Using spatial information to develop business opportunities

October 2nd, 2019, Published in Articles: PositionIT, Featured: PositionIT

Africa has attracted much attention from foreign markets trying to build new relationships and remove trade barriers through economic, development and investment opportunities as the world explores this vast untapped continent which is full of potential and new business areas. This article illustrates how information platforms such as Market Decision’s AfricaProfiler bridges the gap between Africa and the competitive global international market through a spatially-enabled economic and demographic platform. 

Geospatial-platforms such as AfricaProfiler are useful for companies looking to expand their footprint into Africa. Using information compiled on 35 databases of highly reliable sources for every country on the continent, the case studies focus on site development in Kenya, retail potential in Zambia and finally telecommunications and banking expansion and market research studies throughout Africa.

Building businesses spatially in Africa

Africa’s GDP is expected to be the fastest growing of all continents in the next 20 years. But knowledge is important for capturing business potential. Drivers for growth include access to basic services and infrastructure, and more importantly, adoption of digital technologies [1]. Technology has had a significant impact on driving business development globally and particularly in developing countries.

Through globalisation and development, investment has driven technological development which now plays an important role in economic development and entrepreneurship in many emerging economies. New technologies may also enhance economic development in Africa. Mobile phones and connectivity have aided business development through improved internet connectivity, reducing the cost of doing business and making money transfers easier. Yet, there is still an issue of lacking information technology and infrastructure [2].

Africa has great business potential because population growth and urbanisation are occurring at a rapid pace. Cities are growing fast, incomes are raising, and new business opportunities are developing as unmet needs are identified throughout the continent. Industrialisation is an emerging area as Africa has its own industrial revolution which has not matured yet. There has been a significant increase in production across all sectors which provides the chance to double production in the future and grow manufacturing exports. With a positive outlook in production there is still a vast gap in the availability of adequate infrastructure. Investment in infrastructure throughout the continent has increased radically and has created a platform for those who want to help solve and improve Africa’s infrastructure challenges. There are many unexplored regions with a wealth waiting to be unleashed. The digital era is also expanding throughout the continent particularly with broadband connectivity which has increased mobile data traffic. This has opened and improved transactions and opens access to other markets which will improve the GDP of the continent [3].

The continent has attracted attention from foreign players, mostly European and UK. As countries change agreements, commitments and allegiance to organisations and each other, Africa will become a platform to build relationships with different regions as there have been many political disruptions globally. After Brexit, the UK will need to forge new partnerships, as will Europe. The US in the meantime is “Putting America First” and will most likely create more trade barriers with Africa and will likely cut US aid to the continent.

Because Africa is largely untapped and unchartered, the areas of interest for business development and expansion include: environmental sustainability (where the abuse of the earth’s resources has nearly reached that of first world countries); increasing capacity of energy supply through renewable energy; supplying food to a growing global population; a high penetration of social media interaction through mobile phones and the internet; and an increasing young population.

Spatially-enabled platforms can assist business development throughout the continent by helping investigate and develop business opportunities; helping governments serve their people and to advance economically, socially, geographically, technologically and developmentally. The following case studies show how one such a spatially-enabled platform, AfricaProfiler, provides information on a country-level to aid business development and expansion.

Market Decisions produced and annually updates AfricaProfiler (in collaboration with American Digital Cartography -ADCi). The comprehensive, spatially-enabled database provides organisations with an in-depth view of African countries with insightful information that enables business-making decisions, from a macro to a micro level. Individual country census data has been sourced to provide better information on each country, and have been combined various reputable and reliable information sources to create a comprehensive solution.

The database’s 35 layers with information are used in industries from employment and agriculture to manufacturing, finance, trade, skills, and education. These layers incude a Country File, Capitals, Financial Outflow, Informal Markets, Population Comparison, Population by Province, Press Freedom, Retailers by Country, Shopping Centres, Competitiveness GCI, Ease of Doing Business, Economic Data, Economic Regions, Top 100 Banks, and Top 500 Companies layers, among others.

GIS and business development

Business are slow to adopt GIS as part of their business strategy due to its cost, complexity, limited data and the number of skilled people available. But GIS is becoming a more popular tool as location is an important component in business development and because GIS allows for a competitive business advantage by combining geospatial data with business data for analysis, data management and querying [4]. With the help of GIS businesses can taget areas to expand their business as location is highly important for every business transaction.

