High Five

Written by ProfitGuide Staff

South Africa
Best of both worlds

Success story

Battle plans

Fast facts





Success story

Algorithmics Inc.

Risk-management software
Sales to South Africa: US$6.5 million (approx.)

In 1996, Ron Dembo took time out from his honeymoon in South Africa to scout the market. What he discovered — besides the patience of his wife — was a big-money opportunity for his firm, Toronto-based Algorithmics Inc.

Dembo was already convinced that South Africa’s banks and insurers would want Algorithmics’ product — software that helps companies manage financial risks — as regulators had recently introduced incentives for financial institutions to implement risk-management systems. With further investigation, he gained confidence in the business environment. “South Africa is a very easy country for a Canadian to do business in because there’s a First World infrastructure,” he says. “It’s like going down to Bay Street and talking to the Bank of Montreal.” (Dembo adds, however, that some rural areas continue to play catch-up.)

Not that selling a new product 12,000 km away is easy. Algorithmics had no staff in South Africa, or even competitors who could educate the market about the emerging product category. Unfazed, Dembo set out to create understanding and profile by delivering speeches on risk management to prospective clients.

Dembo knew he would need a strong local presence to sell and support his highly technical product. So Algorithmics asked potential clients to recommend someone. The feedback helped Dembo and company identify a local IT expert with whom a joint venture was formed. As business grew, Algorithmics set up its own office in Johannesburg that now employs 15 people.

Algorithmics is now moving into other African countries. Roughly 8% of the firm’s US$82 million annual revenue derives from South Africa. “South Africa is one of our big success stories,” says Dembo. It has probably paid off that honeymoon, too. — SB

What South Africa wants

1   Mining:
South Africa’s mining industry relies on imported parts and machinery, says Rowena Dias, international marketing consultant at Ontario Exports Inc. Downstream processing and engineers, consultants and capital-goods manufacturers for developing mining communities are also in demand.

2   Information and commmunication technology:
Networking equipment and services, including consultants and integrators, are needed to support South Africa’s technological modernization. The country’s spending on all things Web-related, from hardware to services, is expected to reach $2.9 billion next year.

3   Transportation:

© 2004 Susanne Baillie

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