Doing Business in Africa? Lose the Preconceptions
“To make the most of Africa’s increasing opportunities what you need, above all, is flexibility and patience.”
So says Alejandro Lago, Professor of Production, Technology and Operations Management. “You need to forget your preconceptions about Africa.”
Co-director of IESE’s Africa Initiative, Lago opened the Barcelona leg of the Pan-African Executive MBA on campus this week. 79 executives from Kenya and Nigeria were at IESE to attend the “Managerial Decisions Across Cultures” module of the EMBA, which digs deep into globalization and strategy.
Among them is Bizzu Kanja who is an EMBA student at Kenya’s Strathmore Business School. “Being at IESE is interesting and sheds light on the difference in business cultures. What works in Europe for instance, won’t necessarily work in Africa. Foreign business wanting to invest in Africa need to be able to adapt.”
Walton Kiche Otunga agrees. Team lead for infrastructure at the United Nations in Nairobi he is also pursuing the Pan-African EMBA at Strathmore and welcomes the IESE module as a means to acquire a more “global perspective.”
“Any European investor in Africa would do well to partner with local business,” he says. “The ideal scenario is a combination of European experience and the offer of training, with on-the-ground knowledge of the local business landscape – creating bridges between different business cultures.”
Preconceptions can mar access to opportunity, says Kanja. “Africa is perceived as one of the world’s biggest emerging markets. But this is mainly based on population numbers. So this can be deceptive,” she says. “In my field, retail, the numbers might be there in terms of population, but the product must always be tailored to what really matters – and that’s customer ‘sophistication’ and above all, purchasing power.”
Opportunities are there, says Lago. But be wary of jumping to conclusions about where to find them. “In Europe most of the so-called ‘traditional’ markets are already well developed, so business opportunities are more likely to be found in areas such as hi-tech. But in Africa, these traditional business models are still widely applicable – except in fields like telecommunications.”
Both agree that key to success in foreign investment is flexibility. And patience.
“Results will come but it’s important when you’re doing business in Africa to understand that you are there for the long haul. There are no fast turnarounds in Africa,” says Kanja.
Lago advocates a “grass-roots approach” to investment – important in the global business world but “absolutely crucial in Africa where there are tight-knit business communities.
“European businesses are in a position to seize opportunities when they arise if they create practical, workable business plans that can adapt to change – rather than the more sophisticated models suited to the European business landscape, but impractical in the African context.”
And taking a responsible approach is fundamental, says Kanja. “Foreign companies should apply the same ethical values that they uphold in their own markets when they set up in Africa. They should do what they can to help people out of poverty.”
Kanja and Otunga are part of a 100-strong cohort of African executives pursuing the IESE module of their Pan-African Executive MBA in Barcelona this week. The module delivers a deep dive into cross-cultural team management, corporate governance and globalization and strategy.
“This module is one of our many initiatives to reinforce business links between European businesses and managers across the world,” says Lago. “The students here on campus in Barcelona this week are future leaders in Africa. They are building connections that can be really fruitful, contributing to the impact that they will have on African society.”
These sentiments are echoed by Kanja and Otunga. “I’m here to learn from more efficient economies,” says Kanja, who aims to establish a county-wide shopping center association in Kenya. “It’s about seeing which business models can be applied back home.”
For Otunga the experience is proving eye-opening. “I’m broadening my global perspective at IESE. Meeting new people in my field and gaining insights into the cultural differences in how business is done around the world.”