Strategic alliance strategies to fuel DHL’s bid to grow in in Africa

WARC, 14 February 2014

CAPE TOWN: DHL, the logistics business, has fuelled its growth across Africa by partnering with a wide range of third party businesses, a leading executive has said.

Charles Brewer, managing director for sub-Saharan Africa at DHL Express, told How We Made It In Africa that multinational companies needed to accept and adapt to a unique business environment.

"If you are prepared to blend your product into Africa, rather than expecting Africa to blend into you, you can get huge returns out of it," he said.

DHL had done so partly by linking up with a wide range of businesses, large and small, to develop a presence in both urban and rural areas.

A partnership with Engen, a pan-African fuel retailer, for example, allowed consumers to send documents or parcels from any of their service stations. Similarly, it had links with many smaller outfits, including hairdressers and informal shop owners, which acted as DHL retail points while earning a commission on sales.

Brewer noted that the informal economy was a common feature across the continent and that many people continued to live in rural areas, factors that meant multinationals had to rethink their usual approach.

"People who buy goods don't necessarily buy them through modern retail outlets," he said, "it is through street trading and an informal trading environment."

This did make things more difficult but it also presented fresh openings. "While servicing customers in the cities is obviously important, the real exciting and new opportunity is to take your product to the semi-rural and rural parts of Africa," Brewer enthused.

DHL had already increased the number of retail points it operated from 300 to 2,000 but an ambitious Brewer was aiming for 25,000. "The more we have, the more we will connect Africa with the rest of the world," he said, adding that linking small and medium sized businesses to the global economy offered great prospects.

"Despite all the challenges of operating in Africa, the yields are solid and the growth levels very high," he said. Brands would have to commit themselves to the long-haul, however, as the continent's rise was likely to be "more of a marathon than a 100m sprint".

Data sourced from How We Made It In Africa; additional content by Warc staff

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