How to Start a Manufacturing Company in Africa

Welcome to this post on how to start a manufacturing company in Africa, via Afrokonnect. What can be more rewarding and transformative than starting a manufacturing company in Africa? Africa stands out as the headquarters for natural resources and a very vibrant customer base. Africa is on a path with increased focus on production and industrialization.

It is necessary to consider Africa when it comes to setting up a manufacturing company. The continent offers various entrepreneurs with a wealth of opportunities. The focus on industrialization for the continent is geared towards economic development by various countries. Experts have also stated that it is crucial to job creation and technological growth of the continent.

Starting a manufacturing company in Africa comes with its various challenges alongside multiple limitations. It is important to overlook them and focus on recognizing the amazing opportunities offered.

Calculated steps and strategies is crucial to leverage the strengths of this amazing continent. Entrepreneurs have a great chance to create thriving enterprises by investing in the continent’s manufacturing sector. These investments will be crucial to the development of Africa as a whole.

An Overview of the Manufacturing Sector in Africa

The manufacturing sector on the African continent has been on a rise since the early 2000s. The continent agenda to diversify and industrialize is the leading factor in economic development on the continent.

The manufacturing sector has greatly aided in reducing the reliance on raw material exports. The continent has also started to fend for itself by exporting finished products instead of raw materials. This has helped in generating greater revenue for the continent.

Africa is home to various industries with various companies springing up across the continent. The improved concentration on the manufacturing sector has also boosted intra-African trade which prompts development. The young population is the biggest driving force in the growth of the manufacturing sector. These youths occupy 98% of entrepreneurs market.

The Entrepreneurs market control the manufacturing sector which means the success of the industry is linked to the youth population. The African continent is advancing from its reliance on imports to focus more on production. Local manufacturers have a very exciting challenge to meet the needs of the domestic and external market. The African continent isn’t void of its challenges such as power and transportation. These challenges have to be unlocked to harness the full potential of the sector.

Importance of Manufacturing for Economic growth and Job Creation in Africa

The African continent aims to reduce reliance on western powers and promote exports. A thriving manufacturing sector is crucial to achieving these feats listed above.

1) The manufacturing sector helps in the transformation of goods to finished products. The sector will also help in diversifying the African economy which will be crucial its growth. The shift will also result in stiff competition for the African market which foreigners have usually dominated.

2) The creation of newer manufacturing companies will reduce the unemployment rate. The creation of companies’ means there will be enormous vacancies to fill. The African unemployment is on a massive high and the creation of companies will help in reducing it. This gradual reduction of the unemployment will help in reducing crime massively. It will also help in alleviating poverty and improving our living standards.

3) A thriving Manufacturing sector will also improve our technological advancement. An improvement on our technological capacities will bring about development. This will also bring about improved productivity on our continent.

4) An improved manufacturing sector brings about massive reduction on imports. The availability of locally made goods will ensure the reduction of imports. It will also ensure the increase in exports which ensures our locally made goods are sold globally. The increase in exports helps countries to save Forex (Foreign Exchange). This promotes the balance of trade hence resulting in economic stability for African countries.

Challenges Faced When Starting a Manufacturing Company in Africa

Africa is seen as the next hub for manufacturing companies due to its amazing potential. However, there are various challenges associated with starting a manufacturing company in Africa.

1) Infrastructural Limitations:

The African continent is facing serious deficiencies when it comes to infrastructure. This has driven various potential investors from the continent. Various infrastructural deficiencies ranging from transportation to power are rampant on the continent. These deficiencies have reduced productivity and had a negative effect on the manufacturing sector.

2) Skilled Labor:

The African continent is known to have a large workforce but majority of them are unskilled. The education sector is at a low in African hence reducing the efficiency of workers.

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Hired foreigners are seen everywhere in top positions in companies while Africans have been reduced to menial jobs.

3) Obtaining the necessary permits:

Getting the necessary permits to operate legally in Africa is a time-consuming and stressful tasks. The spread of corruption is not also helping matters as companies have to pay their way to get these permits. These can delay the operations of manufacturing companies. Entrepreneurs are hereby advised to consult their legal team for proper counselling and work closely with the local authorities.

Others include:

4) Access to Finance;and

5) The political and Economic instability of the African continent.

Steps to Own a Manufacturing Company in Africa

Here are some steps to follow if you are looking to start a manufacturing company on the African continent:

1) Make an Extensive Research on the Target Market:

Before establishing your company on the continent – take time to properly analyze your market. This will enable you decide the best country to establish your manufacturing company in. You will need to decide which part of the continent has demand for your target product.

2) Analyze Some Factors on Your Chosen Location:

There are several factors to consider before choosing a location to start your company in. Nearness to raw materials and infrastructure facilities are some of the factors to consider. Identify the location that best suits your interest and begin operations there.

3) Draw out a Plan:

Planning is one of the crucial parts when starting a manufacturing company in Africa. Time and attention must go into this part as it will decide the success or failure of your company. The plan will also be crucial to attract or deter investors.

Others include:

4) Secure adequate financing;

5) Secure partnerships both locally and internationally;

6) Ensure to register your business legally to avoid hitches;

7) Erect adequate facilities;

8) Hire trained workers;

9) Set your standards;

10) Implement properly planned marketing strategies; and

11) Evaluate your performance regularly.

Conclusion

Owning a manufacturing company in Africa is a very lucrative venture and is sure to return enormous profits. It is also very easy to lose money on this continent so proper planning and research is needed. These steps outlined above is sure to provide you with an advantage when starting a manufacturing company in Africa.

Entrepreneurs are sure to face challenges but tackling them effectively will guarantee you growth and enable you harness the potentials on the continent. Thanks for reading and I hope to see you another time on Afrokonnect.ng.