The Right Lens: A Differentiated Whole

Understanding the distinctions between Africa’s many parts is critical to understanding what success means in Africa. Cognizant of these distinctions, many business leaders also pursue success in Africa with a continent-wide lens.

The most obvious reason is economies of scale. Tom Gibian first observed them when he was working in Asia, before he began work in Africa:

In Africa, you can’t be a little pregnant. The Asian shipping lines and logistics firms saw this early on. Their business just didn’t work if they had to give up their manifests for last-mile transport. So, once they decided they were coming to Africa, they were all in. They made sure they could transport to every major port. The same is true in my business. We found that, to build a world-class private equity business, you couldn’t go small. To attract the right capital and world-class talent, you couldn’t go small. You had to do the whole continent.

That logic was also compelling to Tim Solso when he was looking for the next significant growth opportunity for $18 billion engine and power generation manufacturer, Cummins, Inc. Square-jawed, mountainous, and rugged, Tim was born in the coastal state of Oregon, but is very much a product of the American Midwest. After attending DePauw University in Greencastle, Indiana, he earned a Harvard MBA, then returned to Indiana with Cummins, which is based in Columbus, Indiana. Tim rose to the top at Cummins and became CEO and chairman in 2000. “In my last five years with the company, ” he said, “I wanted to find the next growth area for Cummins, one that the company ten years from now could benefit from.”

After some intense investigation, Tim determined that growth area was Africa. It was during that time that I met Tim, and together we met some two dozen CEOs from all corners of the continent (Tim was explicit that he wanted to look at the whole continent). Years later, I asked him why he did not focus on a couple of big national markets or one regional market. “Never an option for me, ” he said, in a clipped tone that is all about efficiency. “My goal was to move the needle for Cummins. It had to make sense from that perspective.” Like ECP’s Tom Gibian, he found that a continental vision helped to attract the talent Cummins needed to succeed. “The guy I asked to lead us in Africa is a phenomenally capable talent in our organization, and was previously leading distribution in Asia. For him to come and attract the team he wanted, the opportunity had to be big: all Africa.”

While economies of scale are compelling, much of that benefit could be realized at the regional level. Operating in the 140-million-person market of the East African Community or the 380-million-person market of COMESA would probably yield the economy of scale necessary to compete, while gaining the advantage of market focus.^*

Ultimately, the best reason to approach Africa as a whole is because that is increasingly how Africans see it. Mo Ibrahim saw the economies of scale that appealed to Tom at ECP and Tim at Cummins, but also sees much more. “There is something common about the African people, ” Mo told me over dinner. “While politically there are fifty-four countries, there is some form of an African identity.”

“I don’t think our company would have been a success unless it became an all-African business, ” Mo said. “Whenever I meet somebody else in the room from Africa, they will come to me as an African. Not as Mo Ibrahim, not for what I’ve done, but because they look at you as an African, and they’ll say or feel ‘Oh, hi, brother.’ There is this something on an emotional level that binds us. It allowed Celtel to create a brand across the region.”

Today, African identity is a critical feature of politics, trade, and branding. Bharat Thakrar makes his living understanding branding across Africa. His views on African identity are captured in how he describes an exceptional event that resonated broadly across the continent:

Brand aspiration in Africa is different than in the U.S. or Europe. It’s being proud of who I am, proud of being African. It’s a sense that it’s our time now. The best example was during the last football World Cup. The last African team standing was Ghana and the whole continent was supporting Ghana. Scangroup had just set up a business there and in our internal messaging system everyone was sending messages to our Ghanaian employees from everywhere in the continent, “We are with you.” Suddenly every Ghanaian got support from every African that he knew on the continent. It was so emotional for every African that Ghana win. You will not find that in a European country, nor in North or South America, for that matter.

At Dalberg, about 50 percent of the global staff are in Africa. We experienced exactly the same phenomenon.

