“Do you really think Africa is going to take off?” This is a question I often get both from Africans and from people in the West. My answer: “It’s not going to happen tomorrow but I’m convinced it will happen.”
At any typical introductory talk about the continent chances are that the speaker will show two popular covers of The Economist: “The hopeless continent” (2000), and “Africa rising”(2011). The latter came about a year after McKinsey published their report “Lions on the move: The progress and potential of African economies.”
Last weekend I read an interesting article in Foreign Policy: “Africa’s boom is over,” by Rick Rowden (thanks to my colleague Ulf Richter from Nottingham University who shared the article with me). The author’s main point is that without manufacturing industries, and under the current trade and investment treaties, Africa’s growth will not take off. He points to the fact that the IMF’s 2015 projection for growth in sub-Saharan Africa has been revised downwards from 4.5 to 3.75 % given the persistence of low commodity prices. He also offers an interesting discussion about why Africa has not industrialized, and the need to renegotiate treaties for industrial policies to be effective.
The one point I want to highlight is this comment: “In Africa and Latin America, industrial policies often failed because they were focused inward on small domestic markets. Companies were often given support based on corruption or nepotism, rather than their efficiency. On the other hand, the successful East Asian countries focused on international markets, and they instilled discipline in companies by cutting off support to those which failed to improve.”
This is where I see hope for Africa’s development: it needs to come from within. Colonization, foreign aid, and NGO support have failed in this – with my due respect, especially to the well-intentioned efforts of people collaborating with NGOs: these are still needed, especially so in the educational and healthcare areas.
It’s due time for Africans to take the leading role, and to do so in their own style. The creation of indigenous companies that undertake internationalization initiatives within the continent is a critical part of the game in Africa . It will contribute to the creation of jobs for a growing population that is full of energy, and to marketing growth. I have met many African entrepreneurs who are working in this direction. Africa needs more of these, and management education is an urgent need. This is why I’m convinced that Africa will take off even if it doesn’t happen tomorrow.
Very interesting comments, as usual. Congratulations.
Yes, it is more than time for Africans to take their fate in their hands without blaming “the others” any more for their problems.
Yes, Africans should take the leading role, and to do so “in their own style”. Now, the question is: what should be “their own style”? Africans haven’t found it yet. Also, they will have not other choice than adapting it to the usual way of doing business, not the opposite.
Best wishes for 2016.
MHR
Hi MHR, you may have seen already Charles Ivenso’s response to you.
I see that you’re taking a rather universalistic approach: I’m not sure what you mean by “the usual way of doing business”… Many business practices need to be adapted from country to country. But I’m sure that you have something specific in mind that prompted your comment — would you like to elaborate on it? I’ll try to get back to you sooner next time!
I responded to your comment before getting to your previous to the article on “Time horizons” — I guess I understand this one better now. Yoou may want to check that response. Thanks!
I think Africans are already leading the way in building businesses across the continent. The recognition of the emergence of what we call regional giants is what has informed the change by my institution, Lagos Business School, away from a focus on developing managers for the Nigerian economy and business environment alone, to a broader focus on preparing managers to lead across the continent. In Nigeria, Ghana, Kenya, South Africa, Sudan, Zimbabwe, etc, companies such as Dangote, Econet, Golden Palm, Equity Bank, First Bank, Guaranty Trust Bank, Ecobank, UBA, MTN, Globacom, Saro Agro, The Computer Warehouse Group, Kasapreko, etc, etc are leading the way. The Tony Elumelu Foundation recently launched a $100m fund to provide capital for young Africans with bright ideas to launch their businesses. I think the future is promising, even if challenging and Africans have come to realise that they really have to take their own fate in their hands. What is different this time is that unlike before, there is belief and there is an unwillingness to be held back by the usual challenges that have always been considered an obstacle to venturing across the continent. Our people have indeed found “their own way”.
Thank you Prof Ariño.
Best regards
Charles Ivenso
Lagos Business School
Thank you, Charles. I see that you’re responding to Marc-Henry’s concerns below.
I saw a great entrepreneurial push, especially so in Nigeria. And if there’s a will, there’s a way.
