7 Essential Steps for Developing an Effective Business Strategy in Africa
January 16, 2024
Adam Wakefield

Developing an effective business strategy is critical for startups looking to succeed in Africa. It can help them stay ahead of the game, outperform the competition, and capitalise on exciting opportunities in the African market. According to the African Development Bank, in 2023–2024, Africa’s GDP growth projected at 4.1% will outperform the global average of 2.9%. Europe is only projected to grow by 1.1%. In contrast,18 countries in Africa are expected to exceed 5% growth rate. This growth is supported by Africa’s growing middle class, diverse markets, and vast resources, making it an attractive business destination.  

In this post, we will discuss business strategy development in detail. We’ll cover the benefits of a solid business strategy, proven methods, and different approaches, and provide real-life examples to equip you with the practical knowledge you need to develop your plan.

Infographic of African GDP growth


What is business strategy development?

Business strategy development is the process of formulating a comprehensive and cohesive plan to guide an organisation's actions and decisions in order to achieve its long-term goals and objectives. It involves analysing the internal and external factors that impact the business, setting clear priorities, and defining the approaches and tactics that will be employed to achieve sustainable success. Unfortunately, not all businesses succeed in their goals. Bridges Business Consultancy released a study that showed that nearly 50% of companies failed to meet their strategic targets. Developing a well-thought out business strategy can help to address these issues. 

It’s important to understand that business strategy development isn’t a one-time event. Instead, treat it as an ongoing process where you continuously adapt to evolving customer needs, market dynamics, and technological advancements. It is the guiding framework that connects and directs all aspects of your startup toward a shared purpose. 

For instance, suppose you run a climate tech startup aiming to resolve waste management issues in urban cities of South Africa. Your business strategy development process should include the following:

  • Understanding the waste management landscape. Begin with in-depth research on how waste management practices vary in different South African cities. This includes an assessment of recycling facilities, waste disposal methods, and local government policies. 
  • Finalising target markets: Target key cities where waste management is a bigger problem and your startup can make a significant difference with sustainable solutions. This can be a city with a higher population density (e.g., cities in Gauteng) or a failing waste infrastructure. 
  • Establishing local partnerships: You may find it hard to enter the South African market on your own. Collaborating with relevant NGOs, waste management authorities, and local governments may improve your chances. For example, if you are looking to work in Johannesburg, you can connect with the Climate Action Partnership (CAP). CAP is an alliance of South African environmental NGOs. Getting their support can help you to succeed in the local region. 
  • Customising your solution: If you are entering the South African market from a foreign country, you will need to tailor your solution according to local needs. For example, you may need to focus more on recycling initiatives here since only 10% of waste is recycled in South Africa.
  • Setting up a pricing model: Work out a pricing strategy that is affordable to your target market, especially if you come from a country like the US, where consumer spending is higher. Explore different revenue models, such as revenue-sharing arrangements with local municipalities or subscription-based services for households.

These are only some of the steps you would need to perform. Your business strategy development will include more steps for innovation, scalability, implementation, etc. 

Two people sitting with a laptop

3 proven benefits of business strategy development 

Developing a business strategy can provide you with several benefits:

1. Identifying and generating high-value leads 

Your business strategy provides a framework that can help you identify and produce high-value leads. One way to generate quality leads is to use market analysis and segmentation to understand customer preferences and needs, and customise your offerings accordingly. Strategic networking and referral programs can also help you cultivate valuable relationships within the African business industry.

For example, Salesforce has an annual event called Dreamforce. This conference attracts hundreds of IT professionals and thought leaders from around the world. The event helps Salesforce build credibility with its audience. This is done by announcing new events that can address business challenges, offering training, providing a platform for connecting with other experts, having Q&A sessions, and even hosting a party. 

Attendees spread the word about their positive experiences via social media platforms, allowing the company to generate brand awareness and earn new leads. In the future, many of these leads will become Salesforce users and future Dreamforce attendees. Some of the contacts made during these events may even turn into strategic partnerships. 

2. Achieving your strategic business goals 

Business strategy development employs a unified framework to synchronise business development objectives with strategic goals. It promotes resource prioritisation — allocating time, finances and manpower to initiatives that are tied to your strategic goals. As a result, you can avoid wasteful spending on non-essential activities and spend your time and money where it creates the most traction.

Performance measurement, another aspect of business strategy development, helps you align business processes with your goals. When you set KPIs and metrics, it allows you to identify areas of success and pinpoint opportunities for improvement. 

