Expansion is exciting.

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You’re about to onboard more customers, explore a new country, and find out first-hand who has the best jollof in Africa. Most importantly, you’ve projected a 4x increase in your annual revenue in the first year of expansion.

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It looks easy on paper, but your business can fail if you don't answer some key questions.

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How do you expand sustainably without burning through all your resources? How do you identify the right market to expand to? Which product should you launch with?

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If you don’t find great answers to these questions before expanding, you’ll burn cash without tangible results, and jollof rice will be the last thing on your mind.

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In this blog post, with the help of three experts, we’ll give you practical insights on how to successfully expand to another African country.

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When should you think of expanding?

1. You’re getting customer requests from another market

This is a no-brainer. 

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Let’s say your business is based in Kenya and consistently gets inquiries from Cameroon.

This might be a good signal for expansion. 

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When you get customer inquiries from other countries about your product, it might be time to expand to the new country. Sometimes, it’s purely organic. You’re doing well in a market, but you're also getting inbounds in markets where you're not active.

I've experienced this a number of times when I was at a company called U-Lesson Education.

I was leading sales and essentially expanding across Nigeria, but every now and then, we would get a random customer saying, "I'm trying to create an account, but they’re in the USA, India, Canada, Ghana, Uganda, and even Kenya." 

The more you get those types of inbounds, the more you start to ask the question, is there a need? Then, you start to dig in, do some research and maybe visit those places to get more insights.”‍

Tayo Sowole, Head, Revenue Strategy, Talstack

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But before you pack your bags to the new country, do some research.

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2. De-risking against macro-economic forces 

Companies are subject to a country's economic forces, such as inflation, interest rates, taxes, purchasing power, currency instability, and unemployment.

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Expanding to different countries reduces the impact of the macro-economic force of a single country on your entire business.

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The situation in Nigeria illustrates how de-risking is a good motivation for expansion.

With what's happening within the Nigerian economy, there's been a lot of strain on many businesses and so that is one of the reasons that people look at the numbers and say, how do we get better? Is this market the best or do we have to look abroad?  

Tayo Sowole, Head, Revenue Strategy, Talstack

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Here’s a picture of what that looks like in Nigeria. The dollar exchange rate to the Naira increased by over 200 per cent between September 2023 and September 2024.

That raised the price of tools like cloud services and other necessary tools for growth without a corresponding increase in Naira revenue for most companies.

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For companies that raised VC funding in foreign currencies, that slashed their revenue by the same amount. 

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You most likely raised money from investors in dollars and foreign currencies. When you’re reporting to investors, you have to do so in the same currency.

Then, when you are reporting, because of the currency exchange rate, the numbers don’t look impressive, regardless of how well you performed.

This makes you think of ways to increase your forex earning potential to ensure that you are able to meet the expectations of you and your team, your stakeholders, and investors.  

Gerald Black, Africa Tech Ecosystem Builder & Consultant

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3. Revenue growth and market saturation

Not all expansion plans are due to customer inquiries from a new country or to de-risking your business. 

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In some cases, it’s part of your business plan, and it’s just time to hit the road and explore a new market. In other cases, when you’ve found PMF and revenue plateaus, or your market size starts shrinking, expansion might be the next step to meet your revenue goals.

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When you have steady revenue growth, it’s time to start thinking of expanding into another market.

Also, when your business is running smoothly in the market you are in, and you have stability, you should think of expansion.

Sometimes, when you feel like a market is saturated, you ask what's next for the company. How do we get more profit? Can we still grow in the current market or do it elsewhere?

Bruno Bawa, Operations Specialist at Kora 

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When you decide you’re ready for expansion, the next question to answer is, “How?” 

It starts with market research.

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How to expand to another African country in five steps

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1. Get the right market insights

Surface-level information found online or media insights won’t cut it. You have to “hit the streets” and engage critical stakeholders. 

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One way to do this is to engage an expert who knows the layout of the market you’re going into.

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‍Gerald Black who used to lead go-to-market at Anchor – a B2B payment infrastructure provider – recalls how he navigates market research for expansion.

“I went with some delegates from Nigeria who are considering another African market. 

We went very high, very low, to the streets, and back to government agencies to ask questions and feel the pulse and the energy of the market. 

It’s not always great to sit back in your country and get insights about the new marketyou’re going to from the media.

