Chad Allen is a seasoned finance professional and the founder of Convenit Consultants, an international business consulting firm.
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Chad Allen is a seasoned finance professional and the founder of Convenit Consultants, an international business consulting firm. With over 18 years of diverse experience living and working in Europe, Africa, and the United States, Chad’s career is marked by a deep understanding of cross-border transactions, regulatory frameworks, and cultural nuances. He uses this expertise to guide businesses through the complexities of international expansion and multinational operations.
“Convenit,” derived from a Latin word that translates to “come together,” excels at guiding clients through the intricate and complex process of international business by bringing together the essential components necessary for organizations to flourish globally.
After moving to Africa for work, Chad was approached by numerous multinational companies (MNCs) to assist them in entering or expanding within the Sub-Saharan Africa (SSA) marketplace. His experiences in the region gave him a clear understanding of the vast opportunities and significant challenges that companies encounter when initiating their expansion efforts.
Using this insight, Chad developed a comprehensive three-dimensional business approach to help multinational companies navigate the complexities of emerging markets like SSA and achieve sustainable success.
Understanding the Dynamics of SSA Markets
Chad’s time in East Africa began with encountering a market on the brink of economic expansion with vast opportunities, which attracted the interest of MNCs. However, while these companies recognized the region’s immense potential, they were equally aware of the significant hurdles they would face. Chad mentions that this duality of prospects and obstacles ignited his passion to delve deeper into understanding the region’s dynamics.
Since antiquity, Africa has attracted opportunity seekers drawn by its natural resources, such as gold, ivory, diamonds, and other valuable commodities. However, Chad discovered that maximizing this potential also means facing pervasive challenges stemming from underdeveloped or inadequate institutional frameworks across various domains—political, legal, economic, and social/labor.
These institutions are crucial in establishing order, reducing information asymmetry (where one party in a transaction possesses more substantive information than the other party), and facilitating the ease of transacting between buyers and sellers.
The Role of Market Intermediaries
To further understand this concept, Chad draws from his experience of buying a used car. He paid the deposit after the seller told him it was in good shape and after running a quick test drive. But before purchasing the car, he took it to a local dealer (market intermediary) and asked them to certify that it was in good working condition. To Chad’s surprise, the market intermediary informed him that the vehicle had previously been totaled in an accident, making it unworthy of sale.
This is essentially the same as renting office space, where the agent assures that the building is well-maintained and suitable for the client’s needs. Before signing the lease, the buyer consulted with a local property inspector (market intermediary) to verify the condition of the office.
Unfortunately, the property inspector discovered several significant issues (faulty electrical wiring, water damage, and structural concerns) that could pose safety risks. These findings indicated that the office space was overpriced and unsuitable for immediate occupancy without substantial repairs.
According to Chad, the market intermediary in these scenarios effectively eliminated the information asymmetry between sellers and buyers. Market intermediaries help facilitate fair and transparent transactions, essential for businesses operating in markets with varying degrees of institutional development. Emerging markets frequently lack this transparency to one degree or another, leading to business entry or expansion challenges.
Chad’s Three-Dimensional Approach to Emerging Markets
For Chad, navigating emerging markets like SSA requires a keen understanding of their three-dimensional nature, encompassing informal markets, institutional developmental markets, and formal markets.
Informal markets are characterized by numerous institutional voids, meaning a lack of market intermediaries and frameworks that facilitate smooth transactions between buyers and sellers.
This environment presents significant challenges due to high risks, information asymmetry, and elevated transaction costs,…
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