What are the challenges and opportunities of doing business in Africa? And what is the best path home for nationals educated abroad?
A group of high-ranking African executives offered insight on these and other issues in a roundtable discussion moderated by HBS professor Mihir A. Desai at the African Business Conference at Harvard Business School on February 28.
GDP figures don't really capture the reality of Africa, said Bunmi Oni, CEO of Cadbury-Schweppes West Africa. There is huge potential for growth in a market that is 700 million people strong. But challenges include a highly fragmented continent with fifty-three different economic policies, slow government reform, tariff imbalances, and an unreliable transportation system.
There's also the matter of corruption, an issue that is bound to come up in any discussion of doing business in Africa.
"The hand of the giver is as bloody as the hand of the receiver," Oni said. "There's a big price to pay if you want to stay on the ethical path."
He told the story of a tug-of-war he had seven years ago with customs officials from one African country who were demanding bribes to allow a shipment to pass. After a four-week standoff, Oni told them to keep the goods, valued at about $50,000. The officials now say, "Let those idiots go" whenever they see papers from Cadbury-Schweppes, he said with a laugh.
| Our business in Africa—and most businesses in Africa—are profitable. |
| — Alexander B. Cummings Jr., Coca-Cola |
Weak infrastructure is portrayed as a nearly insurmountable challenge, said Titus Naikuni, who was named CEO of Kenya Airways in February 2003. Skills, focus, and a little bit of money are all that's needed to get things moving.
"The government doesn't have the ability, capacity, or wish to see the bigger picture," he said. "When you go home, try to see the bigger picture for them."
Privatization can bring dramatic change, he added. After the mobile phone industry was privatized in Kenya to two carriers, the subscriber base grew from 50,000 state subscribers to 1.8 million total in four years.
"What I've learned in my year at the airline is that Africa is very diverse," Naikuni continued. "It's much easier for a European carrier to get traffic rights in our country than it is for an African carrier. Go home and try to break the divide between African countries."
The path home
How do you pitch Africa to investors on a global stage that includes China's hot returns and large, integrated economies in Latin America, asked Desai.
"Our business in Africa—and most businesses in Africa—are profitable," said Alexander B. Cummings Jr., president of Coca-Cola's Africa group. Returns on Coca-Cola's investment in Africa beat those of any other market in the world.
"In competing for resources, there's nothing like a track record," Oni agreed. For the past ten years, Cadbury-Schweppes has had a compound annual growth rate of 23 percent in Nigeria, with future growth forecast at 25 percent.
Desai asked about career strategies in Africa. Is it better to return to Africa immediately after graduate school, or to first gain experience in the United States and Europe?
"No particular road is the correct one," said Naikuni, who started his career in Kenya but also worked in the U.K. "It's best to work for an organization with links to Africa," he added. "Be clear on what you want to achieve and don't waver."
"If you have education and experience from the outside, you have both a great opportunity and a greater obligation," said Oni. "Africa is a place that gives you huge scope to actually do things that make a difference."
Africa suffered from colonization in the past, he continued. "Perhaps in the future Africa will see a second round of colonization by its own children who are returning with resources and experience."
Future change
"What is the chance of an African running a company like Coca-Cola some day?" one member of the audience asked Cummings.
"The United States is the country where that is most likely to happen," he responded. "Once you set your objectives, never assume you won't achieve them because of where you come from. You should believe you can run any organization in any country."
Another question returned to the issue of corruption. To what degree can multinational corporations be held responsible for the spread of corruption in Africa?
Multinationals and business in general can't be held entirely accountable for corruption, Oni answered. Government is a more likely culprit, but the days of corruption are numbered as more and more countries slowly embrace reform. "Progressively, things begin to move on," he said. 