February 15, 2022
NUGGETS FOR A WINNING BUSINESS IN AFRICA: UNDERSTANDING THE TERRITORY
The Africa Conundrum
Africa, as a continent, is in flux – finding itself at the intersection of historical impediments and a future of great potential, at this crossroad in time. It is a fleeting moment, where opportunity can forever eliminate the historical remnants that have impeded progress on the road to a brighter future. And whilst the continent still grapples with the detritus of colonialism, apartheid, genocide and centuries of slavery, it is recognised today as the last great opportunity for growth and development on the Planet. Indeed, more than 54 countries that call this continent home, have emerged and progressed quite significantly, from these deep historical ‘scars’. Nonetheless, Africans can be excused for peeping in the rear view mirror of the past, as they reach for a more prosperous and equitable future.
But the future comes with its own challenges. On the one hand, is a population that now exceeds one billion people, of which 18% are said to be unemployed! (The global average is 7.5%). On the other, is a burgeoning society of millennials, all keen to engage new technology and opportunities in robotics, artificial intelligence, virtual reality and the blockchain. The reality is, that against this backdrop, it has become increasingly difficult to overcome this conundrum. Additionally, it is hard to imagine how any leader on this continent, with its melting pot of culture and commerce, can successfully elevate the quality of life, of populations … and deliver a recipe for growth?
Consider that Europe, Asia and North America are all, in one way or another, trying to strengthen their ties in Africa. This is because they know that the continent offers one last, great opportunity for growth, despite its challenges. But more importantly, because the developed world knows that Africa can also provide solutions to a number of global problems.
This article, will provide a roadmap to successfully navigate the African business landscape.
In the short period of time I have lived on this Earth, (the bulk of it on this wonderful continent), I have come to the inescapable reality and understanding that it is impossible for anyone in business or politics, to totally absorb and contextualise the African continent. This is especially so, in regard to its people, resources and landscapes, without the guidance and insights required to be successful. It’s like looking at the stars, and seeing their beauty and wonderment – but being overcome by the grandeur and complexity of it all!
In this article, I will unravel the mysteries and magnificence, and present the tools required, to access the wonder and strength of the African continent. There is an African proverb that says “where water is the boss, there the land must obey”. It talks to the wisdom of understanding the terrain that you are in, thereby allowing yourself to adapt to that terrain. It does not help fighting something that you don’t have the power to change.
Navigating through South Africa
Here in South Africa, I look at the challenges that the current President, Cyril Ramaphosa is confronted with. On one hand he has committed to the delivery of the land reform program. But on the other hand, it is clear that without this assurance, it will be difficult for him to capture the required votes from the grassroots majority, in the upcoming elections. With reference to data from the South African Land Audit Report, it shows the following farmland and agricultural ownership profile, by racial groupings:
72% – Whites
4% – Africans
4% ‘Other’ and co-owners
Against the following population demographics in South Africa, it is easy to see, that with the basic means of production is in the hands of the minority – a socio-political and economic dilemma confronts the country’s President. As it would for any head of state, for that matter.
Demographics in South Africa:
80.2% – African
8.4% – White
8.8% – Coloured
2.5% – Indian/Asian
In addition, like the majority of his peers on the African continent, President Ramaphosa has the unavoidable challenge of unemployment, especially in the youth sector, which currently stands at 26.7% of the total population. Exacerbating this is the impact of disruptive technology and the socio-economic impact that comes with it.
A good example is Uber – a brilliant idea, but not without serious implications. Who would have imagined that lives would be tragically lost as traditional taxi operators, threatened by this ‘invasion’ of their traditional business model, would attack the local Uber drivers.
The challenge for any African leader, both corporate and political, is that they need to champion the adoption of new technology, but at the same time be socially responsible in transitioning its people to embrace it.
It is easy to see why there is a lot of fear around artificial intelligence (AI). GARTNER, a leading technology research company, estimates that by 2021, over USD$3 billion of revenue will be generated globally from AI-assisted jobs. The idea that machines will compete with humans for jobs, is not quite as simple as it seems. In reality, AI will create 2.3 million new jobs, whilst 1.8 million will be lost – a net gain of 500 000 jobs. This represents a huge opportunity for Africa, specifically in that it allows us to look at our challenges and see how we can use these new technology platforms to turbocharge development and find our own solutions for continental growth and prosperity.