Just an example of the situation described by Africa (Ariño) is this summary of M&A in the telecom sector in Africa. Please refer to:
http://www.networkworld.es/telecomunicaciones/las-operadoras-preocupadas-por-la-rentabilidad-de-sus-inversiones-en-africa
A translation into English follows:
“Operators, concerned about the profitability of their investments in Africa.
According to a global study by IDC, these challenges are leading some global telecommunications companies to rethink their plans for the region. The firm illustrates this point with the example of Etisalat Grou, reached an agreement in 2014 that led Maroc Telecom to acquire subsidiaries operating under the Moov brand in the western French-speaking area (ie, Benin, Central African Republic, Gabon, Ivory Coast, Niger and Togo). The agreement also included Prestige Telecom, a company based in Ivory Coast that offers IT services to Etisalat operations in the six countries. The measure is a result of the steady decline in its revenues, which accounted for just 7% of its total revenue in 2014.
Meanwhile, Bharti Airtel entered into 15 African markets in 2010 after the acquisition of Zain’s subsidiaries on the continent and has since expanded presence in two markets. However, after five years of operations, the telecommunications company is considering selling some of its African subsidiaries, largely because of concerns about its sustainability and profitability. In fact, according to IDC, Orange is currently in talks with Bharti Airtel to acquire four subsidiaries in Francophone and Anglophone Africa; namely, Burkina Faso, Chad, Congo Brazzaville and Sierra Leone).
The main problem are the operators is the poor level of infrastructure (mainly power supply), which affects the deployment and maintenance of network operations quality. He explains Paul Black, program director of IDC telecommunications Middle East, Africa and Turkey. “This problem has constantly affected the profitability of telecom companies, due to higher levels of capital and operating expenses which should engage in the construction and maintenance of telecommunications infrastructure,” said the expert.
In addition, some global telecommunications companies have failed to adapt and implement strategies that have been successful in other regions. In fact, most have been unable to locate their global strategies to adapt to the African market. “
Thank you for sharing this with us, Juan. And my apologies for the late reply to your and others’ comments (just too hectic a week!).
Actaually, I’m finishing to write a teaching case about Innovis Telecom, and Indian start-up that provides network management services to telecom operators in a number of African countries — among others. The inability of global telecom companies to adapt to the African market that you mention maybe a good business opportunity for a company such as Innovis.
Very timely comment for me — thank you, Juan!
This is a good response to Rick Rowden’s article.
https://www.linkedin.com/pulse/africas-boom-over-eric-osiakwan?trk=hp-feed-article-title-publish
Thank you for sharing this article, Shehu! A good cointerpoint to the one by Rowden.
Thanks for sharing very informative, The same thing has been said repeatedly.The solutions to Africa problems, is not the cosmetic, empty re branding of a nation. Africa has what it takes to be a manufacturing hub like China. The Chinese economic engagement with Africa should be reviewed. Is a win-win thing for the Chinese, The Africa market is flooded with many made in china products and goods that can be manufactured by Africans. That been said,I think Africa now know they have numerous challenges that can keep their leaders awake all night. The follower ships should learn how to hold their leaders accountable for their recklessness while in office.
With good leadership that will curb corruptions, the youthful population, improve and standard education the continent will take it rightful position in the world tomorrow.
You’re putting your finger in the wound, Ritchie. Making leaders accountable is critical. Many Africans have told me “corruption is not an Africa-specific concern: it’s human nature.” We’ve had many recent corruption cases in my own country. I see tqwo main differences in Africa: lack of accountability if caught, and pervasiveness that permeates to very low levels in some countries.
I commented on this at an earlier post. In case you’re interested: https://blog.iese.edu/africa/2014/12/17/smart-citizens-for-smart-cities-and-countries/
Good post. I read your post with great interest and I also see hope for Africa’s development and I think it will only come from within. During my visits to Africa, I have observed that foreign aid and NGO support have failed in their main goals. With all my respect to those NGOs, I have observed and listened to real stories about how the foreign aid spoiled some irrelevant economical sectors that the population does not need. I came to the conclusion that African will only develop from within. Thank you for sharing your post.
Thank you, Khaled. I still think that healthcare- and educational-related efforts from NGOs are worth the effort while these sectors become up to speed in Africa.