ECP founder Tom Gibian, who first went to Africa after completing his MBA at Wharton, has observed the change in African identity over time. “If you went to Africans fifteen or twenty years ago, ” he told me, “they would have said ‘I am from Gabon or I am an Ijaw, ’ and that was the limit of their ambition. That was two generations of African business leaders ago. They relied on political relationships to secure advantage in the market. That really was something you could do at the national level, but only at that level. That’s not the ambition or the value proposition of African business leaders today. They base it on competitiveness, which can cross boundaries. If you go to business schools now and ask any African students what their ambition is, if they’re going back home, ^* it’s for all of Africa.”

Ken Njoroge embodies the competitive and continental ambition Tom describes. Ken is the CEO of Cellulant, a Nairobi-based developer of mobile commerce solutions for banks, airlines, merchants, and governments. Ken and his partner started the company with a desk, a whiteboard, and a credit card. Ken still sits at the same desk. The whiteboard is wearing through in places but it’s still in service next to the desk. Today, Cellulant operates in eight countries and is among Africa’s leaders in mobile payment solutions. KPMG called it the top mid-sized company in Kenya.

Ken’s start in life was tough. “My dad wasn’t around from an early age, and my mother was strict, so we worked.” He sees growing up poor as an asset. “When we were in school we had no books, so my mom said that just meant that my brother and I had to be able to listen to the teacher give the lesson, and understand it the first time. I still have good recall because of it.”

Cellulant is based in a country of 42 million people, and operates in the East African Community, a market of about 140 million. For Ken, that’s too small. He explains:

From the outset, I wanted to build a world-class business, and it became clear to me that if you want to build a world-class business in Africa you need to address a market that’s larger than your borders. Early in my career, I worked with MTN. I could see it was a world-class company that went right across Africa. That really caught my attention. It was great for me to see in real time a business that started from a humble beginning and then went out across the continent and achieved a level of respectability and brand presence and brand recognition. Those were very formative in shaping the theater of my ambition.

That ambition can now be realized, in part because of the advancement in connectivity described in chapter 2. “Because of the availability of data and communication around Africa, ” Ken says, “we talk about our presence in Ghana and Nigeria in almost casual terms.” It wasn’t always the case, Ken pointed out, laughing. “You know, when I talk with some of the older generation and I tell them we have an operation in Nigeria. They say, ‘What, in Nigeria? How do you manage to do business? ’ I say, ‘Look, the amount of effort it takes to get into Nigeria is the same amount of effort it takes to get into Rwanda or to get into Uganda, but the payoff is not the same. It’s far higher.’” ^*

African identity is driven by many factors. One that’s little discussed but particularly relevant for retail and consumer brands is the legacy of failed institutions at the national level. In the absence of national parties and governments that deliver results, consumers find brands that deliver for them, even across national boundaries. Bharat Thakrar explains:

People feel they have been deprived. First they were deprived or let down by the colonials. Then they feel they were let down by their own political group or political class who took power with promises to bring schools, education, hospitals, and then ate the money themselves. Then an opposition group came to power with the same result, and people became very cynical about the political class. Now they feel these guys are just a waste of time. That created a vacuum, where these big Pan-African brands came in and started playing the roles that parties and governments were not playing to the same extent, and affinity started going more toward the brand rather than the party or what have you.

In this particular regard, it may be easier for companies and brands to gain adherents across borders in Africa than in other parts of the world, where the competition for affinity is stronger. Bharat concluded with an observation that may be more whimsical than telling, but it sticks with me: “Very few Africans can trace the outline of their country, ” he said, pulling out a piece of paper and pencil. He began to outline, looking up at me, “but we all know what Africa looks like.” He handed me a perfectly rendered outline of Africa.

