Important things to consider - IMPORT Business in West Africa
Trading , in Africa is very inviting and deceptive at the same time. Before considering a product to Import into Africa or export out , you need to understand the country in Africa you want to target. I repeat as in my other writings " Arica is a continent , every country has its own advantages as well as challenges.
Just because a product is doing well in a particular African country , it may not do the same volume/value in another - Do not generalize. Many countries have advanced local industries and are able to supply to neighbors as well as meet local demands. Yes price wise , quality wise you may still have a margin but add to that logistics , storage and long payment cycle , your product will no longer make sense. Case in point - Baby diapers - Until about 2009 diapers were being imported to most West African nations from Turkey. That volume was dented by imports from china who supplied lower quality but cheaper diapers. Even Thailand makes cheap diapers. However ever since local manufacturing started in some countries , the business makes no sense. For Calculation purpose( FIGURES ARE ONLY FOR REPRESENATION , NOT ACTUAL PRICE INFO) here's the equation and comparison. Cost of DIAPERS FROM TURKEY - $ 0.05 Cost of DIAPERS from CHINA - $ 0.04 Cost of Locally manufactured Diaper - $ 0.09 On the face of it any trader would jump looking at the margin in price and would price his product lower than the local goods at $ 0.08 but the thing he doesn't know is that the locals company extends credit , distributes extensively and collects money on a weekly basis. Local manufacturer also makes and sells in the local currency . So if you import a container of diapers and decide to sell it , you have to have a strong stock and sell distribution , collection of funds and transfer mechanism in place. When you will add the costs and look at the long realization cycle , it will cost you $0.11 . So where you were thinking of making $0.01 and work on a volume business , you would loose $0.03.
Does this mean you can not sell diapers ? No it means that you have to do your homework before introducing a product and not go simply by superficial calculations.
2. Other things that can hamper your calculations are Currency - Most of West Africa buys in USD and sells goods in local currency . Some currencies are pegged to a euro and fluctuate tremendously.
3. Duties are not fixed either , they change often and result in erosion of profits.
In short nothing can be taken at face value. We have in the past helped companies shorten the learning curve and avoid such losses by doing the due diligence for them .
These are mostly , Import related details . Exporting out of Africa is a separate topic !
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