The Entrepreneurial Society!

Peter Drucker

“What we need is an entrepreneurial society in which innovation and entrepreneurship are normal, steady, and continuous. Just as management has become a specific organ of contemporary institutions, and the integrating organ of our society of organizations, so innovation and entrepreneurship have to become an integral life-sustaining activity in our organizations, our economy, our society.” (1)

References

1. Drucker, P. 1985. Innovation and Entrepreneurship. Heinemann. London.

—————————————————————-
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’, offers Africa growth strategy solutions, and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi 

Tour De Entrepreneur!

Bike 1

“The problem with the French is that they don’t have a word for entrepreneur” 

So former US President George W. Bush is alleged to have said once. They do actually. The word ‘entrepreneur’ means someone who organizes and assumes the risk of a business in return for the profits and was introduced by Richard Cantillon (1697-1734), a French economist pictured below.

Bike 2

The French have another claim to fame in the form of the Tour de France, which is an annual multiple stage bicycle race primarily held in France, but also passing through neighboring countries. For those who do not know, a bicycle is a human-powered, pedal-driven, single-track vehicle, having two wheels attached to a frame, one behind the other.

What does riding a bicycle have to do with entrepreneurs you ask? Everything. The running of a business is analogous to the riding of a bicycle in the Tour De France! In the 2015 edition, a team sponsored by one of Africa’s most entrepreneurial firms MTN Qhubeka achieved much success in cycling’s biggest global event.

Look Ma, No Hands!

Bike 3

The phrase “look ma, no hands” comes from the classic anecdote of a child riding successfully on his bike without using his hands on the handle bars and so he shouts out “Look mom, no hands!”

When it is used in a different context other than riding a bike, then it means the person is doing something daring.  But this article “is not about the bike” (1) only. It is about starting a new business which is as new and daring a pursuit, as riding a bike is! It is a process of starts and stops, learning and adaptation, rises and falls, failures and success before one gets to say ‘look shareholders, no hands’. How does an entrepreneur ultimately get to ride with ‘no hands’? It starts with learning and being taught how, by a parent or mentor.

Bike 4

In What Way Is Riding a Bike Like Entrepreneurship?

Bike 5

Riding a bike is the art of managing momentum, speed, control, navigation, balance, and awareness. One also needs to be safety conscious. The key elements of riding a bike, and which are analogous to the startup of a business are:

1. Choose the right bike/Select the right vehicle for business.
2. Get on the bike/Decide on the strategy and journey.
3. Sit on the seat/Assume leadership.
4. Peddle/Start trading.
5. Balance/Align competing priorities and requirements in your business.
6. Accelerate/Create momentum in the business.
7. Brake/Reduce speed in order to change direction or to avoid challenges in the business.
8. Steer/Navigate around obstacles and change course appropriately.
9. See/Scan the environment.
10. Stop & Get off the bike/Review performance periodically or even stop the business altogether!

The successful rider needs to manage both acceleration and braking, both keeping on the straight course and turning to avoid obstacles and change direction, focus on the task at hand as well as consider future steps and the goal to be achieved. Just as in business.

Team Effort!

Bike 6

It is not always a solo pursuit. As in marriage, or business, it may be a process of teamwork. It may be a co-led business. Or it may be one where everyone has their place in following the leader.

Dust Yourself Off and Ride Again! 

Bike 7

It is not always carefree riding however. The “Look Ma! No Hands!” phrase can often precede disaster, as riders tend to crash when they aren’t holding onto the handle bars. An uncontrolled business can run into problems. One can even fall into disgrace like former world champion Lance Armstrong!

But when that happens one has to dust oneself off and try again. For if you have ever ridden a bike, it does not matter how long it has been since, you will always know how to get back on, and ride hopefully better this time around. Like riding a bike, once learnt and mastered, the art of business can never be truly forgotten, rusty reflexes notwithstanding. Hence the ‘Look Ma, No Hands’ approach to riding a bike or running a business should not be the default mode. A ‘hands on’ management approach is required as well.

But sometimes,  just temporarily as you cross the line in yet another grueling ‘tour de business’, you need to take your hands of the bars, raise your hands, do a double fist pump in the air, smile and wave!

References

1. Armstrong,  L. & Jenkins, S. 2000. It’s Not About The Bike: My Journey Back To Life. Putnam

—————————————————————-
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’, offers Africa growth strategy solutions, and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi 

AFRICAN GROWTH STRATEGIES 2/2: 54 Execution Items!

strategy execution success

African Growth Strategies Reloaded

My previous post “AFRICAN GROWTH STRATEGIES 1/2: 54 Corporate Insights”, highlighted 54 corporate strategy insights that could be gleaned from my ‘remix’ of Dianna Games’ book “Business in Africa: Corporate Insights”. As I was speaking to a business associate about the ‘growth with risk’ opportunity that Africa presents, he mentioned that while most organizations understand the imperative of an Africa strategy, most do not even know where to start in terms of implementation, or underestimate the work or organizational transformation required to attack this issue adequately.

It may seem easy to discover a new Africa focused business model, but the difficult part is to implement the new strategy in an economical and efficient way (9). Further, and increasingly so, you need to be entrepreneurial and innovative in order to seize the myriad of Africa opportunities, while deftly navigating the attendant risks. Entrepreneurs, ‘make execution a natural sequence in the strategy process’ (1).

In this follow-up article, I offer an example of an execution planning tool or checklist below to help you begin to translate the Africa opportunity into enduring value for your organization. It gives examples of ‘who’ may have to do ‘what’ based on some of the possible takeaways from the first article in order to increase the investment return from the Africa adventure. But first, a word on execution, that ‘great unaddressed issue in business’ (3).

The Importance of Execution

execution

“Execution is the gap between what a company’s leaders want to achieve (AFRICA SUCCESS) and the ability of their organization to deliver it (EXECUTION PLATFORM), a system of getting things done, and a discipline for meshing strategy and linking the three core people, strategy and operating processes of any business to get things done on time” (3)

While an African growth strategy is important, “research shows that most companies fail to execute strategy successfully” (7). Today more than ever before, strategies fail in the execution not the vision (11). While strategy formulation is critical, “the ability to execute strategy can be even more important than the strategy itself” (6)! A brilliant ‘go-to-Africa’ strategy “can put you on the competitive map, but only solid execution can keep you there” (10). Most companies have had varying success in Africa, and even more complain about the ‘school fees’ and painful lessons that come from being an African businessman. Yet the difference between a company and its competitor and the main reason why companies fall short on their Africa promises to stakeholders may lie in the ability to execute (3).

The Africa Execution Platform

Organizations do not execute, the people within them do. Successful strategy execution depends on two things:
1. a focus on the right strategic goals, lead and championed by senior managers, that unites an organization behind the strategy, determines the measures and milestones of success and makes sure that financial, technological and human resources are allocated effectively, and
2. the freedom granted to all parts of the organization, individuals, teams, suppliers and strategic partners, to be creative in finding new and innovative ways of carrying out these goals (12).

For expedience, I assume that an organization that is pursuing an African growth strategy has a ‘focused’ and ‘free’ C-Suite or senior executive committee or team configured like, or in some variation of, this:
• Chief Executive Officer (CEO)
• Chief Financial Officer (CFO)
• Chief Operating Officer (COO)
• Chief Marketing Officer (CMO)
• Chief Human Resources Officer (CHRO)
• There may also even be an executive in charge of Africa and/or country managers responsible for individual markets, but these would normally report into the C-Suite anyway.