Take, for example, Amazon’s third–party seller program. One of Amazon’s missions is to be Earth’s most customer-centric company. To do this, Amazon has set up a strategic goal of expanding its product selection. 

One business development process that meets this goal is the third-party seller program. Amazon invites sellers to create accounts, establish seller metrics, and ensure smooth order fulfilment and delivery. This allows the company to sell to more users without holding the inventory.

3. Maximising growth and profitability 

A well-defined business strategy helps identify and seize market opportunities while leveraging competitive advantages. Business strategy development makes your decision-making more data-driven. These informed choices can help you to grow your profits. 

Data-driven decision making is crucial because it ensures that your decisions are derived from concrete facts and figures, as opposed to guesswork. This boosts the likelihood of successful outcomes and minimises inherent business risks. Starbucks has one of the most well-known loyalty programmes in the world. It uses its app to collect and analyse customer data, including where they live, what they order most, or how much they spend. The company analyses these insights to personalise its promotions and recommendations. By doing so, Starbucks manages to retain customers and boosts its profits. 

A step-by-step guide to developing a business strategy plan 

Creating a strategic plan is a vital process that helps businesses establish a clear roadmap for meeting long-term goals and objectives. Here are the essential steps you need to take to create an actionable business strategy.

Step 1: Establish goals and objectives 

The foundation of business strategy development lies in establishing clear goals and objectives to achieve your desired outcomes. Goals and objectives are used interchangeably in some scenarios, but they have distinct definitions. 

A goal is a desired outcome that you plan to accomplish over a long period, which can usually take several years. It’s a broad statement that encapsulates your startup’s vision and can’t be quantified. On the other hand, objectives are measurable and specific goals that you must achieve within a particular time. Objectives encompass activities or actions that help you to achieve a goal. 

For instance, you want to create a startup in Kenya that can become a leading e-commerce platform for small businesses nationwide. This is your goal. Your objectives are: 

  • Get 10 000 downloads in the first 12 months.
  • Establish a monthly active user (MAU) rate of 5,00 users in the six months.
  • Earn an average app rating of 4.0 or higher in the first three months.

Infographic of SMART goals


Companies worldwide use a popular framework to set objectives: SMART framework. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. 

  • Specific: Your goal must be clear and precise without any ambiguity. It should be clear to everyone involved, including business partners, investors, and internal teams. For example, your goal is 3 000 paid subscribers for your SaaS startup in Nigeria. 
  • Measurable: Your goal should have a standardised unit of measure – a number or percentage – that you can track. It must emphasise how much progress is made towards a target. For example, tracking the percentage of new subscribers to ensure you meet the target within the specified time frame. 
  • Achievable: Your team and partners should be able to achieve your goal within the available time and resources. For example, perform market research and devise strategies that help your team sign on more subscribers via different promotional methods.  
  • Relevant: Your goal must align with your startup’s values, vision, and mission. For instance, your goal can align with your startup’s vision to move local business users from on-premises project management tools to cloud-based tools. 
  • Time-bound: Your goal needs a specific deadline by which it should be achieved. It should be a realistic time frame that grants your team enough time to succeed. For example, your goal can be to sign up 3 000 new subscribers within one year. 

Step 2: Analyse the external environment

In the modern African business landscape, business strategy development involves an in-depth understanding of the external environment and a cogent analysis of internal factors. The external environment includes technological, demographic, and political factors. There are several assessment frameworks to choose from.

Inforgraphic of PEST analysis

PEST analysis 

All startups, especially those operating in dynamic and diverse markets like Africa, can benefit from conducting a PEST analysis. A PEST (political, economic, social, and technological) analysis provides insight into what external forces can impact your startup. For example, if you  plan to expand to multiple African countries, geopolitical issues should be an external factor to consider in your business operations. 

So, when is the best time to do a PEST analysis? When you:

  • Uncover a large-scale issue affecting your audience 
  • Plan to pivot your startup to another niche (e.g., AI)
  • Realise that there are new changes in a specific area (local laws) and want to reassess your market
  • Consider an acquisition or partnership 

STEEP analysis is an extension of PEST analysis with an additional “e” that represents environmental. It also looks into factors including resource availability, ecological worries, environmental regulations, and the impact of climate change. 

SWOT analysis

SWOT analysis helps you to identify your startup’s strengths, weaknesses, opportunities, and threats. You can use it to identify threats and opportunities for your external environment. For instance, your e-commerce startup in Nigeria might have the opportunity to partner with local craftspeople and sell their hand-made products to local and international customers. You can also leverage social media platforms like Tiktok to promote your venture. 

