AFRICANGLOBE – African economies are booming. According to the latest figures from the World Bank, Kenya, Nigeria and Ethiopia are among the fastest, growing economies in the world — but many have questioned if this growth is sustainable or, indeed, if it is coming at the expense of the poor and vulnerable.
A study into business environments across Africa has revealed several insights into what needs to change to ensure that the economic boom continues long into the future, while also creating jobs, building infrastructure and lowering poverty.
In-depth interviews with 40 CEOs, business leaders, entrepreneurs and government officials for the Africa Capitalism Research Project show how business can play a bigger role in contributing to strengthening enterprise in Africa and identifying the barriers keeping it from contributing further.
Funded by the Tony Elumelu Foundation, the study is running in seven African countries, including SA, and already some common themes have been identified as vital to ensure sustainable growth.
Some business leaders bemoan the lack of co-operation between state-owned enterprises (SOEs) and the private sector. There is a sense in the private sector that the government interferes too much and refuses to ask for help when out of its depth. Eskom and South African Airways are cases in point: they consume huge amounts of tax money in bail-outs without delivering quality services or operating efficiently.
Many business leaders feel the government should ask for help to solve challenges, especially in sectors where there is capacity and experience in the private sector. The Gautrain, a coalition between private enterprise and the public sector, has allowed the private sector to take the lead in establishing a very successful model.
Officials in the public sector need to understand how partnerships help both sides achieve objectives that will create jobs and ensure economic growth. This leads to another problem identified by African leaders — the need for more trust between the government and the private sector. This means fewer regulations and rules governing every action of private business, hampering enterprise and stifling innovation.
This is the case especially in Nigeria, where business leaders blame the low number of small-and medium-sized businesses on the excessive number of permits, licences and registrations that business owners have to complete.
Businesses need to be seen as a partner in creating employment, developing skills and infrastructure and making a meaningful contribution that can transform society.
Corruption is everywhere, not just in Africa or the public sector. But in Africa, it has reached epidemic proportions and urgently needs to be addressed, specifically from the government’s side.
But where there is corruption there are always corruptors. Business leaders who offer money to secure deals and tenders are part of the problem. Collusion between individuals in the private sector and government officials is a cancer that hurts economic development.
People like to point fingers at corrupt African governments, but what are organisations doing to stop tax evasion and money being taken offshore? Industries need to help clean up their own houses.
Business can’t thrive in a hostile or violent environment. For companies to do well, entrepreneurs to flourish and great business ideas to succeed, there has to be an environment that is not only business friendly but also stable and peaceful.
The recent xenophobic attacks in SA and terror attacks in Kenya and Nigeria are not good for business. They affect investment, capital, confidence and the long-term plans of corporations.
Africa needs more entrepreneurs, one of the largest forces for job creation in any economy. By investing in entrepreneurship, governments essentially invest in the domestic economy.
One of the criticisms of growth on the continent to date has been that foreign direct investment has largely been channelled into the sectors where there are big returns — oil, gas and minerals — which do not effect on unemployment or poverty.
A recent Gallup poll showed that Malawi had the highest entrepreneurial intention in the world, with more than 57% of those polled saying they were going to start a business in the next year.
But for entrepreneurs to succeed, there needs to be venture capitalism to help fund, network and develop entrepreneurs. Business people with expertise and knowledge in banking and private equity need to become more involved.
POOR infrastructure, bad roads, a lack of technology and electricity issues are big obstacles to many start-ups in Africa — all needing to be addressed.
CEOs and business leaders across the board complain of a lack of skills, in all areas, from software and IT programming to key management experience and training. Often companies want to bring people in from overseas and face extraordinary barriers from government in getting the right people appointed.
Yet foreigners are at the helm of some of SA’s biggest companies — for example, Pick n Pay’s Richard Brasher and Woolworths’ Ian Moir — and have injected these companies with energy and positive spin-offs for all South Africans.
Africa needs to invest in its own skills, but this needs long-term planning. This is not about getting more graduates, but about providing skills, vocational training, internship and mentorship opportunities — especially to those who did not have access to good school systems — to build capacity. Big business could be doing much more than it is in helping to train and develop people from the ground up.
Many white business leaders in SA talk about the practice of token appointments of Black candidates, ticking the boxes but not genuinely committing to the success of these appointments. By truly investing in Black employees and their development, communities can really be transformed and skills built. Africa’s future is reliant on participation — especially from formerly disadvantaged people — and if we fail to do that we will head for an abyss. Capital will go elsewhere and businesses will flounder.
This is a sensitive issue and problematic on many fronts, yet business leaders, especially in SA, complain there is a need for people who want to work, who have a work ethic and want to get a job done — not people who complain about money and want to discuss bonuses before a project is completed.
People need to understand the government can only be expected to create an environment where there is jobs growth, but they can’t give jobs. Africans need to become more productive, and more self-reliant — thinking about creating something, not waiting for others to make things happen.
The research is showing there is an appetite for business on the African continent and goodwill on the part of both the private and public sectors to build a better, more integrated and inclusive Africa.
We need to capitalise on this goodwill and can use the insights generated from research to invest in crafting an African dream that is not only focused on creating wealth and success for a few, but uplifts communities and improves conditions for all African citizens.
By: Nceku Nyathi