The insights presented will mean different things to different functions but some examples are as follows:
1
CORPORATE INSIGHT: AFRICA RISING
ACTION: DEVELOP A GRAND AFRICA STRATEGY NOW!
RESPONSIBILITY: CEO
2
CORPORATE INSIGHT: ABOVE AVERAGE GROWTH PROSPECTS
ACTION: SEE AFRICA AS A KEY BUSINESS GROWTH DRIVER
RESPONSIBILITY: CFO
3
CORPORATE INSIGHT: AFRICA IS NOT A COUNTRY
ACTION: IDENTIFY INDIVIDUAL MARKETS OF INTEREST
RESPONSIBILITY: CEO
4
CORPORATE INSIGHT: AGRICULTURE
ACTION: NOTE THAT AGRICULTURE WILL BE A GAME CHANGER
RESPONSIBILITY: CEO
5
CORPORATE INSIGHT: AFRICA BRAND
ACTION: CREATE ‘MADE IN AFRICA’ BRAND CENTRICITY
RESPONSIBILITY: CMO
6
CORPORATE INSIGHT: FRONTIER MARKET
ACTION: BE ENTREPRENEURIAL AS EVERYTHING IS ‘UP FOR GRABS’
RESPONSIBILITY: CEO
7
CORPORATE INSIGHT: FIRST HAND EXPERIENCE
ACTION: PUT ‘BOOTS ON THE GROUND’ IN TERMS OF PEOPLE
RESPONSIBILITY: COO
8
CORPORATE INSIGHT: RISK-RETURN TRADE-OFF
ACTION: SOMETIMES HIGH RISK=HIGH RETURN!
RESPONSIBILITY: CFO
9
CORPORATE INSIGHT: RISK MANAGEMENT
ACTION: DO EXTENSIVE DUE DILIGENCE ALWAYS
RESPONSIBILITY: CFO
10
CORPORATE INSIGHT: INVESTOR INTEREST
ACTION: ENGAGE WITH AFRO-CENTRIC INVESTORS
RESPONSIBILITY: CFO
11
CORPORATE INSIGHT: INFORMALIZATION
ACTION: REALISE THAT MUCH OF AFRICA’S ECONOMIC ACTIVITY IS INFORMAL AND ADJUST AS NECESSARY
RESPONSIBILITY: CMO
12
CORPORATE INSIGHT: CONSUMERS
ACTION: UNDERSTAND NEEDS OF A CONSUMER DRIVEN ECONOMY
RESPONSIBILITY: CMO
13
CORPORATE INSIGHT: CO-OPETITION
ACTION: COMPETE & COLLABORATE AT THE SAME TIME
RESPONSIBILITY: CEO
14
CORPORATE INSIGHT: CULTURE
ACTION: UNDERSTAND DIFFERENT CULTURAL NUANCES
RESPONSIBILITY: CHRO
15
CORPORATE INSIGHT: CHINA (and BRICS)
ACTION: HAVE A CHINA STRATEGY
RESPONSIBILITY: CEO
16
CORPORATE INSIGHT: CAPITAL & CASH
ACTION: RAISE ADEQUATE CAPITAL FOR AFRICA EXPANSION
RESPONSIBILITY: CFO
17
CORPORATE INSIGHT: AREA
ACTION: AFRICA IS HUGE SO PLAN ACCORDINGLY
RESPONSIBILITY: CEO
18
CORPORATE INSIGHT: NIGERIA
ACTION: NIGERIA IS THE LARGEST AFRICAN ECONOMY WITH 20% OF ITS POPULATION – HAVE PRESENCE
RESPONSIBILITY: CEO
19
CORPORATE INSIGHT: GEOGRAPHIC DIVERSIFICATION
ACTION: DIVERSIFY COUNTRY RISK BY YOUR PORTFOLIO OF COUNTRIES OF INTEREST
RESPONSIBILITY: CFO
20
CORPORATE INSIGHT: GATEWAY TO AFRICA
ACTION: UTILISE WHATEVER GATEWAY WORKS
RESPONSIBILITY: CFO
21
CORPORATE INSIGHT: RELATIONSHIPS & TRUSTED NETWORKS
ACTION: ESTABLISH SOLID PARTNERSHIPS
RESPONSIBILITY: CEO
22
CORPORATE INSIGHT: OPPORTUNITY SET
ACTION: FOCUS ON SCALABLE OPPORTUNITIES
RESPONSIBILITY: CEO
23
CORPORATE INSIGHT: NO ‘ONE SIZE FITS ALL’
ACTION: ADAPT ACCORDING TO SITUATION
RESPONSIBILITY: CEO
24
CORPORATE INSIGHT: OPERATING ENVIRONMENT
ACTION: REALISE THE DIFFICULTY OF OPERATING IN OTHER AFRICAN COUNTRIES
RESPONSIBILITY: COO
25
CORPORATE INSIGHT: WOMEN & YOUTH
ACTION: EXPLOIT THE DEMOGRAPHIC DIVIDEND
RESPONSIBILITY: CMO
26
CORPORATE INSIGHT: TALENT
ACTION: SEEK TO EXCEL IN TALENT ACQUISITION AND RETENTION
RESPONSIBILITY: CHRO
27
CORPORATE INSIGHT: HOMEGROWN COMPANIES
ACTION: LEARN FROM THOSE WHO HAVE BOTH SUCCEEDED AND FAILED
RESPONSIBILITY: CEO
28
CORPORATE INSIGHT: SUPPLY CHAIN
ACTION: INNOVATE AROUND YOUR SUPPLY SOURCES
RESPONSIBILITY: COO
29
CORPORATE INSIGHT: STAKEHOLDERS
ACTION: PROTECT YOUR LICENCE TO OPERATE BY MAPPING AND ENGAGING WITH IMPORTANT STAKEHOLDERS
RESPONSIBILITY: CEO
30
CORPORATE INSIGHT: SCRAMBLE FOR AFRICA
ACTION: TAKE FIRST MOVER ADVANTAGE WHICH IS CRITICAL
RESPONSIBILITY: CEO
31
CORPORATE INSIGHT: SOUTH AFRICA
ACTION: SA IS THE 2ND LARGEST AFRICAN ECONOMY, IT’S MOST SOPHISTICATED AND WITH WORLD CLASS FINANCIAL MARKETS – HAVE PRESENCE
RESPONSIBILITY: CEO
32
CORPORATE INSIGHT: TOP TEN ECONOMIES CONTRIBUTE 80% OF AFRICA’S GDP
ACTION: EITHER FOCUS ON THE TOP TEN ECONOMIES OR DEVELOP A STRATEGY FOR THE OTHER 80% OF COUNTRIES THAT ARE NOT AS LARGE
RESPONSIBILITY: CFO
33
CORPORATE INSIGHT: REGULATORY ENVIRONMENT
ACTION: BE AWARE OF REGULATIONS AS WELL AS CHANGES
RESPONSIBILITY: CFO
34
CORPORATE INSIGHT: REFORMS
ACTION: KEEP TRACK OF REFORMS THAT COULD HAVE AN IMPACT ON YOUR STRATEGY IMPLEMENTATION
RESPONSIBILITY: CFO
35
CORPORATE INSIGHT: REGIONAL TRADE
ACTION: THINK SUB-REGIONALLY VIA TRADING BLOCS FOR SCALE
RESPONSIBILITY: CEO
36
CORPORATE INSIGHT: RESOURCES
ACTION: RESOURCES SECTORS ARE STILL CRITICAL FOR MOST ECONOMIES
RESPONSIBILITY: CEO
37
CORPORATE INSIGHT: RULES OF ENGAGEMENT
ACTION: THERE ARE DIFFERENT RULES FOR DIFFERENT MARKETS EVEN THOUGH THERE IS SOME ALIGNMENT WITH GLOBAL STANDARDS E.G. ISO, IFRS
RESPONSIBILITY: CFO
38
CORPORATE INSIGHT: ACT LOCAL
ACTION: ENSURE THAT YOUR VALUE PROPOSITION RESONATES WITH LOCAL NEEDS
RESPONSIBILITY: CMO
39
CORPORATE INSIGHT: TECHNOLOGY
ACTION: EMBRACE MOBILE TECHNOLOGY AS A BUSINESS ENABLER
RESPONSIBILITY: COO
40
CORPORATE INSIGHT: ENTREPRENEURSHIP
ACTION: BECOME ENTREPRENEURIAL AND WORK WITH LOCAL ENTREPRENEURS TO GET BETTER MARKET ACCESS
RESPONSIBILITY: CEO
41
CORPORATE INSIGHT: EQUITY
ACTION: GROW INTERNAL CASH FLOW AS EXTERNAL CAPITAL MARKETS ARE STILL ILLIQUID AND SHALLOW
RESPONSIBILITY: CFO
42
CORPORATE INSIGHT: ENTRY & EXIT STRATEGIES
ACTION: STRATEGIES SHOULD FOCUS ON BOTH ENTRY AND EXIT IN CASE OF MARKET FAILURE OR PUSHBACK
RESPONSIBILITY: CEO
43
CORPORATE INSIGHT: EAST AFRICAN COMMUNITY (EAC) BLOC
ACTION: RECOGNISE EAC AS A KEY & GROWING REGIONALLY INTEGRATED BLOC
RESPONSIBILITY: CEO
44
CORPORATE INSIGHT: GLOBAL THINKING
ACTION: APPLY INTERNATIONAL BEST PRACTISE
RESPONSIBILITY: CEO
45
CORPORATE INSIGHT: GOVERNANCE OF CORPORATES
ACTION: ENSURE STRONG CORPORATE GOVERNANCE PRACTICES ARE IN FORCE
RESPONSIBILITY: CFO
46
CORPORATE INSIGHT: GOVERNMENT POLICY
ACTION: HAVE A FIRM VIEW OF GOVERNMENT POLICY AND ELECTION INDUCED CHANGES
RESPONSIBILITY: CEO
47
CORPORATE INSIGHT: INFRASTRUCTURE
ACTION: PLAN AROUND WEAK INFRASTRUCTURE WHICH IS A FEATURE OF MOST MARKETS
RESPONSIBILITY: CFO
48
CORPORATE INSIGHT: INNOVATION
ACTION: INNOVATE YOUR BUSINESS MODEL CONSTANTLY
RESPONSIBILITY: CEO
49
CORPORATE INSIGHT: INFORMATION ON MARKETS
ACTION: FIND FORMAL AND INFORMAL WAYS TO GET MARKET INFORMATION
RESPONSIBILITY: CMO
50
CORPORATE INSIGHT: INSTITUTIONS
ACTION: PLAN AROUND WEAK INSTITUTIONS YOU MEET
RESPONSIBILITY: CFO
51
CORPORATE INSIGHT: EMPOWERMENT
ACTION: EMPOWERMENT/INDIGENISATION/LOCALISATION NEEDS TO BE EMBEDDED IN YOUR MARKET PLANS
RESPONSIBILITY: CHRO
52
CORPORATE INSIGHT: ECONOMIC OPENNESS
ACTION: PRACTICE WHERE ECONOMIES ARE MORE OPEN RATHER THAN CLOSED
RESPONSIBILITY: CFO
53
CORPORATE INSIGHT: EASE OF DOING BUSINESS
ACTION: DO BUSINESS WHERE IT IS EASIEST BY REFERRING TO THE WORLD BANK DOING BUSINESS INDEX
RESPONSIBILITY: CFO
54
CORPORATE INSIGHT: SUSTAINABLE & INCLUSIVE GROWTH
ACTION: ENSURE YOU HAVE A FINANCIALLY, SOCIALLY, & ENVIRONMENTALLY SOUND BUSINESS FRAMEWORK
RESPONSIBILITY: CFO