There is no more visible corporate expression of a whole Africa than the mobile phone giant MTN, which operates in nineteen African countries. The man who helped build that empire, Phuthuma Nhleko, is mentioned as a model by many of the other business leaders in this book. Fifty-three years old, Phuthuma is erudite, relaxed, and hip. He traces his consciousness of a whole Africa to the writings of African intellectuals Kwame Nkrumah, Robert Sobukwe, and Stephen Biko. He also credits his student days in the United States, specifically to studying at Ohio State and at Atlanta University, the oldest of America’s historically black colleges:

When I think back to my early twenties, Atlanta University was the crucible of a worldview that looked at life differently. The ethos of the institution was that history education should not be focused only on the period that commences AD 01, that you need to go back to 4000 BC or longer. If you go back to 4000–5000 BC you go back to the older civilizations like Egypt, and you are enlightened about other states and peoples and the depth of civilization around Egypt. If I were minister of education in Africa for a day, I would legislate a set of books of the likes of Cheikh Anta Diop’s The African Origin of Civilization. At the very least, even if one is at variance with his theory, it puts a very different perspective on one’s worldview and what established media would have developing Africa believe as a reflection of its own image and position in the world.

It takes away the damaging, incorrect, and highly peddled notion that African people just “emerged” yesterday and contributed nothing. Because that is a mere sliver of purposefully selective recent history that is uneducated and makes the misinformer feel a sense of subliminal superiority. You need to go far back. The same simplification and ignorance of Chinese history is promoted in today’s mass media. They give the impression that China has just arrived. Well, China has arrived before; this is just the second or third time, right? I think those are very important perspectives that shape how young Africans begin to see themselves. For me as a twenty-year-old, it started shaping my mind about Africa, where it has been, what it could be, where it fits in the world and where it needs to go.

The emergence of business leaders like Phuthuma, Mo, and Ken is manifesting in increased African investment in Africa, a prerequisite of continental growth. That change can be seen in figure 3–5.

Figure 3–5: Growth of intra-African foreign direct investment

Source: Ernst & Young. Africa by the Numbers. 2012. By permission.

According to Ernst & Young, the number of investments in Africa by Africa climbed fourfold from 2007 to 2011. In the same period, intra-African investments as a share of the total number of investments in Africa doubled, from 8.3 percent to 16.9 percent, ⁶ an early indication of Africa’s growing belief in itself.

As African business steps on the world stage, talented African managers are returning home and emerging domestically. They are expressing greater faith in their opportunities and helping to define an African identity. Like leaders of emerging continents before them, they are also defining an approach to capitalism appropriate to their time and place.

CHAPTER 4

Africapitalism

You can’t ignore the markets where there is nothing. Those are the markets that buy everything.

Dr. Chris Kirubi, Chairman, International House Limited

Africa needs everything, and success in Africa comes from filling that need. That seems a straightforward equation, but it has eluded many companies that have operated in Africa, including many African companies. James Mworia recalls an experience that captures the phenomenon well. When this story took place, James had already been to university, become a CPA, and was working full time at Centum:

I remember when I was an employee of Centum in 2001, I got a letter from my bank, Standard Chartered Bank. They said, “Based on your balance and the activity in your account, you’re not qualified to be an account holder in this bank. You have so many days to collect your money, ” and they closed my account. That’s not a long time ago. Individuals like me who were working for a listed company could not even afford to be banked. What happens to everybody else?

Figure 4–1: Map of Human Development Index Scores

Source: UN Development Program, provided to Wikimedia December 18, 2011.

In late 2012 I met the CEO of a U.S.-based global consumer and investment bank that was reported to have significant plans for expansion in Africa. “Yes, we’re growing our presence in Africa, ” the banking CEO confirmed. He summarized the company’s plans to service global corporate clients as they expanded across the continent. I asked him if he planned to bank anyone else while in Africa. He looked at me quizzically. “Like who? ” he asked.

Africa can look like a place where only the few can buy anything. The World Bank’s calculation of gross domestic product per capita rates Africa the lowest of any region in the world. Figure 4–1 shows Africa’s relative place in the human development index (HDI), a compilation of income, health, education, and other socioeconomic metrics.

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