Africa: A Continent Rich With Franchising Opportunities
The African continent is undergoing an economic renaissance. Regional multilateral financial institutions like the African Development Bank, legal reform, and foreign investments in a variety of industries are making this transformation possible. As a result, franchising is a huge untapped industry on the African continent. For those entrepreneurs who are daring and are farsighted enough to take advantage of that potential, the opportunities are significant.
The African Development Bank (AfDB) has been researching the growth and viability of franchising on the African continent for quite some time. In fact, the AfDB has its own franchising initiative that started in 2001. This initiative raises awareness and helps build the capacity of stakeholders in franchising in a number of African countries. It also creates business opportunities by linking franchisors in different countries and by designing financial support mechanisms for franchisors and franchisees at the regional and country level. AfDB research has revealed that 90 percent of private businesses on the continent are small or medium-sized enterprises (SMEs). According to the AfDB, franchising encourages the development of these SMEs and helps create stronger economic opportunities, educate a burgeoning workforce, and reduce the levels of poverty across the continent.
Not surprisingly, Egypt and South Africa have some of the most developed franchise operations. This is most likely due to past legal and economic reform in those countries. Approximately 19 African countries have franchise operations, but not much data is available regarding the extent of those operations. What we do know, based on AfDB research, is that more than 200 international franchises have successful operations in the African market valued at more than $300 million in food franchises alone. The growth of the African franchise sector is due, in part, to the recognition by African governments of the importance of SMEs to their local economies. This recognition has led them to promote franchising as an instrument that could lead to business growth and viability.