Why not? Africa’s necessary - and overdue - mindset shift
On May 30, 2019, I addressed the Mauritius chapter of Project Management Institue (PMI). Here is the script of my speech.
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Several years ago, right after I graduated from college I wrote about my aspiration to start a global apparel brand in Africa. I never pursued that dream. As I spent the last 20 years navigating the hallways of some of the world’s biggest lifestyle and sport product companies, I think I abandoned my dream because the more I learned about what it takes to create and sustain a global brand, the less I thought my idea was plausible.
I have been away from the continent for almost 30 years and returned 5 months ago for an extended stay in Mauritius. I am discovering Africa anew and if I am to go by the quality of the goals, stories, and students at the African Leadership University here in Mauritius, as well as the many conversations I have had elsewhere with leaders like you, then there can be no better place to be and time to be there than in Africa, today.
Africa’s economic growth prospects are among the world’s brightest. Six of the world’s 12 fastest-growing countries are in Africa (Ethiopia, Democratic Republic of the Congo, Côte d’Ivoire, Mozambique, Tanzania, and Rwanda). Furthermore, according to the IMF, between 2018 and 2023, Africa’s growth prospects will be among the highest in the world.
Africa’s growing, youth{ful} population, amidst an aging population in most other regions, constitutes a formidable market. The continent’s population is predicted to quadruple from 1 billion in 2015 to 2 billion in 2050 to over 4 billion by 2100.
Africans are moving to the city. The continent is urbanizing more rapidly than any other part of the planet. Today’s about 60 per cent of Africa’s population lives in rural areas. 80% of the population increase will occur in cities. By 2025, there will be 100 African cities with more than one million inhabitants, according. And according to a study by the Global Cities Institute of the University of Toronto, by 2100 three African cities will top the global list of largest cities.
For comparison, today’s largest urban area is Tokyo with 35 million inhabitants, whilst in China about a hundred cities have at least one million residents. None of the future megacities will be in China, Americas, or Europe.
If projections are correct, by the end of the century, Lagos will have 88 million residents, the population of today's Germany. At present, its population is estimated to be around 16 million inhabitants even though it is hard to come up with the exact number since most residents live in suburban slums. About 2,000 people move to the city every day.
Kinshasa, the capital of the Democratic Republic of the Congo, will be in second place, reaching 83 million residents, up from nine million at present.
Dar Es Salaam, on the coast of Tanzania, will be in third place. It has a population of just 4.4 million today. By 2100, that is projected to jump by a whopping 1,588%, putting the total at 74 million inhabitants.
Turning to business, which you are all very familiar with, Africa is the most profitable region in the world. Africa records the highest rate of return on Foreign Direct Investment, higher than in Asia, in Latin America and the Caribbean and the global average.
These facts fill many of us with excitement because the potential for the continent has not been talked about in this way for many decades, perhaps ever.
This comes as many of these trends are quite the opposite in much of the developed world – slowing economies, population decline, cost of labor inflation, mature economic returns etc.
However, we all remember the BRIC countries, that were supposed to lead the world to new levels of growth not seen before. For today, I exclude South Africa from that list. The 4 original BRIC countries are among the most populous in the world with close to 40 percent of the world’s population. By comparison, the USA has just about 4.3 percent of the world’s population, and Germany only one percent. Today, across the group, the level of economic development is still well below that of industrialized economies such as Germany or the USA. Even Russia and Brazil, which currently reach the highest GDP per capita values of all BRIC countries, only reach one sixth of the corresponding value of the USA. BRIC influence on the global economy have been minimized by everything from lack of sector diversity to trade protection to political instability to poverty extremes to internal social strife.
