Technology Opens New Global Market Opportunities for African EntrepreneursPublished: April 28, 2010
Jane Ogwayo was working for a multinational company in Kenya, but like many women across the world, she wanted to find a way to help support her family without trudging to an office each day. "When I realized it would be difficult to raise a family and at the same time work for a company, I opted to work at home while taking care of my young children," says Ogwayo, a Goldman Sachs 10,000 women scholar at the United States International University (USIU) in Nairobi.
With start-up capital of about $700 USD, Ogwayo launched her own company making custom garments for institutions, including graduation and judicial robes, clerical vestments and hotel uniforms. She supplies the Anglican Church of Kenya, universities including USIS, and hotels in Africa catering to the high-end business and safari markets. In addition, she has shipped small orders to the U.S. and Australia.
Tapping Technology to Expand Internationally
For years, major companies based in developed nations have been taking advantage of lower labor costs in emerging economies by shifting production to new locales that allow them to reduce expenses throughout the global supply chain. Now even small entrepreneurs like Ogwayo may be able to stake a place in the global supply network and reach promising markets overseas with the help of the Internet and other technologies. "Once you go to the Net, you become visible globally almost immediately," says Charles Mayaka, professor of strategy and marketing at USIU and academic director of the 10,000 Women certificate program for women entrepreneurs.
The Internet and other developments in communication, such as Skype, make it possible -- and affordable -- for African entrepreneurs to participate more in global markets, according to Murray Low, executive director of the Eugene M. Lang Center for Entrepreneurship at Columbia Business School and a mentor to USIU entrepreneurs through the Global Business School Network. Low says that only in the past year has Africa received the bandwidth and widespread access to technology necessary for small entrepreneurs to run international businesses.
In addition to new Internet-enabled capabilities to find and communicate with overseas customers, small-scale logistics providers, such as FedEx, make it possible to ship smaller orders at competitive costs, particularly to markets in Europe and the Middle East. "Even small African companies like [Ogwayo's] uniform business would be able to interact and service at a high level a customer anywhere in the world," says Low.
While he recognizes that large-scale producers in China or other newly industrializing countries might be able to beat a small entrepreneur on price, Low points out that Chinese manufacturers often do not like to fulfill small orders.
Ogwayo is able to compete by offering more specialized products and smaller, flexible production runs that allow her to compete with large, industrial producers. "Initially I wanted to make ladies' dresses on order, one at a time, but when I realized the growth limitation of such a business, I switched to staff uniforms," says Ogwayo. Most of her company's products are made-to-measure for each specific customer. Ogwayo also works with customers to develop new products, including sanitary kits for girls ordered by non-government organizations operating in Sudan.
Finding Global Suppliers
Low's wife Julia is running a business in the U.S. that is built on a model that links small woman-owned businesses with U.S. markets. Julia Low sells to interior designers a variety of custom, high-end bed and table linens that she arranges to have made through women entrepreneurs in Vietnam and Madagascar.
Julia Low located her suppliers on the Internet. Her first step was to search Google looking for companies overseas with expertise in linens. Once she found some sites, she began to sift through them looking for firms with websites that indicated the managers spoke English and, preferably, had experience in international markets. Eventually she narrowed her search down and visited potential suppliers before deciding on her partners. Her supplier in Vietnam speaks Italian, French and English. "It's been an incredible journey for me in terms of finding the suppliers through the web," says Julia Low. "Technology has opened the doors for both sides. What's wonderful about the suppliers I've found is that they are incredibly savvy and entrepreneurial in their own right."
She now works with her suppliers using a combination of e-mail, Skype and database portals that allow her to work closely with suppliers in real time. Some days she spends four or five hours on Skype. When it comes to her own distribution, Low, who used to own a retail shop, will also sell through the Internet at her site, Juliab.com.
While the technology is a key to the model, Julia Low says she still has to occasionally travel to visit her suppliers face-to-face. "It is essential to meet with them, especially in the beginning," she says. "There is a trust factor because you are working so far away. It really is creating a partnership and a relationship based on trust."
In her own business plan, Ogwayo points to some of the external factors that could still interfere with business in a developing country such as Kenya, including the 2008 post-election violence, the global financial crisis and changing government regulations. "We can minimize the risks by diversification of products to avoid over-reliance on any single product or market sector," she adds. "The flexibility of our production strategy will make it possible to react quickly to changing circumstances."
Mayaka says that entrepreneurs who are able to develop a global presence, like Ogwayo or Julia Low's suppliers in Vietnam and Madagascar, may go on to support many other entrepreneurs in their region. He notes that he had worked in India where towns and regions develop a cottage industry, or specialty. Through the use of cooperatives, the production of individuals can be grouped to meet demand from large customers, including orders from abroad. "In my view, there is a large opportunity out there," says Mayaka. "With the kind of women entrepreneurs we have who are in families and know each other, they could get a group together to export."
Small entrepreneurs in Kenya and other African nations who are able to develop relations with customers in the U.S. could benefit from the 2000 African Growth and Opportunity Act (AGOA), which extends U.S. trade benefits to African countries, Mayaka adds. He says Kenyan entrepreneurs are already making fishing flies and honey, and raising specialty vegetables for sale in Europe.
Exporting also provides access to new markets with more disposable income to support African entrepreneurs than they would get at home, he says. "Over time, some of those women will break through and become independent."