Future Africa Blog

Lessons From the Developing World - Part 1

** By JAMIE ANDERSON, MARTIN KUPP And RONAN MOALIGOU

It isn’t easy operating amid poverty, isolation and lawlessness. But some companies have figured it out.

The developing world is home to some of the most challenging markets for any business: Urban slums. Rural backwaters. Lawless regions and battle zones.

But hundreds of millions of potential customers live in these places, and a few pioneering companies are thriving there. Their success offers lessons on how to tap these complex environments for profits and growth.

The Journal Report

All of these markets share certain challenges. They often lack functioning legal systems, so contracts are rarely enforceable. Theft, vandalism and physical violence are common. Skilled workers are hard to find.

The widespread poverty in these areas makes it difficult for many people to afford whatever a company is selling. Marketing is challenging because conventional advertising media like television and radio don’t reach many of the people in these environments, and more-direct approaches can be dangerous. And winning the acceptance of the people living in these communities, for companies and their products, is tricky because these societies are often a patchwork of religious, linguistic and cultural diversity.

Little wonder, then, that to succeed in the face of such challenges, companies first must recognize that traditional business strategies won’t work. Instead, companies need to find local partners familiar with the terrain, and rely on those partners to help guide their operations and develop strategies unique to each market. And to sustain a business in these environments, companies need to assert their value to their employees, partners and the broader community by supporting their organizational development.

Wesley Bedrosian

“It has to be a win-win for the company and for local people,” says Lars Stork, formerly chief operating officer of Celtel Nigeria, one of several telecommunications companies that have been at the forefront of expansion into these areas. “If not, any results will be short term.”

Here’s a look at how Mr. Stork and others learned those lessons.

The Locals Know

In mid-2007, Celtel Nigeria was the second-largest mobile-telecommunications company in the Nigerian market, with a 28% market share and about eight million subscribers. The company—now known as Zain Nigeria after becoming part of Zain Group, which is owned by Kuwait’s Mobile Telecommunications Co.—had done well serving Nigeria’s cities and larger towns, but had only recently shifted its attention to poorer consumers in rural areas.

Although roughly half of Nigeria’s population lives in rural regions, the challenge of reaching them was daunting. For starters, village-level chiefs and religious leaders held significant power in many regions of Nigeria. Even after national authorities approved Celtel’s plans for expanding its network, the company needed to win the approval of tribal leaders to install signal transmitters and other equipment and to send its employees to tribal areas to maintain the network.

Many areas of Nigeria weren’t reached by television or radio signals, making the promotion of products and services particularly challenging. Some other traditional marketing approaches were also difficult: Billboards were quickly stolen and recycled for building materials or fencing, and it was dangerous in some regions for Celtel staff to travel for direct-marketing activities at markets and other rural gatherings.