For example, one of the things that inspired some delegates was the fact that they read that tech companies in that particular country raised a lot of money. It looked like something must be going down there. 

Getting there, we found out it was probably just two or three companies that were the top players that raised all that money and product adoption was still very low.

The companies that raised money had some form of government backing and contracts supporting a lot of their transactions. So, relying solely on fundraising insights from the media might misinform you.

Gerald Black, Africa Tech Ecosystem Builder & Consultant

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2. Select the product to launch with and engage regulators

Clear market insights from your research help you decide which product or service to launch and the regulators you’ll engage.

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You can’t launch all your products at once. It might even require you to launch a specific product for that market

Gerald Black, Africa Tech Ecosystem Builder & Consultant

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The next step is to think about regulation.

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The rules of engaging regulators differ for each country, so you must adapt. However, the key questions to answer are: Who are the relevant regulators? Which licences do you need to operate?

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Licences are expensive and sometimes have processing times. So, launching with a local partner is a way to get to market while working on the licenses.

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Is there anyone there anyone you can launch with? Is there a way we can have a partnership that covers things like licenses? These are the questions you should ask.

So, maybe we’re offering the infrastructure to help process money. For example, I would think that if Kora is expanding to Uganda, you might not acquire licences or companies first. You might want to get a feel of the market to see what adoption looks like. 

There might be some banks or financial partners Kora can get started with before fully committing. I would always advise finding partners, launching alongside them for specific use cases, and learning from that before you think of hiring a full team. Let it be a customer-led expansion instead of diving head-in.

Gerald Black, Africa Tech Ecosystem Builder & Consultant

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In some cases, instead of relying on partners or acquiring licences, companies that have the liquidity either merge with or acquire existing companies in markets they’re going to. 

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An example is Risevest acquiring Hisa and Prembly’s merger with Pelezer. It all depends on your plans and the resources you have.

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I've been involved in trying to acquire companies. Many times, there is no alignment between the valuation of the company you’re trying to acquire and the value you'll get from entering that new market. 

Say you're making $10 million a year in Nigeria.  

If you go to Ghana, you can’t expect to make $10 million a year soon because of the market size. So, you go there and try to acquire a company, and they say the valuation is $2 million. That is maybe 4x or 5x the amount it will cost you to build a team in Ghana.  

That valuation has been set because they have a number of customers you can buy and an amount of recurring revenue you're taking over. It can be quite complex sometimes.

Sometimes, it’s better not to acquire a company but just test the market before fully committing.

For example, at Talstack, if we want to go to another country, we know what levers to pull because we have domain expertise in what we do.

We have an idea of what works today. But even at that, there are no guarantees that those things will work 100% if you take our current system to a new market.

So, it makes sense for you to try to learn and do a soft entry or soft launch. If it doesn't work, you can take a step back. If you've acquired another company, it’s harder to leave at that point if things don’t work out.

Tayo Sowole, Head, Revenue Strategy, Talstack 

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Both strategies have pros and cons. 

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Acquiring a company helps you hit the ground running and get instant traction. Launching with partners helps you get your foot in the market without fully committing. If the market is unfavourable, you can roll back your expansion plans and re-strategize. 

Whichever strategy you select, ensure you’re on the right side of the regulators. Non-compliance is costly.

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3. Count marketing, advertising and operational costs 

While testing the waters in a new market, sometimes the regulators want you to show a sign of seriousness. That might include getting an actual office. 

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But with limited resources, how do you still show seriousness without burning your resources?

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Bruno Bawa, Operations Specialist at Kora explains;

I usually tell people entering new markets not to rent a building immediately. Instead, they should go for virtual offices, which are available everywhere in Africa. 

Use virtual offices and a registered business address for the first few months while doing the groundwork and getting a feel of the market, especially if you really need to have a presence in this market and show the regulators that you're serious about doing business in the country. Buying or renting actual buildings is very expensive, but virtual offices are cheaper. 

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Marketing and advertising can be expensive, especially if you’re entering a new market. 

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So, what do you do? Tayo explains;

Your marketing budget depends on the details of your expansion strategy.

In the past, I have built strategies to leverage existing marketing resources, especially in the early expansion phase. But you can only do that for so long, and I'll give you an example.

So, when I wanted to launch a particular product in Kenya and Uganda, we opened a new social media account to engage with audiences in those specific markets. The marketing team started duplicating the resources we used for the Nigerian market for the other markets three months before we physically went there in preparation for our launch. 