Africa needs to fare better than the BRICs have. Runaway urbanization and a growing youth bulge, with most young people lacking meaningful job prospects, is a time bomb. Africa is suffering from a major urban infrastructure gap. Annual national public spending on infrastructure is exceedingly low: an average of 2% of GDP in 2009-2015, compared to 5.2% in India and 8.8% in China. Sixty percent of all urbanites live in over-crowded and under-serviced slums. Around 25-45% walk to work due to lack of affordable transport. Another looming problem is that African cities are set to expand during a period of unprecedented climate stress. The strain on basic services and natural resource endowments, as Cape Town’s water crisis shows, is set to increase. If Africa does not find a way to build sustainable cities with greater access to private capital, then they risk becoming both unlivable and indebted. Already, we have the slums of Khayelitsha in Cape Town, South Africa (400,000) and Kibera in Nairobi, Kenya (700,000) as stark reminders of the risk to a bigger landscape of our communities. Concerns are also rising about an impending debt crisis in the continent. As of 2017, 24 countries have surpassed the 55 percent debt-to-GDP ratio suggested by the International Monetary Fund.
This is not a doomsday scenario. If anything, the last 5 months have helped me understand that this all poses opportunity. The need to build better infrastructure, expand access to relevant education, drive full utilization of women within the workforce, launch smart cities and drive diversified economic growth are all critical to our future. They are also challenges that are not new to the world; we have proven models and solutions from every corner of the globe to start with and innovate from to suit Africa’s unique needs.
As someone who has spent much of his professional life seeking ways to drive transformational change, I am heartened by the factors that we already have in place:
A high dissatisfaction with the status quo and negative stories that have characterized the post-independence era
An inevitable global and continental trend line that calls for clear and urgent action
Immense resources in nature’s endowment and human capital
A burgeoning supply of digital natives with facility in the digital sphere
Increasingly more examples of good leadership of some national governments, sectors, companies and entrepreneurs that are creating flashpoints of innovative activity
We need more of all the above.
Unlike the most developed powers and the BRIC nations, our MORE will not immediately come or from a focused, top down coordination of a large population, significant land mass and economic policy. It will come from fragmentation of micro activities that combine to create a groundswell of high paced and high impact change.
This requires a shift into a mindset that obligates each of us to be an actor, versus a spectator, for transformational change.
With the leverage of digital technology, we can create and activate networks, form partnerships and alliances, innovate and embed solutions, launch and scale businesses, penetrate and access markets and trade zones, collaborate and communicate ideas faster than it will take many governments or the African Union to drive a coordinated Africa agenda.
We can’t wait! This is already happening – we just need much MORE of it to happen:
We need more big thinkers across all sectors
We need more entrepreneurs and entrepreneurial leaders
We need more deployment and employment of digital technology
We need to create scale – not only with new enterprises but with existing ones, because scale is what we need to close to gap with the future that we are headed towards.
According to the Africa Growth Initiative at the Brookings Institute, about 400 African companies have revenues of $1 billion today, but even this scale of activity insufficient to drive our readiness for the future. A slightly earlier 2017 report from the advisory firm Konfidants noted that only 30 African companies had taken the world stage, and of that number 22 were South African.
Let me venture a personal belief - that, our firms, even if big, even if successful, are playing in limited local and national markets, and still face many constraints to operate across the continent and therefore lack the efficiencies, competitive edge, capital and organizational readiness to venture into and survive in international markets. This is the ultimate potential I believe African companies must target - to meet the consumption, employment, productivity and economic needs of the continent’s burgeoning population.
My questions for us tonight are:
How do we achieve scale?
How do we transcend internal and international trade obstacles?
How do we create globally relevant and desirable African brands?
I am not suggesting that international markets and trade policies are not closed and discriminatory towards African brands and their products. I am asserting that the continent’s firms lack of readiness and ability to scale is an equal, and perhaps, bigger challenge. And maybe - the challenge that the continent has a better chance of addressing.
This is what my recent conversations with three Africa growth experts confirmed to me:
Generally, it is not yet the ambition of African firms to scale outside the continent. They see lots of opportunity in the continental market and those opportunities are better suited to their capabilities, so the current focus is on the continental market.
At present, only 16 percent of trade by African nations is with continental neighbors. The AU free trade bill that went into effect just today is a step in the right direction
Markets outside Africa are tough, well-populated with capable existing competitors and African firms have generally not yet built up the resources of surplus capital and management talent to enter those markets either organically or by acquisition
When some African firms have entered overseas markets, they have primarily been South African, and have had mixed to poor results, causing some to eventually pull back.