Make sense?

The A (frica) Team

a team

As it is becoming untenable NOT to have an Africa plan or be at least demonstrating clear progress in executing upon it (3), do you have an Africa ‘formal strategy execution process in place’ (7)? If not, let us talk. Or as the voice over from the popular A-Team TV series would say:

“If you have a (AFRICA) problem, if no one else can help, and if you can find them, maybe you can hire the A-Team”.

My ‘soldiers of fortune’, aka The A(frica) Team, are easy to find and will be happy to make sure that your Africa plan comes together!

References

1. Barney, J. 2001. Is the Resource-based ‘View’ a Useful Perspective for Strategic Management Research? Yes. Academy of Management Review 26 (1).
2. Bossidy, L & Charan, R. 2002. Execution: The Discipline of Getting Things Done. Random House Business Books.
3. Games, D. 2013. Business in Africa: Corporate Insights. Penguin.
4. Gilbert, X, Buchel, B & Davidson, R. 2008. Smarter Execution: Seven Steps to Getting Results. Prentice Hall.
5. Hrebiniak, LG. 2005. Making Strategy Work: Leading Effective Execution and Change. Wharton School Publishing.
6. Kaplan, R & Norton, D. 2005. The Strategy Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Harvard Business School Press.
7. Kaplan, R & Norton, D. 2008. The Execution Premium. Harvard Business Press.
8. Neilson, GL, Martin, KL & Powers, E. 2008. Secrets to Successful Strategy Execution. Harvard Business Review. June.
9. Pettit, J. 2009. Finance: Facing the Liquidity Challenge. In 7 Ways Forward: How to Rebuild Your Capabilities for Long Term Growth in a Period of Turmoil. Strategy + Business 54.
10. Syrett, M. 2007. Successful Strategy Execution: How to Keep your Business Goals on Target. Profile Books. London.

—————————————————————-
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’, offers Africa growth strategy solutions, and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi 

The Entrepreneurial Ones Are Not Yet Born!

adorable-baby-wearing-diaper-tie-sitting-briefcase-188809

The Beautyful Ones Are Not Yet Born

‘The Beautyful Ones Are Not Yet Born’ is the debut novel by Ghanaian writer Ayi Kwei Armah, that expressed the frustration that many citizens of the newly independent states in Africa felt after attaining political independence. It was written in 1968.

the beautyful ones

                                                                                                                                                     Fast forward almost half a century later and there is a sense that in most of Africa, the economic freedom and inclusive growth that was expected to come with political independence, has been largely illusive. The dream of prosperity seems to have been at least deferred, and at most destroyed. However, ‘for countries to grow and benefit from globalization, more citizens need to take entrepreneurial risk’ (6). Can a renewed commitment to the practice of entrepreneurship and the spirit of innovation be the solution to the continent’s ills of poverty, inequality and unemployment?

Creative Destruction Revisited

One of the most poignant quotes from the book reads thus:

“Others devoted to life will surely find that between the creation of life and the destruction of the destroyers there is no difference but a necessary, indispensable connection, that nothing good can be created that does not of its very nature push forward the destruction of the destroyers” (1)

I have previously written on Creative Destruction, the ‘process by which new ideas, businesses and industries emerge, and therefore lead to the downfall of traditional ideas, businesses and industries’ (3). Creative destruction is ‘a revolutionary process at the heart of which is one or more innovations’ (3). Joseph Schumpeter considered capitalism as an economic system in which competition is driven by the ‘perennial gale of creative destruction’:

“Capitalism…is by nature a form or method of economic change and not only never is, but never can be stationary…The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumer goods, new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates…This industrial mutation…revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. The process of creative destruction is the essential fact about capitalism…it is not price competition which counts but the competition from…the new technology…competition which strikes not at the margins of the profits…of existing firms but at their foundations and their very lives” (7).

Importantly the ‘central figure on the capitalist stage is the entrepreneur’ (2) who is the agent of this change process.

The Entrepreneurial Ones Are Not Yet Born

The policy debate around renascent Africa is relatively lukewarm on entrepreneurship and innovation as being important drivers of economic growth, productivity enhancements, job creation and societal well-being. Yet, the ‘abilities to think and act entrepreneurially, to continually innovate, and to engage in an ongoing process of creative destruction have become the source of competitive advantage’ (4) globally.