Conversely, SWOT analysis helps identify threats including political instability, currency exchange risks that can affect customer spending, and changing regulations like government compliance policies.

Step 3: Evaluate the internal environment 

The internal environment encompasses tangible and intangible factors, capabilities, and resources within your company. Analysing this environment is crucial because it provides an understanding of your company’s core competencies and unique features that make it stand out from competitors. Key components of your startup’s internal environment include:

  • Vision and mission
  • Leadership & management
  • Organisational structure
  • Workforce and talent
  • Finance resources
  • Technological infrastructure and resources

Gap analysis

Gap analysis is a framework used to determine the gaps or differences between your startup’s current and future desired state. Gap analysis allows you to identify areas to improve and build action plans to address them. 

To illustrate, suppose you manage a fintech startup in South Africa with the following business metrics: 

  • Number of active users: 7 500
  • Monthly transaction volume: $500 000 
  • Monthly revenue from transaction fees: $4 000 per month
  • Customer satisfaction rating: 4.2/5
  • Number of available financial products: 4
  • Investment in technology and platform development: $120 000

After one year, your desired future state is: 

  • Number of active users on the platform: 25 000
  • Monthly transaction volume: $1 000 000
  • Revenue from transaction fees: $12 000 per month
  • Customer satisfaction rating: 4.7/5
  • Number of available financial products: 12
  • Investment in technology and platform development: $200 000

Your gap analysis reveals:

  • Active users gap: 25 000 (desired) – 7 500 (current) = 17 500
  • Transaction volume gap: $1 000 000 (desired) – $500,000 (current) = $500 000
  • Revenue gap: $12 000 (desired) - $4 000 (current) = $8 000
  • Customer satisfaction gap: 4.7 (desired) – 4.2 (current) = 0.5
  • Financial products gap: 12 (desired) – 4 (current) = 8
  • Investment in technology gap: $200 000 (desired) – $120 000 (current) = $80 000

Now, you can devise action plans to fill this gap including:

  • Acquiring more users by using referral programmes, paid ads, and cultivating partnerships with local players.
  • Increasing transaction volume by using loyalty programs and promoting discounts. 
  • Generating more revenue by cross-selling financial products.
  • Improving customer satisfaction by using feedback surveys. 
  • Expanding your financial products by offering a broader selection of investment options, saving products, insurance, and loans to meet diverse user needs. 
  • Allocating funds to invest in cutting-edge technologies to improve customer experience. 

Infographic of SWOT analysis

SWOT analysis

You can also use SWOT analysis to assess the strengths and weaknesses of your internal environment. Strengths are internal attributes that make your product/service unique or competitive. Weaknesses are internal factors that put your startup at a disadvantage. 

For example, a Nigerian e-commerce startup may have the following strengths: 

  • Efficient supply chain: The startup has collaborated with reliable manufacturers, suppliers, and delivery platforms to ensure timely customer deliveries.
  • Unique product selection: The startup offers a wide selection of products, unlike their competitors. 
  • Proprietary technology: Your machine learning algorithms provide your customers with a more personalised user experience. 

In contrast, weaknesses may include:

  • Limited budget: Your startup may have a limited budget that that affects your marketing strategy and operational efficiency
  • Inexperienced workforce: Your team comprises younger and inexperienced workforce, compared to your rivals. 

Step 4: Create a competitive advantage 

Defining a unique selling point (USP) can gain you a competitive advantage. A USP is a distinct value proposition that differentiates a company from other businesses in its industry. It acts as a compelling reason for your potential and existing customers to use your products/services over your competitors. 

The following steps can help you create a competitive advantage:

1. Identifying your startup’s competitive advantage: Identify your startup's unique strengths and capabilities that competitors cannot easily replicate. Use the frameworks discussed above to find your USP. 

2. Growing demand: After determining your USP, take a look at the group of people you want to sell to and understand their different and specific requirements. This is especially important if you're doing business in two or more African countries. You can conduct thorough market research and gather customer feedback via focus groups, emails, social media, and interviews. By identifying untapped opportunities and gaps in the market, you can customise your products or services to meet customer demands more effectively. 

3. Boosting sales: A competitive advantage is only valuable when it reflects an increase in sales.You can attract potential customers by using different sales and marketing strategies to highlight your USP. These include free shipping, personalised product recommendations, free samples, and referral bonuses.  

