Franchising is a key driver of Africa's growth, says Standard Bank

Franchising is playing an increasingly important role in Africa's economic growth, creating opportunities for entrepreneurs while supporting job creation and business expansion.

Staff Writer

Andre Beck, head of franchising for business and commercial banking at Standard Bank South Africa. Image supplied

According to Standard Bank, the sector is well positioned to benefit from changing consumer behaviour, digital innovation and growing cross-border trade.

The bank says the sector is proving particularly valuable because it gives entrepreneurs access to established business models, reducing some of the risks associated with starting a business from scratch while helping to formalise informal economies.

Andre Beck, head of franchising for business and commercial banking at Standard Bank South Africa, says franchising is already making a significant contribution to South Africa's economy.

"Franchising is playing a critical role in formalising informal economies, enabling job creation, and unlocking access to capital for entrepreneurs."

He notes that the sector contributes approximately 15% to South Africa's gross domestic product (GDP), adding that the next challenge is to replicate that success across the rest of the continent by improving access to funding and creating more opportunities for entrepreneurs.

Changing consumer habits reshape franchise opportunities

Many of the biggest opportunities lie in retail and food service, where changing consumer behaviour continues to reshape how businesses operate.

Consumers are increasingly looking for convenience and affordability, driving growth in online shopping, click-and-collect services and home delivery.

Retailers are also using AI and machine learning to streamline operations and personalise customer experiences, while demand continues to grow for healthier, locally produced and sustainably packaged products.

In the food service sector, quick-service restaurants, takeaway outlets and delivery-first businesses continue to outperform traditional dine-in experiences.

Consumers increasingly expect speed and value without sacrificing quality, while social media and online reviews are playing a greater role in influencing purchasing decisions.

According to Beck, these trends demonstrate why franchise businesses remain attractive to entrepreneurs.

"Franchising offers a proven and structured pathway for entrepreneurs to enter the formal economy with reduced risk. Across Africa, we are seeing how well-supported franchise models can accelerate job creation, skills development and sustainable business growth."

Looking beyond borders

As trade between African markets continues to strengthen, franchise brands are also exploring opportunities beyond their domestic markets.

Standard Bank points to research by McKinsey, which projects Africa's consumer class will reach around 1.1 billion people by 2030. Combined with one of the world's fastest urbanisation rates, this growing consumer base is expected to support continued expansion across the franchise sector.

Joret Olivier, executive head of enterprise banking for Africa regions and offshore at Standard Bank, says franchising is particularly well suited to regional growth because successful business models can be adapted and replicated across multiple markets.

"Africa's economic future will be driven by businesses that can grow across borders.

Franchising is uniquely positioned to achieve this, given its replicable and adaptable model."

Barriers still need to be addressed

Despite the sector's positive outlook, growth is not without its challenges.

Businesses continue to navigate rising labour and operating costs, supply chain disruptions, infrastructure constraints and increasing competition. At the same time, changing consumer expectations around sustainability, digital shopping and affordability require businesses to continually adapt.

Standard Bank also notes that inconsistent regulations, limited access to tailored financing and skills shortages remain significant barriers in several African markets.

While these challenges persist, the bank believes stronger collaboration between governments, financial institutions and the private sector could help unlock the next phase of growth, positioning franchising as an increasingly important driver of entrepreneurship and long-term economic development across the continent.

Source: Bizcommunity.com