A lot of us have been brought up to see only the relative safety of corporate employment as the only way to a better life. There certainly is nothing wrong with having a nice comfortable job. In fact the whole raison d’être for LinkedIn for example, is to connect talented people with job opportunities. But what happens when large corporate are busy downsizing or not recruiting, while the African population is predicted to double to 2 billion in the next few decades? Where will the jobs that are already short come from?

We should realize that we are living in a time of a ‘global entrepreneurial revolution where entrepreneurs are challenging existing assumptions and creating value in novel ways’ (5). So ‘the destruction of the destroyers’ (1) of the post independence dream in Africa can only be achieved by the creation of an entrepreneurial class and supportive socioeconomic and political ecosystems that complement existing paradigms. Only then can the ‘revolutionary process’ (3) begin to deliver the expected economic and social good to both the current billion people as well as the next billion.

Till then I guess the entrepreneurial ones are still to be born!

References

1. Armah, AK. 1968. The Beautyful Ones Are Not Yet Born. Heinemann.
2. Demirbas, D & Demirbas, S. 2011. The Role of the State in Developing Countries: Public Choice versus Schumpeterian Approach. Business & Economics Research Journal.
3. Howie, PJ. 2011. The Evolution of Revolutions: How We Create, Shape and React to Change. Prometheus Books. New York.
4. Kuratko, DF. 2009. The Entrepreneurial Imperative of the 21st Century. Business Horizons. September.
5. Morris, MH, Kuratko, DH & Covin, JG. 2008. Corporate Entrepreneurship and Innovation: Entrepreneurial Development within Organisations. Thomson South Western.
6. Schramm, CJ. 2008. Toward an Entrepreneurial Society: Why Measurement Matters. Innovations. Winter.
7. Schumpeter, JA. 1942. Capitalism, Socialism and Democracy. New York Harper.

————————————————————————————-
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’, offers Africa growth advisory solutions, and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi

AFRICAN GROWTH STRATEGIES 1/2: 54 Corporate Insights!

dianna gamesI am a big fan of music, art, literature and business. I have also done business in about 15 or 16 African countries so have a healthy passion for Africa. And I immensely enjoyed reading (and recommend that you buy and read for yourself) one of the relatively few books written about African business – Business in Africa: Corporate Insights by Dianna Games pictured above.

I also decided to ‘remix’ the book a bit by reconfiguring some of the key corporate insights therein into the acronym for African growth strategies and the 54 (for the 54 countries on the continent) considerations that accompany it! This was based on the comments (in quotes) in the book from business leaders at African Development Bank (AfDB), Actis, Anglo-Gold, Carlson Rezidor, Coca-Cola, DuPont, General Electric, Imperial, Liberty, M&C Saatchi, MultiChoice, MTN, Nandos, Seedco, Sacoil, United Bank for Africa, Wilderness Holdings, Global Pacific and others.

africa map numbers

What does ‘remix’ mean?

“A remix is a piece of media which has been altered from its original state by adding, removing, and/or changing pieces of the item. A song, piece of artwork, book, video, or photograph can all be remixed. The only characteristic of a remix is that it appropriates and changes other materials to create something new. A remix in literature is an alternative version of a text. Various textual sources would be cut literally into pieces with scissors, rearranged on a page, and pasted to form new sentences, new ideas, new stories, and new ways of thinking about words. A remix in art often takes multiple perspectives upon the same theme. An artist takes an original work of art and adds their own take on the piece creating something completely different while still leaving traces of the original work. It is essentially a reworked abstraction of the original work while still holding remnants of the original piece while still letting the true meanings of the original piece shine through”- Wikipedia

A.
1) Africa Rising

‘Africa is rising’ and ‘there is a widespread optimism about Africa’. The African giant, once sleeping and bedeviled by nightmares, is stirring’. The last couple of years have witnessed a ‘positive growth trajectory’ and ‘a sea change in Africa’s fortunes’. ‘The world now recognizes that Africa has taken a big leap economic step forward’. The narrative is increasingly about ‘a dynamic and changing Africa’ and the ‘exciting future that lies ahead’. Afrika is the new black!

2) Above Average Growth Prospects

After a ‘decade of positive economic growth’ as well as ‘some of the highest growth rates in the world’, Africa is ‘a new growth area’ with ‘every African market holding the prospect for growth’. What is also interesting is that ‘Africa’s increasing growth is about more than just resources’ and ‘Africa is a key driver for many a business’ future growth strategy’. While ‘Africa’s growth potential remains strong’, achieving ‘real annual growth at 5% for 40 years that is uninterrupted or averaged will be a tough task’.

3) Africa Is Not A Country

Yet ‘doing business in Africa is not doing business in one country but in 54 states’. ‘Africa is not a single country’ as others may appear to think. It is also not ‘a single category of countries but is made up of performers, failures, small, big, landlocked, littoral, democratic and autocratic’. Additionally, ‘patterns of growth have been highly differentiated between states; some are richer while others have failed’. Therefore ‘it is important to treat all countries in Africa as individual markets – one cannot think of the continent as one country with slight variations’.

4) Agriculture

‘The biggest opportunity in Africa for the future lies in the agriculture sector’ and which ‘story is very interesting’. For a continent of 1 billion people that is projected to double by 2050, the issue of food production will attain greater significance given that ‘agriculture is modestly commercialized’ and as ‘about a quarter of the world’s nearly 1 Billion food insecure people live in Africa’. The continent has much of the world’s vast tracts of arable land and accommodating weather, and, ‘according to the World Bank, growth in agriculture is at least twice as effective in reducing poverty as growth in other sectors.’

5) ‘Africa’ Brand

Given that Africa is largely a continent of heterogeneous but aspirational consumers, the ‘Made in Africa’ brand deserves consideration. It is important for businesses to project that ‘we are an African brand based in Africa’ while ensuring that ‘the brand is sacrosanct’ and appropriately trademarked and protected especially in environments where counterfeits may encroach on brand equity. Increasingly ‘the message to African consumers needs to expand outwards from traditional media to social networks and mobile phones’ given the young and technologically savvy demographic profile of the customer base.

F.
6) Frontier Market

‘After the emerging powers of China, India and Brazil’, ‘Africa has become the last big opportunity for global firms to grow their market share’ and ‘is one of the chosen frontier markets in this new global era’. That Africa is a relatively immature virgin market in most respects ‘provides a great frontier opportunity’ for almost everything!

7) First Hand Experience

The African ‘reality is very different from written theory’ and ‘it is crucial to understand what is happening at ground level’. ‘There is no substitute for firsthand experience’ or being at the ‘coal face of doing business in Africa’ and ‘it really helps to have a presence on the ground. No one ‘knows a market than someone who lives in it’. Before you make any investment, ‘you need to spend time in the market’ and after that, ‘monitoring the investment on an ongoing basis requires active involvement and presence in a country’. ‘It is crucial that multinationals operating in Africa truly understand the markets they are trying to reach’ and attain an in-depth ‘know-how of doing business in Africa’.

R.
8) Risk-Return Profile

Historically, ‘Africa has been regarded as high-risk, poor, inefficient and politically unstable’. While improvements have been noted, ‘political risk is still a significant issue’. Additionally, as the continent has become more integrated in the global economy, ‘Africa faces the risk of a global slowdown’ like any other region. But they say ‘no pain, no gain’ and ‘in some of the highest risk markets you have some of the greatest returns as long as you mitigate risks’, e.g. ‘currently margins are high in other African countries – more than double what they are in SA’ and ‘returns here are the highest of any emerging market’.

9) Risk Management

It is important to ‘see Africa much more in terms of opportunities than risks. In fact the risk is not having a presence here’. But you must ‘plan properly’, ‘do deep due diligence’, and ‘always follow due process when entering or working in a new market and be patient about the extra time it may take’. ‘Extensive due diligence on industry, market, partner is vital’ as ‘there is no substitute for doing your homework’. Also, ‘look at opportunity and risk on a country by country and region by region basis as risk within country can be localized’ e.g. Nigeria and Boko Haram in the north or rebels in DRC in the east.

