My good friend Ravi Patel recently took a trip to Africa to explore some business opportunities and get an insight into his family roots. As is typical of a Ravi adventure, he managed to get himself into some situations during this journey such as getting malaria and nearly getting shot. Here he shares some of his learnings and thoughts!
Africa! Africa! Africa!
So it seems that after 100,000 years, give or take, we humans are now flocking back to where it all started. Having migrated out of the vast plains of the African sub-continent in search of something else, whatever the thinking was at the time, it seems the tides have turned and now people from all over the world are moving to Africa, as are the many Africans who left their homelands in the yesteryears, also known as the 'repats'. So I decided to visit Kenya and Uganda in East Africa to try get a sense of what is going on and why the huge people migration and buzz. There are some pretty broad generalisations below and where not backed by data, the sources were based on conversations and my observations. So no death threats please.
Even before landing on the huge-ass continent (big enough to fit the landmass of China, USA, India, Japan and most of Europe), I was bombarded with commentaries and economic reports raving about the progress of the sub-Saharan region. For example:
- According to the International Monetary Fund, Africa will have the world's fastest-growing economy during the next five years of any continent, and that seven of the world's ten fastest-growing economies will be African.
- According to the United Nations World Population Prospects report, over the next 40 years, Africa's population is set to double with Africa likely to replace China as the biggest contributor to the global workforce.
- Infant mortality, health indicators and educational attainment have all improved, of course in some countries more than others.
- Africa has 60% of the world's uncultivated arable land and it is widely held that we are only at the tip of the iceberg in terms of discovering the resources that Africa has, making this prime territory for exploration for the global economy.
We have to remember that this growth is starting from a low base, and there are quite notable regional differences for each economy based on their specific circumstances and histories, but the outlook is definitely bucking the global pessimism and there is a sense of optimism and energy that is is all too reminiscent of the boom in the tiger economies of south east Asia.
In this post I am not going to talk directly about the economic miracle that is happening, or the rush for all the natural resources, or the investment invasion by multi-national corporations, or the reasonable successes in tackling poverty, or alternatively the more negatively perceived issues such as political corruption, human rights violations, disease, crime, conflict, the latter all of which I believe are not always specific to Africa. (I am more than happy to talk about this in private though). I plan to share some of my personal experiences which I hope gives you an insight into some of the realities of this fast evolving land that seems to be getting more and more attention.
1. Setting up business:
I primarily went to Kenya and Uganda to explore opportunities in the region in the renewable energy space, an area I am personally interested in. The region is growing at such an aggressive pace that the current energy supply, dominated by electricity, petroleum and woodfuels, is struggling to meet the needs of households and businesses alike; access to the electricity grid is limited to the main cities and towns, reliability is poor with regular outages, rural dependance on firewood is leading to deforestisation damaging the wildlife ecosystem and the cost of electricity and petroleum supply is spiralling out of control and holding back domestic business from competing internationally. The good news is that in the most recent Energy Act in 2006, the government made commitments to address these issues and more importantly, explore alternatives such as biomass and other renewable sources; sadly, there appears to be limited progress. I hope to help fix this. Having met with several mid-sized industrial firms, I was able to confirm that energy situation was a real issue and there were no real alternatives to consider or people to turn to to help. Now with major advancements in technologies helping to lower the cost of access, the return on investment for various energy alternatives are now presenting becoming a real option. Renewable and self-sustaining sources of energy will need to be considered and implemented if businesses want to survive and compete internationally.
Some specific tips I received from business people about succeeding in Africa:
You need to invest in people to be productive – Accessing human capital remains one of the biggest issues for any business in Africa. Not necessarily a surprise given the lack of depth and experience of most commercial industries, it remains an issue holding back companies from reaching the industrial productive capacity of the Asian developing economies. It was often highlighted to me that the average blue collar worker in Kenya or Uganda may not exhibit the same disciple and fear of underperformance to their Asian counterparts who operate in a culture of 'Face' where there is great personal shame in embarrassing or disappointing your counterpart or boss. There isn't that same industriousness in Africa today and as a result, one's expectations of productivity needs to be managed. The challenge in new developing African economies to is to understand what are the worker's needs and positively motivate them through investment in their skills and helping them develop their ambitions with clear career plans. This will certainly not happen overnight, but given the opportunity that is firmly accepted, the investment in people is not really an option.
