The zeitgeist on Africa is quite positive and it’s no surprise that Jonathan Berman’s latest book is entitled Success in Africa. But far from riding the current wave of optimism about Africa, the book offers a realistic account of what it takes to run a successful business in Africa.
Berman, a strategy consultant and Harvard Business Review blogger, starts the book by setting the stage for more in-depth discussion on what it takes to achieve commercial success in Africa and he does a good job at it. It’s always surprising to see a map showing the true size of Africa, which is as large as the U.S., Mexico, China, India, Japan, Western and Eastern Europe combined. Few will pass his quiz on the number of companies in Africa with $1 billion annual sales. Many will appreciate his discussion of the importance of non-resource sectors in driving growth in Africa, although I am more pessimistic on the diversification of African economies. Three quarters of foreign direct investment still goes to the resource sector and new discoveries mean that more countries in the region are likely to be increasingly resource-dependent.
Success in Africa takes a close look at commercial success in Africa by telling and discussing the personal stories of CEOs at well-known multinational companies and less internationally recognized companies. Listening carefully to captains of industry doing business in Africa is an essential input into any policy that seeks to make the Africa Rising story a sustainable one. As recently noted by Dani Rodrik, sub-Saharan Africa is less industrialized today than it was in the 1980s. In addition, private investment in Africa’s modern industries, especially non-resource tradables, has not increased and remains too low to sustain structural transformation.
Although one could argue with Berman’s focus on business leaders at large companies in a continent where the informal sector and small and medium-sized enterprises employ most people, the book offers a welcome perspective on Africa. What captains of industry have to say is a critical contribution to the debate on the future of Africa and complements well the existing “lenses that distort our vision of Africa today.”
Overall, two themes in the book caught my attention. The first is that the private sector can quickly leverage good public governance to plan, finance, and execute projects in Africa. This message is not new but it is good to reinforce it. Listen to what James Mowria, the CEO of Centum Investments, says on Kenya’s Vision 2030: “a strategy with broad support from business, government, and civil society, articulated in specific projects and actions that are not expected to change with each election.” The vision gained credibility as the government planned for key infrastructure projects and executed them. Mowria says that the existence of a credible plan helped him raise financing for a $150 million project: “first of all that document exists—people know what the plan is. Then, you can see this is what has happened already, this is what is in progress, this is what is planned for. It enables me to have that conversation in confidence.”
The second theme is that success in Africa lies in bridging gaps. “Many needs in Africa go unmet not because the solution doesn’t exist or can’t be afforded. Rather, they go unmet because of bridgeable gaps: gaps between buyers and sellers; between governments and their constituents, between companies and their communities. Business leaders succeeding in Africa close those gaps. One of the most valuable gaps to close is the literal one, distance.” Berman uses a number of examples to illustrate how successful businesses in Africa have bridged these gaps. We hear about two innovations by GE: a battery adapted to power African mobile towers and a handheld ultrasound which uses a rugged little solar panel. We also hear about Equity Bank’s adoption of armored trucks as mobile banks going to villages and its use of local shops for customer-facing functions. We read about SABMiller’s hybrid products, lager-type beers made with a high proportion of sorghum and cassava which have longer shelf life. We discover a mobile payments solution to distribute a fertilizer subsidy directly into the hands of farmers in Nigeria.
If there is one shortcoming of the book, it is the omission of stories or case studies on the role of banks and capital markets in financing successful companies. For instance, Mworia’s company, Centum Investments, is the largest quoted investment company in East Africa and it would have been useful to get his insights on the domestic stock market in African countries.