So, they would change the language and context to fit the audience. We also made minor changes, such as joining industry events in those markets. We didn’t install billboards or go crazy with digital ads. When we launched in those countries, instead of a physical location like an office, we were in a very public space with a lot of foot traffic, like a mall in those cities instead of traditional offices. It helped build brand recognition. 

In another instance, we advertised on a pan-African TV station. It was one advertising cost, but we were able to move TV slots across these other markets for a particular period to test things out.

When we landed there, customers already knew us and paid for our product. Then, we went physically to these people's homes, and we used content marketing to make it big. We told the story of visiting our customers across Kampala, Nairobi, and Mombasa.

It looked as though we were a massive brand everyone knew and had been there for a while. But that wasn't the case.

In another part of Africa that we had to go to, it was impossible to use the same strategy because advertising was more expensive. Some of the biggest global brands were already advertising there, and competition for ad spaces was fierce. So, there was no cheap way to do it. You just had to go big or don't do it at all. We decided not to be in that market because the value that we would get over the period of investment just wasn’t worth it.

It depends on what you want to do,  how much money you have, how much value your product or service would bring back to you and how sure you are of the market.

For instance, if you are in payroll technology and come to Nigeria, there are 200 million people, and maybe 60 million are gainfully employed.

There are maybe three or four major players in the market today. Yes, you can come in and make that investment and say, we're in it for the long haul. Even if it takes us five years, we'll eventually make our money back.

But you couldn't do that if you went to Gabon, for instance. That market may not be worth that amount to you. So you just say, we will not over-invest in owning this market because the total value of the market is not worth the investment.

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4. Account for cultural differences, localisation and language barrier

Cultural differences affect user behaviour across markets. Factor that in your expansion plan. 

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What does this look like in practice? It means localising the team and your brand to cater for the target audience. 

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Tayo has this to say about localising;

When you build out your sales team, build it within the context of that cultural environment that you're in. How do people buy? How do people sell? What languages do they speak? Are people more aggressive or less aggressive?

I've worked in sales teams with many people from other parts of Africa, and once you get into it as a Nigerian, you stand out because our style is different. 

A typical Nigerian salesperson messages you on LinkedIn or WhatsApp, emails you, and then calls you. In some other places, that's not how they live. They might even publicly call you and your company out. 

So you have to think about that. Some societies are more pull than push; they are more laid back, right? So a Rwandan will tell you, "Let's talk later," and what they mean is "no," and everybody knows that except you? 

If you're in Ghana, consider it building a Ghanaian sales team, not an extension of your Nigerian team. So you build it in a way where it's selling to Ghanaians. 

Some things can be applied across countries, right? But there are nuances to it that you must consider, like language.

Even in Nigeria, if you're selling to someone, now and then, depending on who it is and what the situation is, you can sort of break into pidgin. If you're selling to someone who speaks a certain language, you might want to say a few words in it.

People like to buy from people who look like them and speak like them and people they like. So you need to build your sales strategy and team to represent that.

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5. Position your company as a pan-African brand

While expanding, your brand must reflect that you’re pan-African, as this will better position you in the market. 

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That might mean tweaking some elements of your brand to connect with the audience of the country you’re going into.

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On building a pan-African brand: 

I've seen several companies expand to other African countries, leaving their Nigerian identity behind and adapting their brand to the new market. 

An example is Bento Africa. They changed their name and added “Africa” when they started considering their pan-African strategy.

It seems very little but if you go to their website, you will see flags of the African the countries they are in. They have dedicated social media accounts for each country.

Again, it's not like they have marketing teams for each country. If you are Ghanaian and you interact with this company, you are interacting with the Ghanaian version of it.

Tayo Sowole, Head, Revenue Strategy, Talstack 

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Gerald shares another use case.

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Another example is Plentywaka changing their name to Treepz. 

When they launched in Nigeria, it was Plentywaka. 

The Nigerian market understands what Plentywaka is, but when they started thinking pan-African, they had to rebrand to Treepz, and it is a more inclusive as it reflects what they do as a brand across the continent.

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Conclusion

Expanding to other African countries is great. It’ll help you grow your revenue and signal to VCs to invest in your company. 

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But expanding sustainably is important so you don’t burn through your financial runway.

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The points in this blog post will serve as a guide for you.

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