How ‘Diaspora Venture’ can Succeed in Africa

When Africans return home to help develop their countries and contribute to the ‘Africa rising’ narrative, it is a great plan which empowers the individual business owner(s) and the whole society.

But this is not always the case. Many returnees have had to close down their businesses after a few months to a couple of years of operations, due to minimal business growth and poor returns.

Some businesses owned by young Africans returning home from the West are, however, gaining ground and growing to be regional and international ventures solving local problems and supporting development in Africa.

One great example is Café Neo, a business started by two brothers, who returned home from the United States of America and developed the venture into a local brand that is slowly gaining popularity in Rwanda, Nigeria and in neighboring countries.

So, exactly what makes one business to succeed and yet another to crumble down leaving an entrepreneur demoralized and penniless? Some young Africans, who invested their hard-earned savings abroad, have had to cut short their African dreams, and fly back (to foreign lands) in search of ‘greener’ pastures yet again!

For those who wish to come back to Africa and invest in a good venture, the following tips will help you avoid some of the loopholes that have dented pockets of many entrepreneurs:

Carry out vast research on you business idea

Before flying back to your country to run a business, you need to carry out detailed research into the business and the African market. The African market is peculiar, and some products that sell out abroad, may not fetch even handful customers at home.

Identify if your business idea is already being implemented by other entrepreneurs and learn how they navigate the market. It is important to have a great plan but it is more rewarding to have inside information on how to operate that plan.

Identify a viable country to do business

As an African going back to do business in the continent, you have a better chance at success than a foreigner, who does not understand local language and culture. For this reason, some upcoming entrepreneurs would think that establishing business in home countries is more feasible. On the contrary, one needs to identify a viable country where the business promises fast growth, which might not be the home country.

Take for example a Rwandan who wishes to bring in second-hand clothes to its market. While a number of African countries sold second-hand clothes a couple of years back, not all are still in this business. East African countries, for example, have expressed their displeasure with the business as it is killing local industries. With such market intelligence, you would rather focus on another business idea or implement the same idea in a more suitable country.

One good example is that of Café Neo brothers, who when it came to doing business in Africa, decided on a Rwandan company rather than Nigerian due to risk and growth factors.

Today, even though based in Rwanda, the business exports products to their coffee shops in Lagos, Nigeria- their home country- and to other countries as well.

Learn other industries you will engage in the business and how they operate

Sometimes businesses fail not because of lack of inside information on the business, but on other industries that are critical to the success of the venture.

Car-wash business has been booming within Nairobi city due to the success rate of the venture. This kind of business relies on constant water supply for it to operate and flourish.

Early this year, however, Nairobi Water and Sewerage Company called on all businesses using treated water to cease operations immediately due to drought. To further strengthen the order, Nairobi County Government launched a crackdown on illegal car wash businesses in the city saying the rate at “which car wash business is growing along the roads is worrying if the county just sits around doing nothing.”

A viable business may not withstand such pressure, forcing entrepreneurs to look for alternative solutions or close down.

Do not make emotional business decisions

Emotional bonds can obscure an entrepreneur’s sound judgment leading them to start ‘relying on intuitions,’ ‘following their heart,’ and ‘gut feeling’. Strategic decisions are loaded with anxiety and uncertainty, which can force people to resort to using emotions rather than logic.

To avoid being overly excited about a business decision you are to take on, especially for diaspora entrepreneurs, who are emotionally connected with their home countries, one should carefully look into the above discussed tips, then make a sound decision based on facts.

Establishing a sound operations plan with clear objectives and guidelines can ensure that no matter how emotionally connected one is about a decision, it does not affect how the business is managed.

Several businesses owned by entrepreneurs returning to Africa from abroad have flourished. The secret to their success is; carrying out a well-informed research that brings to light issues affecting the market, defines the growth prospects and has clear objectives to avoid haste and emotional decision making processes. Understanding such dynamics can reduce the risk of business failure in the future.