Examples include SAB buying Miller, Nando’s into the UK as have some of the SA hospital groups, Woolworths into Australia via acquisition of David Jones, Sasol into the US. Standard Bank was present in more than 20 international markets before the global financial crisis, but after a significant drain on capital without achieving meaningful relevance, refocused on Africa with much better results
We have thrived more as suppliers, better in agricultural and mineral commodities, perhaps with some light value-add and in textiles (Mauritius, Lesotho, Ethiopia and Madagascar), and not as well in manufacturing where we have not achieved high quality standards.
Lately we have seen some expansion in tech, specifically fintech (payments company Flutterwave, digital lending startup Mines, and mobile-money venture Chipper Cash reaching to San Francisco to tap into venture capital, developers, clients, and the frontier of digital finance)
African firms will be best positioned for long-term success when they are competitive in global markets, so that must ultimately become their ambition. The questions are when and with which offering. Yes, there is growth in Africa but to really create our future, our firms must also be successful outside Africa. Case in point is the trajectory of Japanese and Korean firms as they eventually and purposefully moved from local champions to become global standards.
This is the ultimate mindset I believe all African leaders must embrace without question.
At the same time, if African firms seek to simply copy Western firms, then this might be too expensive and too late. However, if African firms can develop innovative products that meet the needs of Africans, and then go to the world with the subset of such products that have global appeal, then they can compete on their own terms. There are not very many examples to cite at this time, perhaps Discovery, the South African insurance company, that has exported its wellness program to the UK.
We have a strong record of success in our local markets. African firms increasingly compete and win against Western multinationals operating in Africa. But then, some of those firms are being acquired by Western principals e.g. Danone acquired FanMilk in West Africa, Kellogg’s stake in Tolaram (a noodles business in Nigeria) and Coca-Cola’s purchase of Chi, a juice business in Nigeria. These businesses were attractive because they were successful with local consumers in local markets. We will never know if these businesses, on their own, could have penetrated global markets. But we can gain inspiration from their trajectories.
Which brings us to another factor: the owners and leadership teams must have the ambition, capital, and focus on long-term rewards to go it alone and not sell early in their corporate journey. They must find ways to reach the quality and efficiency levels that will make it possible to reach and serve discerning and unforiving global consumers.
I am sure many of you have your own thoughts on this topic and I am eager to hear them during Q&A. I do have thoughts about the actions that I want to ask you to consider.
Strategy is the act of making choices for an enterprise to win – to grow sustainably and profitably, while gaining market share or market leadership. Good strategy asks and answers 5 interconnected questions – about the aspiration, where to play or focus, how to win, which enablers to build and how leaders will manage execution. Any one of these 5 choices, poorly made or executed, can weaken the strength of a company. Execution is what you do, but you cannot do so in a vacuum – you can and must empower yourselves to influence strategy more.
A project manager is the strategist’s best friend. As project managers you help companies bring their choices to life every day. How do you do so? The best project managers see the big picture and can be instigators, ask the right questions and can inspire, build relationships with stakeholders and can influence, creates small wins and can motivate and reassure.
Simon Sinek says - Those who know WHAT they do tend to work harder. Those who know WHY tend to work smarter.
Today, in our continent, we need to explore our WHY more deeply. I pose this challenge in very personal terms because I want us to obsess not only our success but also our potential – the true potential of each of us as individuals, the true potential of projects that we dedicate ourselves to, the true potential of the organizations that we can influence, and the true potential for our continent, all in the fierce urgency of NOW.
By being here and continuing to dedicate yourself to your craft, you are already responding to the challenge to be more, to be more rounded, to be more complete. As I enter the final month of my residency at ALU, I am personally energized to return to a paper I wrote way back in 1999, where I first entertained the aspiration to create a global African apparel brand. And to that question, knowing what is at stake, I feel more empowered and motivated than ever before to say now – WHY NOT.
Thank you for listening.
