Africa is rising and South Africans need to be more strategic, more savvy and more courageous about doing business in Africa – especially as BRIC and some developed nations are zoning in on African markets to take hold of the growth opportunities at hand. The Africa Opportunity 2012 seminar hosted by Barloworld Logistics in Johannesburg on 17 October looked at some of the challenges they would face, opportunities to be found and practical tips on how to start.
Mark Collins, chief executive of Africa for Barloworld Logistics, noted that 93% of the delegates at the seminar reported they were either already in Africa to some degree or had advanced plans to do so in the near future. “Given the rise of consumerism in Africa, many South African businesses are at this very moment rolling out their Africa strategies and deciding their launch pads to achieve that. They will soon find that supply chain management is an important facilitator in whatever they wish to achieve.”
Clichés abound in the approach of South Africans towards Africa. Of the accusations we make regarding the rest of Africa – corruption, kleptocracy, lack of governance – when Africans hear these, they think we’re talking about our home country. This was the finding of a panel discussion at the seminar.
“If you want to get the feel of Africa, just spend some time in Soweto,” said Victor Kgomoeswana, Executive Business Development for Africa for cement producer PPC.
The three panelists – which included Professor Patrick Lumumba, the former Director Kenya Anti-Corruption Commission, Dominic Bruynseels, Chief Executive: West Africa at Standard Bank, and Victor Kgomoeswana, in addition to Kgomoeswana – agreed that South Africans were both welcome and needed in Africa – provided they left their attitude at home.
“Do Africans want us?” asked Kgomoeswana. “I don’t personally encounter any hostility, but I don’t behave as though I’m there to save the continent or even help it. My approach is I’m going there firstly to do business and secondly to learn from them. With the right attitude, I can guarantee no political backlash.”
The proof is in the success South African firms have already had in banking, financial services, food and especially telecommunications. If they could have the same impact in power generation, infrastructure and manufacturing, this would form the basis of a lasting impact on the continent.
The real danger is that South Africa becomes perceived as just another China or Europe, with dangerously one sided trade imbalances with the continent, said Lumumba. “The relationship has to be symbiotic.
While South Africa is much more advanced in its financial markets and depth of management expertise, increasingly South Africans are coming to realise there are remarkable innovations coming out of the region, bespoke to local conditions: such as cash transfer banking in Kenya, and fully automated passport control in Rwanda.
With the right attitude and a willingness to engage on equal terms, the next question is to find a reputable local partner, because it is difficult to proceed without local expertise – to varying degrees. In Angola, for instance, it is nigh on impossible.
It is also at this juncture that the issue of corruption is likely to emerge, if it is going to.
Bruynseels explained that no company, no matter its influence at home, is going to alter the culture of an entire nation. All it can do is hold firmly to its own corporate culture. “The first step is talk to a lot of people either in the country, in your own sector or advisers such as your bankers who already have a presence in the country. Between them, they will know reputable partners from disreputable ones.”
Lumumba pointed out that while corruption is a factor, almost all countries are taking steps to address it and this is taking on a momentum of its own. “When one country makes inroads into corruption, its neighbours are compelled to follow suit or fall off the pace. It’s infectious.”
It was also recommended that businessmen stick to official channels and introductions. The moment a company pays a single kickback, the word is immediately out in the market and the company’s corporate culture is destroyed overnight. Once tainted, it is difficult to un-taint oneself.
Kgomoeswana pointed out that it is for this reason that in the initiative the World Bank has at the moment to stamp out corruption in Africa it is targeting the private rather than public sector.
“When you get a call from someone claiming he can facilitate introductions, decline the offer and rather go through the South African Embassy,” says Lumumba. And the more political influence they claim, the faster you put the phone down.
In fact business introductions are the forte of the Department of Trade and Industry (DTI). While other African governments have opted to skew their natural market with incentives to invest in them, the DTI has instead opted to introduce various initiatives to make it easy for South Africans to do business in other countries, and other countries to do business in South Africa, all the while relying on the attractiveness of the underlying markets to be the deciding factor.
Bruynseels said that it is the natural business case that should be the deciding factor, and the existence of political instability or corruption are factors that one simply weigh in when making the decision to invest, and how much to invest.
In terms of geographies, Bruynseels referred to the ‘four pole’ approach with South Africa, Kenya, Nigeria/Ghana and Egypt acting as gateway countries for each pole of the continent. The various trade blocs on the continent align with these poles, and he noted that these are becoming stronger and more influential as economic forces.
“This means that if you get into one country in each trading bloc, you essentially have easy access to the neighbouring countries because of bloc treaties. A physical presence in Kenya, for instance, gives access to Tanzania or Rwanda; an office in Lagos opens up West Africa; South Africa opens the door to all Southern Africa,” said Bruynseels.
On the vexed issue of Zimbabwe, it was agreed that it was a difficult market but nonetheless one that could not be ignored. Lumumba added: “Zimbabwe is a well-connected country. Despite its challenges, its economy is growing and it will rise again in the post-Mugabe years.” Although finance was very difficult to get from private financial institutions, development finance institutions were increasing their funding into the country in anticipation. However, Bruynseels emphasised that any investment in Zimbabwe at the moment would probably have to be balance sheet funded.
Lumumba concluded: “Africa is a great prospect. South African businesses must look north, but before that must recognise what they have to do to compete. It is rapidly becoming a far more competitive, fast-paced and sophisticated market, especially in the larger cities. I would suggest we use the platform of the Southern African Development Community (SADC) as that launch pad.”