Bureaucracy and corruption – People will often assert that Africa is a wretched and high risk place to do business, plagued with corruption. The 'corruption', which can appear in many guises, whether, bribery, nepotism, abuse of human rights, etc., I would challenge, exists in many developing economies.There is however evidence to suggest that several major economies in Africa are improving significantly and in some cases, better than established industrial economies. According to Transparency International's Corruption Perception Index, 35 African countries rank ahead of Russia. A recent World Bank report on the ease of doing business point to rapid improvements in many jurisdictions with 14 African countries ranked ahead of Russia, 16 ahead of Brazil and 17 ahead of India. And Africa appears to be rapidly democratizing. In recent years, we have seen a number of democratic elections, successful referendum in South Sudan, the Nigerian election, the peaceful transfer of power in Zambia and supposedly fair elections in Zimbabwe. We need this momentum to continue and with growing Pan-Africa governance from associations such as the Africa Union (AU), regional governance from the East Africa Community (EAC) and with greater accountability to the international community, we can be hopeful that Africa is on a steady path to creating a better landscape for business. So the advice I received was to play with a straight bat, an old British cricketing term to describe being honest and operating within the rules, and don't be lured into the world of 'privilege payments' because once you get in.... well you can imagine.
Execution, “Just get it done!” – In most of my meetings discussing alternative energy strategies for mid-sized companies, the one consistent response was (summarised for you), “I would be more than happy to work with you if you just get the damn thing done!” There seems to be a culture and tolerance of underperformance in Kenya, supposedly not dissimilar in other countries in the region, which has made business owners distrusting and conservative in their ambitions. Companies would pitch ideas to them and not follow up. Contractors and suppliers would fail to meet commitments without remorse. As a result, in many cases, businesses said customers would rather deal with international companies than face unreliable local firms. Due to some of the reasons I outlined above, doing business in Africa is not easy, but the challenge now remains for Entrepreneurs and Business Heads to raise the standards of business etiquette and raise the importance of customer service. Again, this will take time and require much investment by the government and private sector to increase awareness of service standards. Some ideas for this could be through adopting a culture of naming and shaming more cases of failed performance through public media to get business leadership to take ownership of their failures, strengthening small claims courts to enforce service contracts (set up in 2006 but arguably could work better), developing service sector industry standards and raising awareness through tertiary education platforms such as training colleges, business schools, etc.
In summary, the business landscape in Kenya and several other economies, remains full of opportunity but this will not be realised unless some fundamental issues are addressed, of which I have outlined only some that I experienced in my exploration. That being said, there are clear signs of success which need to be recognised and built upon across all sectors. A good example is M-Pesa in Kenya which allows mobile phone bank transfers which has nothing short of revolutionised payments and therefore personal and commercial interactions, especially rural access. Just two years after the mobile banking system M-Pesa was introduced in 2007, 40% of Kenya's adult population had become customers. That is a great example of the development of a local solution for a local problem leveraging local technology. And evidently, executed well. We look forward to more similar African successes.
2. Changing times:
Another sign of the development of Kenya is the wave of immigration of multi-national opportunists and 'repats' coming to live, work and play, bringing their high-maintenance demands but more positively, brining their positive influences. Kenya has a deep history of foreign influence, initially with arab traders in the 1st century AD, and then followed by the Greeks, Persians, Indians and even Indonesians and Chinese had made their way to the East African coast by 500AD. Following much European colonial interest, in 1895, the region had been taken under complete control by the British East Africa Protectorate. In fact across most of Africa, European colonists had exerted their presence and shaped much of its history over the 18th and 19th centuries. That is until the wave of independence movements in the sixties followed by decades of conflict, crisis and economic mismanagement that left many nations in a state of crisis and created many of the social issues that exist and are being corrected at great cost today.
