Africa's Business Revolution: How to Succeed in the World's Next Big Growth Market
Acha Leke, Mutsa Chironga, & Georges Desvaux
256 pages, Harvard Business Review Press, 2018
We wrote this book because we believe that businesses, large and small, must play a central role in accelerating Africa’s development and changing its people’s lives for the better. For entrepreneurs and investors, Africa’s long-term growth trends and large unmet needs present exciting opportunities for business-building. For the public and social sectors, partnerships with business will be essential to strengthen Africa’s skills development, healthcare outcomes, infrastructure, and more.
Yet the vibrancy of Africa’s business sector—and the continent’s broader economic progress—remain underreported in the global media. Stories of conflict, corruption, and human suffering dominate the headlines about Africa. As consultants who have worked across every region and sector of the continent, we felt an obligation to recast that narrative and challenge global decision-makers to reset their mental maps of Africa.
In our book, we highlight Africa’s rapid urbanization: it already has as many cities with more than one million inhabitants as North America does. We point to Africa’s rapid technology adoption, with the number of smartphone connections forecast to double from 315 million in 2015 to 636 million in 2022. We consider how household income, literacy, health, and governance have all shown steady improvement in recent decades—even if big gaps remain. And we show that Africa is already home to 400 companies earning annual revenues of $1 billion or more—around ten times the number that most observers assume.
Although these companies differ widely in their geographic and sector focus, what they have in common is the imagination to see Africa’s unmet needs as opportunities for entrepreneurship, and the long-term commitment required to build businesses of meaningful scale. Their innovations and investments have also created real social impact by connecting people to services that were previously unavailable, boosting productivity and growth, and creating large numbers of jobs. In the book, we tell stories of many of these companies—and show that Africa is truly a continent where businesses can do well by doing good.—Acha Leke, Mutsa Chironga, and Georges Desvaux
Do Well by Doing Good
We have had the privilege to meet and work with many remarkable businesspeople, from every corner of the globe, who have built successful enterprises in Africa. Each of those companies has adopted strategies that include all or most of the imperatives we spell out in this book. They’ve set out bold visions for growth. They’ve spotted and acted on favorable long-term trends—and recast Africa’s challenges as opportunities—ahead of the competition. They’ve drawn a map of Africa around the most promising countries and cities. They’ve made smart moves to innovate their product and service offerings, harness technology, and drive up productivity. They’ve managed Africa’s volatility by building resilience into their business models. And they’ve invested in talent, bringing out the best in Africa’s people.
What has struck us time and again in these conversations, though, is how many of Africa’s successful business leaders are driven by a deeper purpose. They look at Africa’s high levels of poverty; its gaps in infrastructure, education, and healthcare; and its governance problems, and they don’t just see barriers to business, but human issues they feel responsible for solving.
Consider the example of Strive Masiyiwa, chairman of the pan-African telecom, media, and technology company Econet Group. There is no doubting his business ambitions: he is the major shareholder in fast-growing Liquid Telecom, now Africa’s largest broadband infrastructure and data services company. In 2017, he launched a new media business, Kwesé, which enables African viewers to stream Netflix and view premium content on their mobile phones for as little as $10 a month. But Masiyiwa has put equal energy into his philanthropic initiatives: for example, he has used his wealth to provide scholarships to more than 250,000 young Africans over the past twenty years. He also devotes an enormous amount of energy to mentoring the next generation of African entrepreneurs, including through regular posts on his Facebook page, which has over 3 million followers.
As Masiyiwa explained to us, these twin passions stem from a simple philosophy: “To be successful, you need to be more than a businessman—you need to be a responsible citizen. Africa is a continent with extraordinary challenges, and it’s a cop-out just to wait for governments to deal with them. If you see a problem, then think about how you can solve a piece of it.” He shared the example of a cholera outbreak in one of the countries in which Econet operates. His local office told him that people were dying because they lacked the necessary medicines, and government processes to procure them were slow. “Then and there, I arranged for the medicines to be airlifted in,” he told us. Masiyiwa has helped in other emergency situations too, including the Ebola epidemic that struck West Africa in 2014–2015. But what really animates his initiatives in education and entrepreneurship—as well as his technology businesses—is a desire to move the needle on Africa’s long-term challenges. As he told us, “The exciting part is asking, ‘What is the root cause of this problem? What can we do to address that root cause?’”
That’s a question that all business leaders operating in Africa, wherever their company’s headquarters might be, would do well to answer. That kind of enlightened problem solving has motivated a cohort of young Western entrepreneurs to build some very innovative African businesses. One example is Jumia, one of the continent’s leading e-commerce players. Another is M-Kopa, which has sold off-grid solar-power kits to six hundred thousand rural households, and financed them via mobile money. M-Kopa’s CEO, Canadian-born Jesse Moore, told us his purpose is to have M-Kopa’s solar power kits “revolutionize the lives of millions of people in Africa, just as mobile telephony and mobile money have done.”