Some say that ‘if you’re not doing business in Africa already, you’ve probably missed the boat’. I disagree as the gold rush is just starting. Indeed ‘the risk for many businesses now is NOT being in Africa’!

I.
10) Investor Interest

‘For many years Africa was at the bottom of the investors list of emerging market destinations’. But now ‘there is no doubt things are moving and, with the developed world in trouble, investors no longer regard Africa as being so risky’. ‘Much of global investor interest has been in resources, but the perception that Africa is purely a natural resources play is changing’ and ‘the size of the Africa opportunity is a big draw card for investors’. More ‘corporate players from all over the world are upgrading their African portfolios’ and increasingly ‘global investors pay attention to what Africa has to offer’. ‘The investment case for Africa has been touted as compelling, even irresistible’. Amidst growing global ‘competition for investment dollar’, ‘investor interest in quality African companies has been growing’ with a ‘long-term investment approach’. Interestingly, ‘there is a growing desire and aspiration by Africans to compete. Africans are now among the biggest investors in Africa’. Also ‘impact investing’ or ‘the use of for-profit investments to address social and environmental challenges’ is growing as investors view themselves ‘as a catalyst for development, rather than the sole source of opportunity’.

11) Informalisation

Much of Africa’s economic activity takes place in the informal sector. Interestingly, ‘family owned companies are a very important part of the economy in many emerging markets and they are particularly important in Africa’. It is predicted that ‘more informalisation is the likely outcome’ as economics grow.

C.
12) Consumers

In Africa ‘a growing consumer market is rising’ and ‘the middle of the pyramid is growing rapidly’ leading to a ‘demand for quality goods on an unprecedented scale’. ‘Rising African urban consumers will further fuel growth’ however, as ‘more than half of Africa’s population will be living in urban areas by 2030 & 60% by 2050 when population will be 2 billion. ‘Looking at a map of Africa’s cities, it is clear there are large urban centers for consumer facing companies to target’.

Yet despite the growth of ‘Africa’s middle class’, it ‘is exceptionally small’ by global standards. Having said that, you must not ‘under estimate people’s aspirations’ or ‘assume that the African consumers want cheap products’. As the ‘African consumer’ moves up the scale, ‘the growth of the middle class represents a viable market for global businesses to tap into’.

13) Co-opetition

‘The competition for consumer spend is keen and growing’. ‘The cost of African assets is rising as competition increases’ too. ‘China is a major price competitor’ and ‘it is difficult to compete with firms from China, India and Brazil’. Businesses face ‘high levels of competition’ not only from own country institutions but also from international and local host country competition. The ‘real opportunity in Africa is through collaborative efforts’ and ‘to succeed in Africa, companies must explore new models of collaboration’ as well as compete i.e. co-opetition.

14) Culture

Understanding local culture is critical for success. In order to ‘get the culture of the business right’, ‘you need to pay attention to the cultural differences between North, East, West and Southern Africa’. ‘There are also local differences that need to be taken into account’.

15) China (and BRICS)

With the ‘rise of strong emerging market economies (EMs)’ has come a ‘growing interest in the continent from EMs’. In fact, the economic bloc BRICS (Brazil, Russia, India, China, and SA) is now Africa’s largest trade partner, over and above the China factor. ‘More partnerships with EM investors’ will increasingly become the order of the day.

16) Capital (and Cash)

You ‘need financial capacity to succeed in Africa’. However, ‘getting funding for assets in Africa is a challenge’. Also ‘in many countries cash is still king’ and ‘payment systems are a challenge’, e.g. ‘in SA up to 70% of business is conducted by way of debit orders, but in the rest of the continent, people pay cash upfront’. Most capital markets are shallow and illiquid despite the need for ‘strong capital management structures to achieve capital retention’. Fortunately, ‘the growing awareness of opportunity in Africa is also helping to unlock funding for long-term lending’ and, ‘if cash is king in Africa, mobile money is heir apparent’ (3).

A.
17) Area

Kai Krause, a computer graphics guru caused a stir with the map below titled ‘The True Size of Africa’ which shows the outlines of other countries crammed into the outline of the African continent, to show the sheer size of Africa, and how it is much bigger than depicted on most maps (5).

True-Size-of-Africa-2N.
18) Nigeria

Nigeria has become ‘the largest economy on the continent’ overtaking SA in 2014. ‘Nigeria is a priority market’ as ‘the next fastest growing market’. Additionally, ‘Nigeria has become world-class in terms of the capacity and talent it is building’. Even if ’West Africa is an area of interest, potential demand in the Nigerian market alone is more than in all other markets together’ e.g. ‘Nigeria was a game changer for MTN in its international expansion, presented a massive opportunity and shifted MTN’s scale of doing everything by 2 or 3 times. It is said that ’if you can succeed in business in Nigeria, you can succeed anywhere in Africa’!

G.
19) Geographic Diversification

Prospects and challenges tend to vary across the different countries and ‘growth in African countries continues to be diversified’.

20) Gateway to Africa

‘The gateway concept is a constantly evolving thing as regions develop’. Many countries are positioning themselves for inward investment, and it is unclear whether South Africa is still the right and only landing-place for companies coming to Africa. For instance, ‘Ghana has positioned itself as the gateway to West Africa’ (4). The same could be said for Kenya in East Africa. But ‘the continent is just too large for there to be only one gateway’.

R.
21) Relationships and Trusted Networks

‘Humility is a big factor in operating in Africa’ and it is important to ‘build strong relationships with Africans in the market in which you operate’, and to ‘work with a local company in a mutually beneficial relationship before an equity based partnership’. ‘Strategic partnerships have become essential’ and the focus should be ‘on building relationships across the board’. In Africa, possibly more than in any region, building the right local partnerships and trusted networks is critical because each country has its unique ways of executing transactions’.

O.
22) Opportunity Set

While Africa is a land of ‘new opportunities’, these ‘vary widely across Africa’s 54 countries’. Market ‘penetration in Africa for most is low which presents a large opportunity’. It may make ‘more sense to aim for even 5% of a much bigger untapped market than to have 100% of a small market’. Going forward, ‘Africa will present a $2.6 trillion business opportunity by 2020 across 4 sectors – consumer facing industries, infrastructure, agriculture and resources’. But ‘the window of opportunity in Africa is not going to be open forever and, as it narrows, entry barriers are going to get tougher’. When it comes to Africa, is your glass half empty or half full?

23) No “One Size Fits All”

You ‘need to view and respect each market as a unique environment because they are all different’. You ‘can’t adopt a one size fits all approach’ and ‘you should not assume that one size fits all. To succeed you really have to understand that culture, region and local issues play a significant role. Things that work in SA don’t work in Zimbabwe and what works in Zimbabwe won’t necessarily work in Mozambique’ for instance. You ‘have to look for country-specific issues otherwise you could fail in a market by replicating business practices from elsewhere’ that are misplaced.

24) Operating Environment

There are many ‘challenges of operating in Africa’ and ‘in past decades, this environment made it difficult for investment and entrepreneurship to survive’, e.g. ‘severe shortage of commercial and residential space’ in which ‘retailers with an appetite for African markets are finding the suitable property stock a constraint to their expansion plans’. While ‘the operating environment in Africa is definitely improving’, ‘it is sometimes difficult to see what you are dealing with because of the structure of the market’. ‘The African business environment is a far more complex one which requires multiple solutions that cater for the very diverse countries in which we operate’.

W.
25) Women & Youth

‘Africa can also benefit from what is termed the demographic dividend’ as ‘Africa’s high population growth is a key driver of growth and new investment’. ‘Woman will have a key role to play in coming decades’ and ‘the youthful profile of the African demographic and rapid urbanization are powerful catalysts for African business growth’. Also ‘the economic empowerment of African women, as well as the economic future of the continent lies squarely in entrepreneurship’. Is it time for an African entrepreneurial spring?