This is specifically important for healthcare, education, food production and infrastructure development – to leapfrog Africa into a bright new future. For instance, innovative research and applications in healthcare, have the potential to see Africa making significant inroads in finding solutions to the diseases that plague this continent – such as malaria and HIV.
Education will also be radically transformed, as new and more effective ways to inform and train the masses become ubiquitous. Agricultural production will also be transformed, and elevated to another level altogether, as African farmers emerge, using technology in more advanced ways for more productive crops and animal husbandry. The application of drones in the agricultural space is a case in point, as well as the emergence and adoption of vertical greenhouse farming, close to consumer communities.
The 2017 Global Innovation Index Report highlights that agriculture is leading innovation and development compared to all other areas of commerce and industry. This makes a lot of sense against the backdrop of a growing global population and the rapidly increasing consumption of food.
Undoubtedly, there is no better place as the source for increasing global food production – than the African continent. It has vast areas of un-used, fertile landmass – all with a healthy combination of landscape and environment.
It is fertile. It has the people. It has the will. And it is blessed with a good climate
Thinking out of the box in Rwanda
I was recently at a function having a discussion with a colleague from Rwanda. He asked me what I thought of the Rwanda government’s decision, to sign a ‘sleeve sponsoring deal’ with London Premier League club, Arsenal.
What this entails over the 3-year period of the sponsorship, is a 200 square centimetre ad-patch on players’ jersey sleeves, that just says “Visit Rwanda”.
And this will cost the country USD$39 million! At first glance this seems crazy! But, the rationale from the Rwanda government’s point of view, is that this is just a piece of a broader strategy to develop tourism. Tourists visiting Rwanda in 2017, contributed 12.7% to GDP, equating to some USD$400 million in revenue. The country sees upmarket leisure tourism and convention-tourism as an important growth sector. As a destination, Rwanda has a lot going for it: lush green landscapes, the mountain gorillas of the Virunga volcanos, the Akagera wildlife park, the tropical Nyungwe forest, idyllic Lake Kivu, and even genocide memorials – all compressed into a space of just 26,000 sq kms.
With reference to its Economic Development and Poverty Reduction Strategy (EDPRS 2), Rwanda has an ambition to raise gross domestic product (GDP) per capita to $1,000; reduce the percentage of the population living below the poverty line to less than 30%; and reduce the percentage of the population living in extreme poverty to less than 9%. These goals were built on development successes over the last decade that included high growth, rapid poverty reduction and reduced inequality. Between 2001 and 2015, real GDP growth averaged 7.8% per annum. Based on this, one can say that Rwanda, through its leader President Paul Kagame, seems to have been doing something right.
Initially I remained sceptical about Rwanda’s ‘sleeve promotion’, regardless of how the government rationalised it. But, biased as I am, (and being a staunch Chelsea fan!), I was able to separate the issues involved and give what I believed, was an objective view on the matter. Initially, my gut instinct and traditional values, were against the whole idea. I thought, “here was another African government that was wasting valuable tax payers’ money”.
However, after further deliberation, and taking into consideration that Rwanda has been one of pioneers of socio-economic reform on the continent, and which spurned a number of other African countries to follow their example … I changed my mind. I began to see that, here was a sheer stroke of genius. Especially if you take into consideration that over 1 millioni people watch Arsenal on live television per game, and you extrapolate this over the 3-year period which is the duration of the deal – that is a huge amount of publicity in anyone’s book.
Who would ever have thought, given Rwanda’s ghastly experience in one of the worst genocides that the world has ever seen, that the country could come full circle and start selling itself on the world stage in such a manner?
As Africans, we have historically been burdened with the stigma of the ‘dark continent’ stereotype. However when millions of people are watching the country of Rwanda being broadcast on premium television – that to me, is a big achievement. The only caveat is, the importance of following through on such a large national investment. There is nothing more disappointing than a country that markets itself so aggressively, and then does not deliver on the results.
Achieving the extraordinary in Senegal
A big story and one that is well-deserved indeed, is how Senegal recently won the rights to host the fourth edition of the Summer Youth Olympic Games 2022 (YOG). The Games, will be held in the Senegalese capital, Dakar.