With the recent influx of ex-pat 'enthusiasts' and the growth of tourism, some observable benefits include a few cool restaurants cropping up – an important need of mine! Fancy an authentic chinese meal, fine modern japanese dining, wholesome lebanese meze, home-made italian, perhaps an organic vegan restaurant...? Plenty of options to keep your taste buds intrepid. I particularly liked Le Rustique (a great open air French creperie), Bridges Organic Health Restaurant (a local organic food gem), Hashmi's BBQ (great Indian grill) and I heard about so many more. Nairobi is getting there, but maybe not the beyond the capital. And then there are the local delicacies such as ugali (a cornmeal staple to accompany any dish), some Nyama Choma (roasted meat), Matoke (cooked plantain) to name a just a few, not to mention all the indian influenced local treats such as chapatis, samosas and bajias. Hopefully, the wave of new restaurants keeps pace and continues filling the bellies of all those hard working Africans and ex-pats.
There is also a cool but small social and nightlife scene. You just need to make sure you take care to stick to the right areas at nighttime. With the growing wield of the middle classes, the swarms of foreign workers and tourists, there are a handful of few cool bars in town to keep you entertained all through to the small hours. I hit a few bars in town and was pleasantly surprised to see the DJ box filled by a visiting Argentinian house DJ, in the crowd were business people across a variety of industries, tech entrepreneurs, United Nations development workers, a local record producer, business school students, safari tourists, backpackers, and who knows what else was there lurking. While I appreciate, the social and party scene might be pretty limited today, you certainly won't be missing out on the latest music hits, party culture and social buzz. A bar called Havana Bar was pretty awesome on Thursday night.
To pick one foreign culture having a significant impact on Kenya, I would have to isolate the Chinese as being the most interesting. China is Africa's biggest investor with more than $56 billion in investments, almost half of its total Foreign Direct Investment, and with a wave of Chinese migrant workers now starting to settle down across the region, it is interesting to see the influence. The Government in China has been very proactive to support the development of the region, in particular, the large infrastructure projects such as the building of roads, railway, universities and hospitals. Of course, all this is in return for access to the continent's natural resources such as oil, metals, minerals, agricultural products. The concern is that the foreign counties rampantly exploit the African nations and the citizens do not get a fair return on what essentially belongs to them. This equity and responsibility for redistribution lies with the government and we can only hope that fair value is being delivered to the people.
Even at the smaller business scale, it is rumoured locally that the Chinese government supports any Chinese national wishing to relocate to Africa and provides free credit lines to sell Chinese products. This obviously not popular with the locals who can pay up to 30% interest for credit lines to buy their stock. And on TV, I even saw a Chinese vicar or pastor preaching a sermon in Nairobi on a state channel which was being translated into Swahili. That certainly got a giggle out of me. And then there are the Indians, Russians, Brazilians, Korean not to mention the long-time presence of Europeans all in the race for African resources and riches, and all increasing their presence and influence in the region. It will be interesting to see what the place looks like in 10 or 20 years.
3. Safety and corruption:
Now safety is a serious issue in Kenya. Before arriving, I had heard horrific stories of crime and terror which I had been warned to prepare for. While the general consensus is that overall street crime is more under control in certain more affluent neighbourhoods, than in previous decades, it is still wise to avoid the slum areas and definitely take extra care in the dark. Unfortunately, the city of Nairobi, and many other large cities in Kenya, have become a magnet for rural villagers wanting to find work and in the process falling into a trap of urban poverty, violence and street crime. Oddly enough, neighbouring Uganda was a far cry from the threat of Kenya and further justification that the situation was not anything endemic to the region but symptomatic of an underlying social issue of overpopulation, poverty and lack of effective police control.
I unfortunately had an incident where while walking through a small slum area just outside the town centre (I thought I would take the chance given the proximity to the city centre... BIG MISTAKE), I had my first insight of what they call “Nairobi Hustlers”. I was walking from the Hotel to the Business city centre, which is a 15 minute walk past a busy local market, when I was approached by three guys in normal street dress claiming to be police and that I should stop. After asking to see their IDs, the card shown to me appeared to look like a photocopy so I made the brave decision to break away and run back to the hotel. I stand by this decision given the likelihood that they were genuine cops was pretty low and the consequences if they were thugs was not good. After getting away and sprinting about 500 meters, away from the Kenyans :-), I was close to the hotel and slowed down. Then suddenly, I was grabbed from behind and quickly handcuffed :-(. Not convinced that they were police, I dragged the guys closer to the hotel where I could reach someone to come and help. Quite a spectacle. I managed to shout over to some guests outside who called over the hotel attendant who came rushing to help me. I was relieved until his first response was that I should go with them. This was not looking good at all.
