT vendors battle to achieve double digit growth, these figures may sound too good to be true. Hutton notes that not every international vendor expanding into Africa has been this fortunate – some have tried and failed, some have placed expat staff in African countries and had to close offices when security risks became too high, and some have found the business culture too foreign for them to operate successfully.
Hutton attributes Fortinet’s success to its model of hiring local staff to represent the company in key regions, who then service local channel partners in their countries and neighbouring countries.
“We hire our own direct touch people in countries to engage with channel and develop the channel. They understand the local market and business culture, and are more successful than foreign representatives in engaging with the channel in those areas. We started putting down our first people in 2007, and now have staff in Nigeria, Ivory Coast, Morocco, Tunisia, Algeria, Egypt, Kenya and South Africa. This model has been hugely successful for the company, which is trying globally for year on year growth of 35%; while we are north of that.”
Strong network growth and rapid moves to high speed broadband and LTE across Africa present a number of opportunities for IT vendors and service providers, says Hutton. “We see LTE becoming mainstream in Africa over the next few years. With it, comes certain potential information security risks. For Fortinet, strong business opportunities are emerging as securing the network becomes a top priority for telcos and carriers.” In addition, Fortinet’s acquisition of Meru Networks is set to position the company to take to market solutions for ubiquitous connectivity with strong network security and simplified cloud-based management and control.

The harsh realities
Some international vendors, including large Chinese firms, some US, Israeli and European vendors are making inroads into the market, he notes. But not every company has the appetite for the harsh realities of doing business in Africa.
Hutton says: “You have to understand the market conditions, and only the tough survive. For example, central Africa tends to be homegrown – companies in Kenya, Ethiopia and Uganda only want to deal with local businesses. Further north, we see challenges like the availability of currency in Nigeria – they’ve run out of dollars and it’s becoming more difficult to lay your hands on dollars in order to do business.
“We recently changed our policies to reduce the time customers had to register a product down to 100 days. This was done for accounting purposes, but it instantly became a problem in places like Egypt, where it can take up to three months for goods just to clear customs. We see these delays in many areas, and often, we must use clearing houses to clear goods into country at horrific premiums.”
In addition, in many countries, there are myriad “service fees” required to oil the wheels of business. “Corruption is a problem in many African countries, and business protocols are often quite different from what Western businesses are used to,” Hutton notes. “Because our partner channel understands the local markets, they know how best to operate successfully within these environments.”