4. Increasing margins: A strong USP allows you to set premium pricing as customers find your offerings more valuable. In addition, if your USP leads to operational efficiencies, you can cut product costs. As a result, your profit margins rise. 

Step 5: Develop strategic alternatives

Not every startup succeeds on its own. In many cases, one has to look for strategic alternatives to grow their venture. Developing these alternatives requires generating different options that align with business goals. 

Often, a business opts for these alternatives if they struggle to increase profits or when the company risks bankruptcy or dissolution. In these critical moments, you must proactively identify a viable future pathway.  Alternative strategies include:

  • Mergers and acquisitions: Consider mergers and acquisitions (M&A) when looking for quick expansion, to gain access to a new market in Africa, or to acquire essential resources or technologies that can accelerate your growth. M&A can benefit startups seeking a competitive edge by combining resources with complementary businesses. It also allows them to overcome market entry barriers and tap into established distribution networks. 
  • Product diversification: Startups in Africa might seek product diversification to minimise their over-reliance on a single product/service or uncover untapped market opportunities in their industry.
  • Entering new markets: Expanding into new markets can be a viable strategy for African startups seeking growth beyond their domestic boundaries. Entering new markets allows startups to access larger customer bases, tap into diverse consumer preferences, and reap the benefits of less competition.  
  • Partnerships: Partnerships benefitAfrican startups looking to leverage shared expertise, resources, and networks to achieve mutual growth objectives. African startups can access new markets, share distribution channels, pool resources, and collaborate on innovation projects by forming strategic partnerships with established companies or other startups in related fields
  • Innovation initiatives: Innovation is essential for the long-term success of any startup, including those in Africa. Embracing innovation initiatives allows startups to stay competitive, differentiate themselves from competitors, and create USPs for their target audience. This may include investing in research and development, adopting new technologies, and fostering a culture of creativity within the startup.

Step 6: Choose the best course of action 

Choosing the best course of action is a critical step in determining the direction and success of your company. This process assesses various strategic alternatives, considering budget, time, and impact while making decisions that align with the organisational goals and objectives. Follow the steps below to guide your decision-making: 

  • Evaluate strategic alternatives: Compare several options including mergers and acquisitions, product diversification, and partnerships. Assess their benefits, risks, and resource requirements. 
  • Align with goals and objectives: Ensure your chosen course of action supports long-term goals and aligns with your company's mission and vision.
  • Perform cost-benefit analysis: Assess costs versus anticipated benefits to maximise ROI and minimise risks.
  • Consider market competitiveness: Examine external market conditions and competition. Identify potential challenges and opportunities, and ensure alignment with market trends.
  • Engage stakeholders: Include key stakeholders (e.g., your team or partners) in decision-making to gain valuable insights and commitment.

Take for example an Edtech startup that has the strategic goal of partnering with a school or to diversify with online courses. Since the startup’s mission is to provide accessible education, they choose online courses to educate people worldwide. A cost-benefit analysis reveals the potential revenue exceeds the expected development costs.  

Based on the market competitiveness, the startup management observes a rising demand for remote learning in different parts of Africa. They talk with stakeholders – students and teachers – to collect valuable insights, including what content format they favour (e.g., slides, videos). This entire collaborative process improves the course content, generating profits for the startup. 

Step 7: Implement the strategic plan 

Implementing the strategic plan refers to the effective execution of the proposed strategy. This includes 

1. Aligning resources: Allocate the necessary resources, including human capital, financial investments, and technological infrastructure, to support the execution of the strategic plan. Ensuring the right resources are available at the right time is vital to achieving the outlined objectives.

2. Communicating with stakeholders: Transparent communication is vital for the implementation phase. Communicate the strategic plan to all stakeholders, including executives, employees, investors, and external partners. 

3. Monitoring progress: Establish key performance indicators (KPIs) that measure the success of the strategic plan. These metrics help track progress and ensure that your startup remains on course. 

4. Making necessary adjustments: Review the performance of the strategic plan and assess its effectiveness intermittently. Analyse whether the plan is delivering the expected results and if any adjustments are required. 

Business strategy development: the key to continued profitability and growth 

Business strategy development is crucial for companies looking to increase profitability and drive growth across African markets like Kenya, Nigeria, and South Africa. 

A well-crafted business strategy plan can act as a guiding compass across the African continent. When companies adjust their business strategy to fit these countries' unique cultures, economies, and competition, they can set up strong positions and make the most of the opportunities in the African market. 

FFA has established an extensive track record for enabling African businesses and startups to thrive through business strategy development. We can help you too