T.
26) Talent

‘Being a pioneer in Africa has its challenges in terms of human resources. ‘Labor can be your biggest asset but also your biggest problem’ and ‘getting the right human resources is one of the challenges of putting down roots in new markets’. ‘They ‘may lack managerial expertise for these markets. ‘Finding good management can be a major challenge’. ‘High unemployment levels are exaggerated by a lack of local skills and antipathy to foreign skills’. ‘It is not easy to bring expatriate talent into African countries anymore and governments are implementing quotas using work permits and visas’. In addition, ‘many young Africans took their talents to international markets’.

‘Skilled Africans are returning to take up opportunities with both international and African companies’. There is ‘extraordinary potential in terms of both human capacity and resources’ and companies are now ‘luring African Diaspora skills back from other regions’. ‘In the hunt for talent, global companies are focusing in the main Diaspora markets to fulfill their own talent requirements and localization needs. ‘Young Africans business leaders are returning to the continent and doing things differently’.

H.
27) Homegrown Companies

‘The growth of African multinationals is also changing the way the continent is viewed’ as ‘new pan African companies are improving neighboring economies with capital infusions and the development of products and services specifically designed for the African marketplace’. ‘Many of the big African company brands have traditionally all come out of SA but that is also changing as African companies spread their wings out of their traditional local markets’. ‘The number of homegrown companies and multinationals is growing as companies in South Africa, Nigeria, Kenya and other places increasingly take a regional view’. ‘These entrepreneurs without borders ‘are mostly in a few sectors – financial services, agriculture and consumer goods’. ‘Emerging multinationals are coming out of other African countries too all helping to build Africa’s business brand e.g. MTN purchase of Investcom.

S.
28) Supply Chain

Supply sources can be tricky and ‘one of the factors contributing to success is working very closely through the supply and value chains’. ‘The continent’s strategic importance within the global supply chain is on the increase’ and ‘inevitably logistics have been a problem’ and continue to be so. Even intra-African flights are still problematic, and one still frequently has to leave the continent first in order to connect back to other parts of the continent!

29) Stakeholders 

In order to secure a license to operate so to speak, ‘look for solutions locally by collaborating with customers, governments, NGOs, universities and other stakeholders in the market’. Your business must be ‘acceptable to stakeholders’ broadly.

30) (New) Scramble for Africa

Is there a ‘new scramble for Africa’?

31) South Africa

The ‘SA link is important’. ‘SA is a country that accounts for about 30% of the continent’s GDP and is not one you want to ignore’. It ‘remains a key market’ as it ‘has the most mature and sophisticated private sector’, its ‘companies are recognizing that they have no choice but to widen their African business beyond SA’ and ‘are able to fund our African operations mostly from SA in the beginning’.

T.
32) Ten Economies Constitute 80% of Africa’s GDP

The ‘top ten economies of Sub-Saharan Africa (SSA) by GDP, constitute 80% of Africa’s overall GDP’. The 80:20 principle clearly applies and it is important to both ‘prioritize the 3 biggest and most influential markets in each of the sub regions (SA for Southern Africa, Kenya for East Africa, and Nigeria for West Africa)’ as well as look at the other smaller, under served but growing economies.

R.
33) Regulatory Environment

In Africa, ‘keeping dialogue open with the regulator and other key stakeholders is very important’ as you often ‘have had to deal with regulatory issues, cultural differences, skills acquisition challenges, weak business support, poor market information and so on’.

34) Reforms

Though the pace of change is slow, ‘reforming business climates’ on the continent provide a better opportunity set than ever before.

35) Regional Trade

‘Intra-regional activities’ in Africa are a problem especially given that ‘intra African trade is 11-12% vs. Europe’s 60%’! ‘Local companies survive behind high tariff walls’ and even ‘visas can be a tricky issue’. But ‘companies are becoming more regionally focused, seeking new markets’ and ‘a new vision is required for regional integration (beyond tariffs)’.

36) Resources

Africa’s ‘growth rates have traditionally tracked commodity prices’ as a result of most countries having ‘mono product’ and ‘undiversified resource rich economies’ with ‘unlocked natural capital’.

37) Rules of Engagement

Firstly, ‘there is no rule book for Africa’. You ‘have to be prepared to accept the rules and cultures of these countries’.

A.
38) Act Local

One of the ‘cornerstones of success is working with local partners in all markets’ and realizing that ‘while the brand is global, the company is local in every country’. You ‘have to put down proper roots in a country, develop local partners’ and ‘allow yourself an opportunity to learn from people in each market’. ‘Think locally, as you are not dealing with homogenous societies within regions or even within countries. Always ‘have country strategies that underpin regional strategies’, ‘beware of ethnic breakdown of countries’, ‘understand the cultural nuances of local management and ensure fit’ while ‘understanding and respecting local protocols’. ‘Choosing the right local partner is key in Africa’.

T.
39) Technology

New ‘technology has played a positive role’ and ‘mobile phones are driving economic growth by enabling business activity at a new level’. By 2015, ‘Africa will have the highest mobile subscription rate in the world, unleashing a range of opportunities in trade, banking, information flows, consumer messaging’ etc. The ‘rapid penetration of technology into Africa has implications for the way business operates’. There are ‘also big opportunities for leapfrogging in the African business environment e.g. rapid and unprecedented adoption of mobile banking and in other new technologies and media’.

E.
40) Entrepreneurship

African ‘entrepreneurs have a new-found confidence’ e.g. ‘in Nigeria you have the largest group of local indigenous entrepreneurs outside SA’ and ‘people from the rest of Africa have a lot to teach about entrepreneurship’. I see entrepreneurial people everywhere. It ‘always struck me how naturally entrepreneurial people can be. However what they often need is a bit of training and guidance to take their ideas to the next level’. ‘Among these 1 Billion people are many thousands of potential entrepreneurs who can positively transform the economic landscape’ even though the ‘obstacles faced by African entrepreneurs are more onerous than those faced by their counterparts in most other parts of the world’. It may be useful to create ‘partnerships with local entrepreneurs who were able to bring to the table the much-needed local knowledge and understanding of these markets’ and ‘are key to getting products into remote areas’.

Africa’s reality ‘shows the importance of having entrepreneurial people on board who can make a plan’, are ‘adventurous’ and pursue ‘green field undertakings’. You ‘need entrepreneurs and managers adequately equipped to deal with the road ahead’, and ‘to adapt quickly to situations, you must be entrepreneurial’.

41) Equity (Public & Private)

Increasingly, large ‘amounts of private equity are chasing acquisitions’ and ‘new money is continually being raised for Africa deployment’. This is interesting since ‘a lot of African businesses are private companies that find it difficult to access long-term capital’. Most ‘growing African businesses observe that their major obstacles are issues such as management skills, corporate governance, international connections and environmental and social practices’ so the ‘thoughtful capital’ that accompanies ‘PE is playing an important role in building quality companies by assisting African businesses to develop to the next level and position themselves for greater competition and international linkages’. Even ‘AfDB is increasing participation in private equity and the indigenous private sector’. African capital markets are mostly shallow and illiquid with limited debt and equity instruments in most economies outside of SA. While ‘stock markets might provide equity capital but the majority of African companies are privately owned and are not ready or willing to go public’.

42) Entry & Exit Strategies

African success is all about being ‘opportunistic and having ‘the right entry strategy’. In ‘deciding which markets to enter you must look at a combination of macroeconomic factors such as population growth, infrastructure, risk profile, regulatory environment, skills, liquidity, business environment, availability of partners the company can work with’. Growth can be ‘pursued through acquisitions’, ‘agreements with local agents’, ‘franchises’, ‘JVs with local partners’ or some other combination. You may find that ‘there are African countries that do not suit business objectives due to the little opportunity or significant risk or competition’ and it may be best to ‘explore a broader Africa strategy’, starting with your immediate region and then ‘move further afield to other markets’. Either way ‘ the selection of target countries in the expansion program’ can be based on ‘the size of the opportunity’, ‘the growth potential within the sector’, ‘the inherent risk to investible capital’, and ‘then to determine how each candidate country matches up against each principle’.

