What does it take for a business to succeed in Africa?
To answer that question, Jonathan Berman spoke with the people who are doing business on the continent. Presently, there are 150 companies valued at over $1 billion in Africa and more than 500 companies with annual sales above $100 million. CEOs from foreign and domestic companies weigh in with their lessons on how to leverage the rising continent for success.
Success in Africa: CEO Insights from a Continent on the Rise recounts the conversations that Berman has with leaders ranging from GE’s Jeff Immelt to James Mwangi, CEO of the Kenya-based Equity Bank. Berman uses his experience in analyzing and working with the private sector to try to get at the heart of how businesses are having an positive impact.
“Success in Africa reveals a place where business is transforming millions of lives for the better, while generating wealth for those willing to lead. The power to transform lives is a driver for men and women passionate about business everywhere,” says Berman.
I spoke with Berman about the book and the debate over whether or not Africa is a rising continent. He also addresses some concerns that people have about the private sector entering African markets. Previous discussions with Berman have revealed a person who is a strong believer in what the private sector can accomplish, but is not blind to the potential negative impacts if companies exploit regions and/or people.
The idea that Africa is rising turns out to be a heated topic. Why does your analysis and experience lead to the conclusion that the continent is rising? In what way are current views on Africa and its countries distorted? What can be done to change those errors in judgement?
That it is a heated topic at all is a reflection of how strong Africa’s presence is in the world’s consciousness. The rapid change underway in Africa challenges a lot of treasured mythology about Africa as solely a place of happy animals and miserable people. You can see media outlets from CNN to HBO have a hard time breaking out of that mythology. See HBO’s current hit Newsroom, in which Africa is so tragic it drives poor Maggie insane. The development professionals I know have worked hard to reduce or eliminate African tragedy, and they recoil from that monolithic portrayal.
Of course, Africa’s a large and differentiated continent, so both the growth data and the related optimism vary. Even in a single country, growth is not linear. Nonetheless, the data of the last decade clearly support the assertion that Africa is among the fastest growing places on earth, and also the continent with the greatest optimism among polled businesses. I think about what Vimal Shah, the head of the Kenyan Manufacturer’s association, said to me recently. “All the ladders I see are pointed in the same direction.” They are of different heights, and not everyone is on that ladder yet, but I see what Vimal sees.
You speak to Western and African business people, in what ways are their approaches to the African market similar and/or different?
Let’s start with a point that should be obvious, but isn’t. Africans are good at doing business in Africa. They have a better understanding of the challenges facing their customers as well as their aspirations. They also often have superior insight on how to overcome those challenges and meet those aspirations. No one articulates that better than James Mwangi, CEO of Equity Bank. His success is rooted in his superior insight that the unbanked could be profitably served, and that to serve them properly, you need to enable the bank to meet them on their own terms, not the other way around. Citibank has been in Africa for decades, and could not have beaten Equity Bank to that insight.
Even as they seek to grow with Africa, many Western companies continue to operate in isolation from the majority of Africans. They seek to serve global clients or a small wealthy elite or extract resources through a narrow channel that is separated from the rest of the economy. That’s a recipe for very limited growth at best. The much greater opportunity lies in engaging the African economy at large. There are Western companies that are succeeding at that. In my view that includes Cummins, Coke and GE, to name three.
Some like to point as the private sector as the villain in the story of poverty. Why do you think they have it wrong?
If I may, I think poverty is the wrong story. Poverty is something everyone I know, including every African I know, wants to escape. Growth and opportunity are the story they want to be part of, in a consistent way that is fair to them. If you think of the story as one of growth and opportunity, it seems to me pretty hard to say that the private sector has no positive role in it. It’s reasonable to debate that role, and entirely reasonable for government and civil society to incent companies to generate social wealth. One of the great challenges facing capitalism in my own country is that the trajectory of corporate profits is not aligned with the trajectory of personal adjusted incomes of the population. As Africa grows, it has an opportunity to improve on that experience, and develop a better one.
President Obama raised his trade-over-aid rhetoric during the 2012 campaign. What can the US do to support business growth and development in Africa.
The administration has been saying very much the right things, in my point of view. And, as I’ve written in Harvard Business Review, President Obama’s trip to Africa was entirely a good investment for the US. Where I would encourage the administration (and the development community) to go further is in making the case that what they are doing helps US business and especially US jobs. The budget strains on the average American family and on the US government are such that you really are not going to get far promoting interests of other countries’ businesses with US tax dollars. The case has to be that it helps America. Some would argue that denies a charitable impulse. I think it’s just smart for the times.
What do you hope that investors learn after reading your book?
- That Africa is a place of extraordinary opportunity, led by extraordinary business men and women.
- That the big opportunity in Africa lies in serving the vast social and productive needs of a billion people building a better life.
- That opportunity can be pursued and won by remaining entirely consistent to a company’s core values, and that in fact those core values are the most likely way to win in Africa today and tomorrow.