Telecommunication companies, banks, government bodies, retail, aviation and health sectors, to name a few, have already benefitted from using spatially-enabled platforms like AfricaProfiler to investigate business in Africa. By using geospatial tools, a company is able to:

  • Understand the density of activity within an area
  • Gain a competitive advantage using up-to-date data
  • Integrate with location intelligence software tools
  • Gain insight into possible trade areas
  • Identify expansion opportunities
  • Increase planning effectiveness

Reliable information in layers such as such as AfricaProfiler’s “Ease of Doing Business” layer ranks the ease of doing business, starting a business, dealing with construction permits, getting electricity, registering a property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Other layers such as population by province, shopping centres throughout Africa, the World Bank Development Indicators and Economic Data, assist with this decision-making process.

AfricaProfiler information on Kenya.

Site development in Kenya

One of the company’s clients was looking to expand their business into Kenya. They wanted to assess the impact of the middle-class on urban nodes and its growth in future. It was necessary to identify the pockets of wealth in order to understand the geographic location of upmarket shopping centres. The retail demand has risen primarily from the wealthier areas.

While employment was a key indicator of wealth, it’s worth noting that many of Kenya’s entrepreneurs are working within the semi-formal economy. Kenya is trying to formalise the informal sector. Many informal areas are placed within proximity to the upper-income areas. Nairobi’s strategic focus is to amalgamate the middle-class bands and so create wealth equally across the very rich and the middle-class areas.

For the company’s client to understand the location dynamics within this changing demographic, it was decided to look for wealthy areas with good infrastructure accessibility. This has proved to be key for selecting good locations for successful shopping centres within Nairobi.

Assessing retail potential in Zambia

Currently just over 20% of the population of Zambia falls into the upper-income category. It is not surprising that shopping centre owners feel more comfortable operating in stable markets. Zambia as a country has not experienced recent political instability and has a close relationship with its neighbouring countries.

For this client, the location of retailers from a largely South African base into Zambia required an in-depth investigation into what the market thinks about retail in general and of shopping centres in particular.

The macro information layer is necessary in any research exercise, but for the micro analysis Market Decisions interviewed retailers and shoppers to provide its client with detailed insights into shopping behaviour. Value for money and product quality appeared to be directly linked in the minds of most Zambians, and because the upper class travel out of the country they are very aware of the prices of goods. The marketing message therefore needs to take into account the sensitivities of the population and its cultural anomalies to market successfully.

Telecommunications

Telecommunication companies require access to quality data as it directly determines store and tower locations. In this instance, AfricaProfiler was sold to a telecommunications client to use with their own internal mapping package. Most companies seldom check their accumulated data for geographical inconsistencies. Companies operating in Africa will have to start creating databases that are geographically descriptive, and complementary data such as that of AfricaProfiler can help do this.

Informing foreign affairs

Governments benefit from creating relationships with foreign governments, either on the continent or internationally. The South African Government has requested the locations of all embassies for Department of International Relations and Co-operation. This will ultimately assist with tourism, but will likely expand the goal towards creating trade to provide employment in the home country.

Conclusion

Geospatial information is a useful tool to drive new business opportunities and economic growth, not just for business but also for government but to anyone who needs to understand business development opportunities through geography.

References

[1] M Chironga, G Desvaux and A Leke, 2018. Rethinking the African business opportunity. Available online https://www.mckinsey.com/featured-insights/middle-east-and-africa/rethinking-the-african-business-opportunity (Accessed 25 June 2019)
[2] J Amankwah-Amoah, ELC Osabutey and A Egbetokun, 2018. Contemporary challenges and opportunities of doing business in Africa: The emerging roles and effects of technologies, Technological Forecasting & Social Change, p131, 171-174.
[3] A Leke and L Signé, 2018. Spotlighting opportunities for business in Africa and strategies to succeed in the world’s next big growth market. Available online https://www.brookings.edu/wp-content/uploads/2019/01/BLS18234_BRO_book_006.1_CH5.pdf (Accessed 25 June 2019)
[4] R Posthumus, 2008. GIS as a tool in business intelligence. Available online http://www.ee.co.za/wp-content/uploads/legacy/AppT-GIS%20as%20a%20tool.pdf (Accessed 25 June 2019)

Contact Laura Goodman, Market Decisions, gis@marketdecisions.co.za

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