43) East African Community

The mode for international activity is ‘moving toward large trading blocs like EAC’, ECOWAZ, SADC, COMESA etc. Kenya is one of the fastest growing markets and its ascendance within the EAC has contributed to the significant successes enjoyed therein.

G.
44) Global Thinking

Multinationals ‘need to tailor global technology and materials to meet local needs and environments’ in the process of ‘incorporating the global experience with local innovation’.

45) (Corporate) Governance

It is important to ‘put in place a strong governance and control structure’ as well as ‘find partners with good corporate governance principles’.

46) Government Policy

A ‘government’s primary responsibility is to enable citizens and the private sector to perform optimally’ as the ‘private sector is a driver of change in Africa’. However, the ‘private sector remains small and vulnerable to political whim’ and ‘the heavy hand of government’ tends to suppress ‘economic activity and entrepreneurialism’.

There is an ‘ever present threat of populist political reactions and policies’. ‘Political risk is very high’ and ‘government bureaucracy is a further stumbling block’. It ‘is important to become familiar with what the government’s programmes are in any country in which you operate’ and ‘to be wary of doing large deals close to election time’. Political ‘volatility continues to be a risk despite improvements across the continent’ but ‘with improving governance, Africa is becoming more attractive’.

I.
47) Infrastructure

A ‘major challenge is infrastructure’ and ‘some of the highest growth markets on the continent have the weakest infrastructure e.g. DRC and Angola’. However, the ‘infrastructure challenge is not just about money for roads, bridges, harbors, railways, power plants. Thankfully ‘investment in infrastructure’ is planned continent-wide and e.g. ‘AfDB invests 70% into infrastructure’.

48) Innovation

Innovation is ‘crucial to staying ahead of the game’ in Africa as there is ‘massive potential for innovative services to reach new and under served markets’. This means that ‘corporate leaders and executives need to become agile and innovative’ and utilize ‘fresh thinking in the fight for market share’.

49) (Market) Information

To ‘succeed in Africa is to understand its markets’. A major challenge has been, and still is, trying to estimate the size of markets in order to build capacity accordingly as, ‘market information has been difficult to find’. It is thus critical that your growth and ‘expansion plans are ‘informed by statistics on African growth’.

50) Institutions

While there are some African ‘states with strong institutions’, most still have relatively weak ones. Issues such as ‘standardization, governance, risk management and control must be institutionalized and continuously monitored if you want to succeed in Africa’. And ‘institutions need people who can manage and lead them effectively’.

E.
51) Empowerment

The issue of ‘indigenization is not unique’. It is just called different names in SA, Nigeria, Zimbabwe, Botswana, Gabon, Zambia and other countries. Governments are trying to ensure that people who have a long term vested interest in exploiting a local resource and in improving its value have a foothold in the sector in their own countries’. Thus it is important to ‘take note of indigenization and competition policy’ as there is ‘growing pressure for local people to benefit from foreign investments’ and to ensure that ‘the whole value chain should create opportunities for Africans. There are also ‘increasing pressures for local hire’. Despite the negativity, ‘local ownership also creates a strong sense of proprietorship at the operational level and encourages innovation and entrepreneurialism as well as indigenous investment in the industry’.

52) Economic Openness

‘Trade in Africa is set to grow significantly in response to increasing economic openness and the promulgation of favorable policies’ by many governments.

53) Ease of Doing Business

Despite a legacy of difficulty, there has been a general ‘improvement in ease of doing business’ and a change ‘in terms of attitudes, practices and engagement’. Importantly, ‘many governments have improved the operating environment for private investors’. ‘Doing business in Africa has definitely become a lot easier now’ although there is much room for improvement.

S.
54) Sustainable & Inclusive Growth

Despite the impressive statistics, Africa has experienced largely ‘jobless growth’. ‘The challenge Africa faces is the need for growth to be more inclusive especially in creating jobs’. ‘The vast majority of Africans lack formal sector employment’ and ‘the focus has shifted to the growth imperative and the need to reduce inequality by creating jobs especially among the youth’. ‘Inclusive sustainable growth is the kind of growth Africa really needs’!

Also, another ‘sustainability platform is critical in Africa because it’s going to become more important’ going forward’ with business models having ‘to build sustainable conservation economies and balance financial, social and environmental equity’.

Ultimately, you need to read the book to get a full picture. For those with an African growth mandate, do make sure that you at least considered these 54 insights.                                           If Africa is your safari, then its growth opportunity is the prey. Happy hunting!

References

1. Carmody, P. 2011. The New Scramble for Africa. Polity Press.
2. Games, D. 2013. Business in Africa: Corporate Insights. Penguin.
3. Karombo, T. 2014. Mobile Money – Heir Apparent to Cash the King. Ventures Africa 11. Ventures Publishing International.
4. Okonjo, C. 2014. A Word from the Publisher. Ventures Africa 11. Ventures Publishing International.
5. The Economist. 2010. The True Size of Africa. November.

——————————————————————–
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’, offers Africa growth strategy solutions, and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi

I See Entrepreneurial People!

Movie_i_see_dead_people-769472

People from the rest of Africa have a lot to teach us about entrepreneurship. If you drive through African cities late at night, you will see many entrepreneurs hard at work, with their workplaces lit only by candles or torchlight. The sense of energy across the continent is massive particularly in East and West Africa. Nobody stands still. They are always finding ways to make money” (7)

I have done business in many African countries. My ‘sixth sense’ or my perception beyond my five physical senses, confirms the presence of this restless and haunting entrepreneurial spirit.

Renascent Africa

Entrepreneurship plays a crucial role in economic growth, and is increasingly viewed as a stimulus to wealth creation in emerging, developing, and developed economies as a result of the actions of individual firms (8) (14). Economic changes are the most important determining factor of the African Renaissance (11). The economic situation of Africa is often presented as the main issue motivating an African Renaissance, since there will be no practical change in the life of the great majority without economic development (4).

However, the role of the entrepreneur as an agent of this economic change and growth as promulgated by Joseph Schumpeter is relatively absent from most of the discourse on renascent Africa. Schumpeter considered entrepreneurship as the process by which the economy as a whole goes forward, and that through innovation the entrepreneur is the protagonist of economic activity in general (16). Entrepreneurship has important economic value (19).

Entrepreneurship and Economic Growth

Entrepreneurship is frequently credited with causing economic growth and creating employment and societal well-being. It is one of the main engines of economic growth and accounts for the majority of new business development and job creation in the United States, the world’s largest economy (10). Additionally, a rise in national and firm level productivity can be achieved by enhancing knowledge, innovation and entrepreneurship (9).

It appears that economic growth has been spectacular wherever entrepreneurship has been identified and actively encouraged (12). For example, the four Asian tigers of Hong Kong, South Korea, Singapore and Taiwan have accepted the innovative spirit, adopted entrepreneurship and now thrive economically. Entrepreneurship, innovation and new ventures provide the fuel for the engine of the modern economy (2).

Entrepreneurship and Job Creation

Entrepreneurs have a very important, but specific function in the economy. They engender considerable employment creation, productivity growth and produce and commercialize high quality innovations (19). Start-ups and small businesses have emerged as the driving force of innovation, jobs, competitiveness and growth (1).

South Africa, in particular, and Africa in general, is engaged in robust debate as to how to perpetuate its economic growth, inclusive prosperity and job creation. For instance, unemployment at about 37% is one of South Africa’s most pressing socio-economic problems (5).

A recent McKinsey Global Institute report (2012) states that:

While Africa’s growth has been strong, challenges remain – and the employment challenge is perhaps the greatest…Africa must accelerate the creation of wage-paying employment… (as) economic growth reaches people through employment income…so Africa’s challenge is to ensure that economic growth translates into the stable wage paying jobs that are the key to the continued expansion of the consuming class” (6).

