Over the last couple of years, there has been a significant increase in the focus on North African businesses and expansion to the region. Number of factors such as growing population under the age of 30, developing infrastructure and increasing demand for ICT solutions and services have driven the growth in the country.
African-centric distributor, Mitsumi Distribution, has observed the most growth coming from countries across the continent such as Algeria, Ghana, Kenya, Ethiopia and Tanzania. Being an authorised Dell distributor specifically for the North African region, the company’s Managing Director, Mitesh Shah, says, “Factors such as having in-country presence, right product portfolio, in-depth knowledge of market segmentation and high level of support, both technical and sales will grow your business and profitably. This is vital for places such as Africa where the market is growing and establishing a business is often a long drawn process.”
Hamid Boughazi, Regional Sales Director for North and French-speaking Africa, Fortinet, says, the main factors for growth is the awareness from all decision-makers that they cannot avoid the path to digitalisation.
He adds, “More and more we see IT at the centre of people’s business from corporation to the simple citizen. When it comes to IT, cybersecurity has started to become one of the main concerns that CIOs and IT managers have to deal with.”
According to Shah, technologies that are leading the region’s channel growth include wearable, smartphone proliferation, cloud and Internet connectivity.
He adds, “A lot of software is being offered through the cloud. Consequently, we are enabling online sales and subscription models on behalf of our vendors. We can also integrate many of these services and offer various solutions from different vendors through a single service model.”
Boughazi says, “We are investing in the North African region, especially in Morocco and Algeria after hiring a local team and have begun to deal with the right channel partners.”
According to Dharmendra Sawlani, President, Dubai Computer Group, Egypt will see the most growth from within the region.
He adds, “Although it will take two more quarters for the results to reflect, the positive measures by the government and IMF funding will boost the economy. One of the major constraints in 2016 was the currency shortage and a vertical upward swing resulting in hyperinflation. IMF funding, unpegging of the Egyptian pound and bold step to withdraw subsidy are some of the positive factors for 2017. I am quite optimistic the IMF funding will help bring USD rates below current rate and also neutralise the cross impact of subsidy withdrawal.”
The opportunities in the market are quite evident but how can resellers succeed in the region?
Shah says, “I believe that for resellers to progress and capitalise on the predictable growth, it’s essential for stakeholders in the channel to uphold the highest moral standards of doing business. Growth is possible because of proper planning, healthy stock rotation and inventory and cash flow management.”
Partners have to gain a comprehensive knowledge of the market and understand its challenges in detail. Grey marketing and software piracy are some of the biggest issues plaguing the market.
“This is one of the key challenges every distributor is facing. We have created different marketing campaigns and programmes to educate partners. Mitsumi encourages and invites all resellers across Africa to partner with them for authorised channel business. We plan to hold blitz campaigns to educate resellers on the huge risks in dealing in grey and how to mitigate this challenge,” says Shah.
Being a price-driven market also poses as another challenge in North Africa.
“African buyers are always on the lookout for high quality and competitively priced goods to meet their requirements.”
One of the other issues in the region, according to Boughazi, is that customers who have important IT teams try to master everything by themselves instead of relying on external companies.
“This is a bit challenging for systems integrators whose value comes mainly from this area. That’s why managed services are not flying in the region except in Tunisia where Managed Security Services, for example, started to be a reality even if these are just the first steps.
“To do business well in the region, it also requires an insight into the market. The best way to have that for a partner coming from abroad is to tie-up with local players who know how to deal with all the challenges in the market. This is a fast way to adapt to local conditions,” he adds.
What is interesting to note is that even though the channel business is still not mature, Shah says the company has seen resellers and systems integrators being proactive as they face threats from more established and financially stronger competitors.
The only way for partners to emerge as powerful players in the region is to adapt to the new digital era and deliver value-oriented services while also bringing in diverse product portfolio. But having said this, it is also critical for partners to have a focused approach to their expansion strategies.
Shah says, “Despite challenging business climate, we have seen a definite growth in the IT sector from the region. The continent has the biggest and most competitive IT market. We believe the region is perched to touch the highest mark by the end of this year.”
Partners who operate in the region need to have a clear and realistic growth strategy planned out. They need to take into account the challenges pertaining in the sector and make the most of the opportunities the region’s development phase presents.