I was then taken down the road and further, down a quiet alley by 6 men towards and then into a wooden shack. Again, not good. In the shack, the men shouted and repeated, “Why did you run?” They then proceeded to pull their guns out and motion how they would have shot me..... if? They explained that they thought I was part of the Al Qaeda network who were known to be a threat in Kenya. They showed me photos on their old battered 2G phones of faces of known Pakistani terrorists, none, I say with full humility, resembled me at all. I repeatedly apologised for running after realising very quickly that my justification that they looked like they were going to attack me was not really a wise thing to do, arousing only more aggression. After 20 minutes of rather unprepared and silly questioning, shouting, a tad of mockery and then going through my possessions, the hotel attendant quietly approached me and whispered that I should pay them some money to make sure I got out quickly. I did not hesitate and put my hands blindly into my wallet and pulled out a few notes. Without even counting, I handed then over and I packed my possessions and was let out of the shack. I dashed back to the main street. Turns out I only gave the equivalent of 15 dollars. Why did they not take more? Not many things made sense but that is the reality of slum life.
This whole ordeal was an unfortunate incident where I saw and experienced first hand police corruption. Again, I believe that this would be quite common in any poor slum region across the world where low level police staff are paid very poorly and supervision is weak. I believe the lesson here is for outsiders to avoid the need to be adventurous and walk alone in any slum-like area. Much like a safari experience with wild animals, any disruption to the natural ecosystem could lead to unpleasant outcomes. In terms of the solution, this will not be easy or quick to fix. The Kenyan police force faces a tough challenge to address institutional corruption or even small abuses of power on street patrols but hard action will be needed and implemented through the ranks to ensure law enforcement is taken seriously. Several actions have been discussed such as the greater use of cameras, but budgets are not aplenty these programmes typically fall before they even start. There was a recent news report about a threat made to the Kenya Police Commissioner who was trying to reform the service (Read here). Beyond this, poverty reduction and economic progress are the only sure ways to help these neighbourhoods grow out of the slums and into a progressive communities. With the economic development of the region I spoke about earlier, hopefully this happens sooner than later.
So what is my final conclusion?
Kenya and Uganda, and from what I hear, the neighbouring regions and the wider African community, have some truly exceptional beauty with stunning geography, raw wildlife and unquantifiable economic potential; the immediate question is what is required to maintain the beauty and realise the potential, and to fix the underlying issues that have been built through years of abuse and neglect.
It will not be a simple path and there are some significant conflicts regarding the legitimacy of democracy, corruption, human rights infringements, access to sanitation and health care and other social basics which will need to be discussed and addressed, nation by nation, step by step. There have been some terrible stories that will scar the memories of many, but we should not forget the great achievements of this continent and the great African heroes such as Nelson Mandela (South Africa), Kwame Nkrumah (Ghana), Dedan Kimathi (Kenya), Amilcah Kabral (Guinea-Bissau), Julius Nyerere (Tanzania), Thomas Sankara (Burkina Faso) and Patrice Lumumba (Congo) and many more and the work they did to rid oppression, introduce civil liberties, equal rights, universal health care and so much more. Feel free to research them. I bought some cool t-shirts to raise awareness from a cool shop in Nairobi called Bonk (Link to site).
It is quite possible that many African nations may find their own way to success that do not conform to the Western models of society or the economy, but rather gravitate to Eastern models where the partnerships already seem to be blossoming today. Or something even more different. On the ground, this is all quite visible with the construction, the wave of immigration, the scale and diversity of foreign investments, introduction of new technologies to solve local issues, local media with fashions, music, cinema, foods, consumer tastes and products and so on and so on. But the one conclusion I took for my trip, and the main reason I am so interested in the region is that the vision of Africa in the future is still being drawn and the role it will play in the future global economy is too significant for us not to be aware and to be involved.