Senegal is a small country in West Africa with a population of only 15 million people and a GDP of USD$15 billion – tiny when compared to the economic giants of Africa, namely South Africa (GDP USD$ 295 Billion) and Nigeria (GDP USD$405 Billion). Senegal’s capital, Dakar, is already well-known as a vibrant city, famous for its lively markets and rich musical culture. It also boasts beautiful colonial architecture, secluded beaches blessed with world-famous surf breaks, and remote riverine deltas teeming with wildlife.
Senegal is also one of the countries in Africa that has a Junior NBA Academy. The current NBA Vice President and Managing Director of NBA Africa, Amadou Gallo Fall, is also of Senegalese origin and has played a key role in driving the growth of this sport on the African continent, especially amongst the younger generation. Senegal has also had its share of sporting heroes – notably Sadio Mane, an International, (and Liverpool), soccer player.
This just shows what can be done by creating a spotlight for a country, on its positive attributes, even against the historical negatives … such as experienced in Senegal. I know there are probably still sceptics out there that criticise the wisdom of hosting expensive ventures like the Olympic Games.
I have also noted the tendency we have in Africa of convoluted argument, often throwing the baby out with the bath-water. Instead, for the good things we have achieved – let’s celebrate them! For all the aspiring young boys and girls of Senegal, who will be able to participate in one way or the other in the Olympics – let’s applaud them. Let’s keep the dream alive!
I will always remember the look on my son’s face, when I took him to one of the 2010 Soccer World Cup games (Brazil vs Ivory Coast), here in South Africa. He was in awe. And I am sure it will live with him as a lesson that anything is possible. That is the reward for imagining an Africa … alive with possibility!
Wrapping It Up
For any entrepreneur, established business, or organisation that wants to expand its interests, and to flourish in Africa, there is a depth of understanding required, of the diversity and difficulty of doing so. There is no other continent on the Planet that has a density of 54 countries. This amounts to 54 heads of state, 54 individual societies – all jostling for a place in the sun. It highlights the complexity and the opportunity – but only if one is prepared for it.
The late Muammar Gaddafi, leader of Libya, was known for his dream of creating a United States of Africa. Whatever his motives, whether good or bad, we will never know. I have often reflected on this, bearing in mind the roles that organisations like the African Union, SADC, ECOWAS etc., should be playing. My sense of it is, that most times, their bite is not as loud as their bark, especially when it comes to facilitating change on the continent. This poses the question of whether our strength is really in creating a façade of homogeneity at the expense of flourishing through the strength of our diversity?
My vote is for the latter.
The socio-economic landscape in Africa is changing on a daily basis. People are more educated, healthier and progressive in the way they think and act. As their mantle of global influence grows, the East and West are increasingly competing for a piece of the opportunity that Africa offers. People regularly ask me what the opportunities in Africa are. In the past I used to grapple for an answer that would adequately (and of course, truthfully) describe the status quo. What comes to mind is the diamond-rich DRC. Who can justify such wealth misappropriated at the expense of citizens and the destruction of the nation in the infamous ‘blood diamond wars’ of the elicit diamond trade, that has ravaged these countries.
At other times I would want to highlight the oil wealth in Angola and Nigeria – and then be disappointed to see how wealth has been lost due to the failure to secure continental resources that would allow these countries to be rich, by having local refineries. And even in North Africa, with its booming tourism opportunities and World Heritage sites like the Pyramids of Giza and the Nile River, this remains overshadowed by the ‘Arab Spring’ uprisings … that left many dead.
However, nowadays my response has totally changed. When people ask me, I now say, “Identify the problem first, then work out the solution”. Because, therein lies the opportunity. When you look at the African continent with this perspective, it really turns everything upside down. One gets a heightened sense of opportunity … and of what can be achieved.
As the saying goes ‘Beauty is in the eye of the beholder’ and indeed, to this writer Africa is a beautiful continent, with beautiful opportunities and the brightest of futures.
Dr Rutendo Hwindingwi is an African Realist, who is a Global Speaker and has a PhD in International Business Strategy from the University of Witwatersrand in South Africa. He is also an Associate Director at one of the Big Auditing and Advisory firms focussing on Business Development and Strategic Client Growth.