Can African entrepreneurship help?

African Entrepreneurship

Several issues exist regarding entrepreneurship in the African context. For instance, it has been said that, African entrepreneurship is more likely to succeed in relatively small businesses than in large undertakings (3). Other reports have bemoaned the lack of a spirit of enterprise and have partly attributed the relatively low level of foreign direct investment (FDI) in Africa to a shortage of entrepreneurial capacity (18). Although more Africans have education, they do not necessarily have the entrepreneurial and commercial talents to create successful businesses (3) others maintain.

However, a recent major study of African entrepreneurship found ‘exceptional effort, foresight, resourcefulness, thrift and ability to perceive economic opportunity’ (3). Also, a number of Africans have created very large businesses (3) and globally renowned businesses. There is thus little evidence that Africans are lacking in entrepreneurial spirit or fail to grasp business opportunities when they are within reach (3).

Sub-Saharan Africa is in the midst of an entrepreneurial revolution that is renewing the region with new opportunities, increased employment and a robust rise in gross domestic product to one of the highest GDP growth rates in the world (20). A critical question is:

“How can Africa’s recent economic progress be deepened and broadened to achieve continent-wide sustainable growth and development?” (18)

It seems that for African countries to grow and benefit, more of its citizens need to take entrepreneurial risk (15) as entrepreneurs are indispensable to economic development (13).

Photo Credit: The Sixth Sense (17)

References

  1. Audretsch, DB. 2007. The Entrepreneurial Society. Oxford University Press.
  2. Bjerke, B. 2007. Understanding Entrepreneurship. Edward Elgar Publishing.
  3. Elkan, W. 1988. Entrepreneurs and Entrepreneurship in Africa. Research Observer.
  4. Evaldsson, AK, & Wessels, A. 2004. The African Renaissance: A Brief Historical Orientation. Journal for Contemporary History, 29(1).
  5. Evans, J (Eds). 2011. Jobs, Jobs, Jobs. Free Market Foundation. South Africa.
  6. Fine, D, Wamelen, A, Lund, S, Cabra, A, Taontiki, M, Dorr, N, Leke, A, Roxburgh, C, Schubert, J, & Cook, P. 2012.Africa at Work: Job Creation and Inclusive Growth. McKinsey Global Institute.
  7. Games, D. 2013. Business in Africa: Corporate Insights. Penguin.
  8. Ireland, RD, Hitt, MA, & Sirmon, DG. 2003. The Model of Strategic Entrepreneurship: The Construct and its Dimensions. Business Horizons.
  9. Lambooy, J. 2005. Innovation and Knowledge: Theory and Regional Policy. European Planning Studies.
  10. Lumpkin, GT & Dess, GG. 1996. Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance. Academy of Management Review.
  11. Matthews, S. 2003. Nepad: Realizing the African Renaissance? Politeia.
  12. Merrifield, DB. 1993. Intrapreneurial Corporate Renewal. Journal of Business Venturing.
  13. Piketty, T. 2013. Capital in the Twenty-first Century. Harvard University Press.
  14. Salgado-Baida, H. 2007. Entrepreneurship and Economic Growth: An Empirical Analysis. Journal of Development and Entrepreneurship.
  15. Schramm, CJ. 2008. Toward an Entrepreneurial Society: Why Measurement Matters.
  16. Stevenson, HH & Jarillo, JC. 1990. A Paradigm of Entrepreneurship: Entrepreneurial Management. Strategic Management Journal.
  17. The Sixth Sense (film). 1999. Directed by M. Night Shyamalan. The Kennedy Marshall Company/Barry Mendel Productions. Hollywood Pictures.
  18. Van Niekerk, LK. 2000. Economic Aspects of the African Renaissance. In Solomon H & Muller M (Eds) Contributions towards an African Renaissance. Africa Dialogue Monograph Series 1.
  19. Van Praag, CM & Versloot, PH. 2007. What is the value of Entrepreneurship? A Review of Recent Research. Small Business Economics.
  20. Xavier, SR, Kelley, D, Kew, J, Herrington, M, & Vorderwalbecke, A. 2013. Global Entrepreneurship Monitor South Africa 2012 Report. Global Entrepreneurship Monitor.

———————————————————————————————————
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’ and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi

Between A Rock & An Entrepreneurial Place!

rock hardplace Between a Rock and A Hard Place

If you are caught between a rock and a hard place, you have a dilemma. You are in a position where you have to choose between unpleasant or difficult alternatives. Whatever choice you make will not be an easy one. You’re damned if you do and you’re damned if you don’t.

aron ralston ‘Between a Rock and a Hard Place’ is also the name of the 2004 autobiography of Aron Ralston. The book recounts Ralston’s experience of being trapped in Blue John Canyon in the Utah desert and how he was forced to amputate his own right arm with a blunt tool in order to free himself after his arm became trapped by a boulder. Inc.com has called Ralston’s book one of seven “great entrepreneurship books that have nothing to do with business” (1).

Being unemployed is in my mind akin to being ‘stuck between a rock and a hard place’ or being ‘caught between the devil and the deep blue sea’ as the alternative saying goes!

Rock of Unemployment

Rock-and-Hard-PlaceBeing out of a job is probably one of the hardest things one can experience. Like a rock, it can stare at you; immovable and seemingly daring you to do something.

Sometimes, and mostly for young people coming out of school, or people who have been out of the job market for a while, one may find oneself between a rock, a hard place and another rock! How so? Well, you need recent relevant work experience in order to get most jobs on the one hand, but you also need a job to get the required experience. Yet another dilemma or ‘chicken and egg’ situation.

Like a rock it can be moved.

Hard Place of Entrepreneurship

rock hard place

Or you can step aside it to avoid its impact. One way to partly obviate the effect of joblessness is through self employment and the pursuit of an entrepreneurial venture. It is not an easy option to become an entrepreneur as starting and growing a business is not easy. The risk of start-up failure is high, and when that happens, the stigma attached to this may make it difficult to go back to formal employment, even if you wanted to. One can become both unemployed and unemployable in the eyes of the all-knowing HR functionaries!

Entrepreneurship is as daunting for most as it is challenge. It is hard.

Stuck Between Unemployment & Self Employment?

Both situations are hard to contemplate. And while anyone can suddenly find themselves without employment and not everyone is innately wired to become an entrepreneur, when the going gets tough, the touch get going. You have to make a living legally, and in the immortal words of Malcolm X ‘by any means necessary’! So what can you do to extricate yourself from a tight spot before you almost self-destruct like Aron above?

1. Smash the Rock!

smashed the rockBe like this kid. When faced with joblessness, try to overcome this by actively hunting for and hopefully getting a job. That is how you smash the rock conventionally!

2. Face the Hard Place!

leap of faithIf you can’t get a job, create one for yourself and hopefully others down the line. Move from unemployed to self-employed and from job seeker to job creator. Identify an unmet customer need or problem, formulate a uniquely effective way to solve it, and execute through an innovative business model (1). That may be a way to deal with the hard place.

Take a leap of faith. Jump into the deep blue sea and swim like hell.

References

1. Murphy, W. 2012. 7 More Great Entrepreneurship Books That Have Nothing to Do With Business. Inc.

———————————————————————————————————
Alvin I Chikamba CA (SA) MBL (UNISA) is the founder and Chief Executive Officer of The OutVest Group (Pty) Ltd and of Entrepreneurial Confluence Strategists (Pty) Ltd, an entrepreneur focused business whose purpose is to grow organizations and create jobs through its proprietary entrepreneurial growth strategy. He is passionate about his new saying that ‘Afrika Is The New Black’ and can be reached at entrepreneurialconfluence@gmail.com or follow him on LinkedIn, his blog entrepreneurialconfluence.wordpress.com and Twitter @strategoi