Big multinationals such as Coca-Cola and GE also see their business objectives and social purpose as intertwined. An example is GE’s “company-to-country agreement” with the government of Nigeria to support the upgrade of infrastructure and public health services. Its scope includes developing ten thousand megawatts of power-generation capacity, upgrading airports, modernizing the national railway corporation’s locomotives, and constructing public hospitals and diagnostic centers. Though GE has built profitable businesses through this relationship, its commitment goes far deeper. The company is also helping to build science and technology skills across the continent, including by supporting curriculum development at several African universities. “We believe that multinationals have a key role to play in investing in the infrastructure of skills-building,” GE’s Africa president and CEO, Jay Ireland, told us.
For many companies operating in Africa, contributing to the social and economic development of the countries they operate in follows naturally from their long-term growth strategies. Very often, it also requires them to engage in a robust manner with governments. Nigeria’s recent improvement in the World Bank’s ease-of-doing-business ranking, for example, is due in part to businesses in that country speaking up about the challenges they faced in bureaucratic red tape, moving goods across borders, and obtaining visas for staff visiting from other countries—and working actively with the government to address those barriers. In South Africa, many of the country’s largest companies convened in 2016 to tackle the problem of the country’s sluggish growth and high unemployment, creating the SA SME Fund with the government’s support. The fund, financed by an initial contribution of over $100 million from participating companies, invests in smaller businesses that are scalable and able to contribute to economic growth and job creation.
All in all, we are convinced that any company seeking to build a sustainable, scalable business in Africa needs to focus on creating value for both shareholders and stakeholders. There is no inherent tension between earning healthy profits and serving the interests of employees, suppliers, customers, creditors, communities, and the environment. Africa is a continent where, perhaps more than anywhere else, business can do well by doing good. Those who focus on fulfilling a major unmet need stand to earn outsize returns for their shareholders while having a transformative impact on society. An example is Kenya-based Equity Bank, which was born out of a small building society in Kenya in 2004. Founding CEO James Mwangi told us he built the bank with one core purpose: “to solve the social problem of lack of access to financial services.” Today Equity Bank has more than 12 million clients across East Africa—in part because of its agency banking model, which has accredited more than thirty thousand small retail outlets as bank agents, able to accept deposits and dispense cash. Fewer than one in ten Kenyan adults had a bank account at the turn of the twenty-first century. Today, thanks in large measure to Equity Bank’s innovations, two-thirds of them do.
Tony Elumelu, founder of Nigeria-based United Bank for Africa and today a leading philanthropist, believes this transformative power of the private sector can be magnified many times. He espouses the philosophy of “Africapitalism”—which includes a commitment to long-term investment and the creation of both economic prosperity and social wealth. As Elumelu told us, “Government simply cannot deliver the enormous growth in employment that is Africa’s biggest challenge and greatest opportunity. But equally, business needs to understand its responsibilities and acknowledge that returns go beyond just the bottom line.”
We heartily concur with the analysis of Fred Swaniker, founder of the African Leadership University, whose campuses in Mauritius and Rwanda are built on a new model of higher education that mixes online education with peer-to-peer learning and in-person interaction with faculty. As Swaniker remarked: “The companies that have done well historically, and the ones that will continue to do well, are taking a holistic view to their role in society. They realize it’s actually in your shareholders’ interest that you are seen to be contributing to the development of the country, whether through education or building infrastructure or giving other forms of value that make you a great corporate citizen and national asset.”
Graça Machel, an international human rights advocate, proposes a “social compact” which would see governments, the private sector, academia, and civil society organizations agree on shared responsibilities to solve Africa’s biggest social and economic challenges and meet the UN’s Sustainable Development Goals. As she told us, “Those goals are an ambitious, universal call to end poverty, protect the environment, and ensure that all members of our global family enjoy peace and prosperity. They require that we ‘leave no one behind.’” She sees a central role for the private sector to partner in poverty-eradication efforts and collaborate with the public sector and civil society to drive job creation on a massive scale.
Machel believes business leaders should ask themselves, “If our country has a certain percentage of young people who are unemployed, what kind of creative, forward-thinking changes do we have to implement to accelerate job-creation and increase employment opportunities for our youth? How can we move from producing five thousand jobs a year to 2 million a year, for example?” Such audacious goals, she said, “require a change in mindset in all of us. Entire industries and leaders themselves have to meaningfully transform—it can no longer be business as usual.” Machel’s late husband, Nelson Mandela, would have agreed. As he famously said: “There is no passion to be found playing small—in settling for a life that is less than the one you are capable of living.”
We give the last word to one of the doyens of African business, Manu Chandaria—a leader who embodies the approach to life that Mandela espoused. He is the chairman of the Comcraft Group, a multibillion-dollar manufacturing and technology company with operations in forty countries. He is also a noted philanthropist and the founding chairman of the East African Business Council and the Kenya Private Sector Alliance. His achievements have been recognized by Queen Elizabeth II, who named him a member of the Order of the British Empire, and the president of Kenya, who bestowed on him honor of Chief of the Order of Burning Spear.
“The whole point is to have a longer-term vision besides making money,” Chandaria told us. If you want to succeed in Africa, he said, then your approach needs to be, “I don’t only want to earn my living, I want to make things good for the people who work for me and the community I live in. It’s not just about corporate social responsibility—that kind of philosophy needs to be built in your approach to business.”