MARKETING
Born Global Export Strategy For African SME ’ s
By Jonathan Phillip Kyetume
The African Development Bank ’ s African Economic Outlook Report 2021 confirms that the Covid-19 pandemic had a significant impact on Africa ’ s economy at the macroeconomic level , as evidenced by a drop in economic growth rate , a drop in Gross Domestic Product ( GDP ), rising debt-to-GDP ratios in respective states with actual pressure felt by the majority of the population . - African entrepreneur .
The typical African entrepreneur struggles with access to capital , unpredictable industry or technology disruption , limited access to information , growing non-tariff barriers , stiff local or regional competition , but the most difficult aspect remains market availability and access .
From the African perspective , various regional trade blocs were established to effect policy reforms , facilitate trade and market access including but not limited to ; the East African Community ( EAC ), Common Market for Eastern and Southern Africa ( COMESA ), Southern African Development Community ( SADC ), Economic Community of West African States ( ECOWAS ), Economic Community of Central African States ( ECCAS ), and most recent , African Continental Free Trade Area ( AfCFTA ).
In comparison to the other regional trade blocs listed above , the AfCFTA , which was established in 2018 , is the largest economic integration in terms of the number of African nations participating . Furthermore , the European Union ’ s recent statement and commitment to promote the AfCFTA presents an attractive opportunity for SME export capacity development .
According to the World Bank 2020 The African Continental Free Trade Area : Economic and Distribution Report , the AfCFTA agreement will create the largest free trade area in the world measured by the number of countries participating . The agreement , brokered by the African Union initially requires members to remove tariffs from 90 % of goods , allowing free access to commodities , goods , and services across the continent . The pact connects 1.3 billion people across 55 countries with a combined GDP valued at US $ 3.4 trillion .
The key objective of the AfCFTA is to create a single market , deepening inclusive economic integration and competitiveness . The AfCFTA agreement ’ s strategic implementation will be critical in ensuring that African countries diversify their production capacities and integrate into regional and global value chains , thereby increasing their economic resilience to future shocks beyond Covid-19 .
With Africa as one market , African SME ’ s especially in the technology and creative space can consider internationalization of their firms by adopting the Born Global export strategy . Typically , a born global company refers to a company whose commercial strategy from inception is aligned to product export beyond local borders . Various scholars of traditional Internationalization theories suggest that export strategy can come into effect as a result of domestic market saturation , product reaching saturation phase , desire to enhance productive capacity and resource efficiency for optimal economies of scale .
With one market , we could leverage market research resources and trade data to understand markets better and develop differentiated products targeting a particular niche . The International Trade Centre ( ITC ) has played a key role in providing information and awareness in line with global export strategy and support to SME ’ s . As marketers , to develop a comprehensive export strategic plan , the ITC has key international trade statistics , export potential maps , automated market analysis , country specific import & export data , export product data aligned to the Harmonized Commodity Description and Coding System as recommended by the World Customs Organization .
At entrepreneurial incubation and innovation mentorship levels we need to foster internationalization as a key aspect in business planning to align commercial strategy for competitive advantage with export development in mind and eventual growth of respective national economies . In the African context , born global strategy will for a greater period of time favour service internationalization . Smaller scale entrepreneurs in goods production can easily leverage on existing global online retail trade platforms for market penetration , however logistics remains a key challenge at a regional level and could delay export for retail use .
Born global strategy success greatly hinges on technology adoption of a firm into the commercial strategy , and this is quite evident with the success of African fintech , bike hailing , and telemedicine firms . We should now be asking ourselves how best we can replicate for scalability across target African markets while building networks and ecosystems for sustainability .
At Policy level , we advocate for development of SME Export support centres to run targeted export readiness and business development support , regional harmonization of logistic systems , inclusive integrated regional shared procurement & tender systems and greater reduction on non-tariff barriers to develop our SMEs Export Capacity . We need to look at low-cost financing solutions or special budgets from respective governments to foster and promote innovation for sustainability of born global firms . Again , affordability and access to technology remain a key enabler of born global SME Internationalization . ■
Jonathan Phillip Kyetume is a Marketing and Communications Specialist . You can commune with him on this and related issues via email at :
Jonathankyetume @ gmail . com
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