What Holds Us Back: Hesitance

With remarkable consistency, successful African executives say U.S. corporate engagement in Africa is characterized by more hesitance and a lower tolerance for uncertainty than that of their global competitors.

Vimal Shah feels the opportunities for U.S. firms are vast, but observes resistance on the part of some U.S. firms to undertake the challenges and uncertainty of Africa:

The U.S. has definitely not missed its opportunity yet. But I don’t see the Americans displaying the aptitude or the attitude to win in Africa. The biggest challenge I find is that Americans are in their comfort zone. They are comfortable where they are, and ask why bother with all of this sort of thing in Africa? You don’t seem to have many more adventurers, the ones going to explore things. My sense is that today’s U.S.-based global firms want everything given. “Until the roads are right, until the power is done, until the political systems are right, we cannot come.” I find they are waiting for perfection.

In Vimal’s view, one driver of American reticence in Africa is the way in which managerial decision making and authority are organized among some U.S. companies:

I used to be the chairman of the Kenyan Association of Manufacturers and we had American companies who were already operating here. A U.S. consumer goods company was one of them. When we turned to doing some joint planning, one of the fellows from their Africa team said, “If we were working for you we could authorize these things. As it is, we report to Egypt. Egypt reports to Switzerland. Switzerland reports to the U.S.” That company is one size fits all.

There is a U.S.-based global bank that has been in Africa for decades. It has all it takes to succeed. They’ve got the technology, they’ve got fantastic assets here, and a big network, but because they are losing out on opportunities. They are giving it away because the guys that make the decisions are sitting in the U.S. and may have never been to Africa. They will read the papers and say, “What is the GDP growth of each country? ” and look at the net growth. Then they will look at the small economies, and tick them off, “Not interested, not interested.” So they will have a presence, but not do much. There is no aggressive growth strategy. As a contrast, take an Equity Bank and James Mwangi. He started from zero and today he has built up a fantastic model and a new niche. The U.S. bank looked at the same customers and said, “No, no—that’s not my market. We’re only working for multinationals, for the big boys.”

Chris Kirubi diagnosed what nearly a dozen African CEOs subsequently pointed out. He stated his perspective even as pictures of the American president and U.S. Constitution rolled by on his screensaver. “Americans have to have a positive mind, ” he said. “You have to see opportunity and be committed. You have to act but you do not. Of course, there are many reasons why not to succeed and why not to act.”

Like Chris, Tony Elumelu could not be a bigger fan of the United States. He conducted his mid-career training in the U.S., opened United Bank of Africa’s first office in the U.S., and sits on an advisory panel to the U.S. government on African entrepreneurship. “I respect the United States tremendously, ” he said, “but with all due respect to my American friends, many Americans do not travel, and so the opportunities to see beyond their borders are very limited.”

By contrast, Cummins’s Tim Solso traveled. He traveled when assessing South Africa for Cummins as a young man in 1981. Twenty-five years later as CEO, he was keen to find Cummins’s next big growth opportunity and traveled again... a lot. Tim described where, and why.

Due to some very far-sighted decisions by CEOs before me, we were already well established in India, China, and Brazil. Those decisions were making me and the company look great, and I had a sense that Africa could be the place that I could do the same for the company ten years from now. So, I went to look. I went to South Africa, Zimbabwe, Zambia, Tanzania, Kenya, Egypt, Morocco, Senegal, Ghana, Nigeria, and Angola. One trip led to another because I didn’t want to make assumptions that could be desperately wrong and in order to do that, I think you needed to visit all five regions.

If you’re sitting in Columbus, Indiana, and never visit Africa you’ll never win there. Before we launched our current joint venture in Nigeria, I remember thinking that Nigeria was a corrupt and dangerous place and not to be dealt with. Well, if you go into Nigeria, there are fifty million people that rely on standby generators to get their electricity. It’s a huge, huge market. We needed to think about how we operate safely, how we put in ethical safeguards, so we can tap it. You have to flip the equation. How do we work there?

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