Africapitalism: a philosophy for sustainable business in Africa?

July 30, 2013 § Leave a comment

Kenneth Amaeshi

As with most developing economies and emerging markets, sustainable business is a hard sell in Africa – especially in sub-Saharan Africa. As an academic and practitioner in this space, I often blame the weak institutions and poor governance characteristics of these regions. In addition, the slow uptake of sustainable business across the continent clearly shows the absence of a developed, indigenous philosophy about the role of business in Africa.

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The burden of the Nigeria Brand in African Markets: Can Africapitalism help?

July 15, 2013 § 1 Comment

Kenneth Amaeshi, PhD

I recently had a knowledge sharing session with a group of Nigerian business leaders in Lagos to explore the subject of Nigerian firms doing business abroad. These business leaders have first-hand experience of internationalisation given that each of them has business operations in one or two African countries. The session was particularly interesting. Two things stood out for me at the end of the encounter. The first impression I got was that “brand Nigeria” is a hard sell, if not a burden, in Africa. One of the business leaders expressed his frustration much more bluntly, thus: “they (referring to other African countries) will watch your Nollywood movies, but will not patronise your business”. The second impression was the level of antagonism and poor economic relations amongst peer nations in the continent. Whilst the former could be interpreted as a firm level challenge, and the latter as an intergovernmental issue in Africa, the two can dangerously combine to work against Nigerian firms in other African countries. No wonder some Nigerian banks are still counting their losses and licking their wounds in this regard.

Nigerians are not easily loved, and neither do they make themselves so. This could be an average Nigerian business’ perception. However, the typical stereotypes out there include that Nigerians are: extremely aggressive, obnoxiously materialistic, loud, domineering, and criminally minded in their entrepreneurial quests. Despite the fact that these stereotypes are often manifestations of cultural biases, they may constitute what is technically known as the liability of foreignness, which is typical of non-indigenous firms. One of the CEOs gave an account of how his company did not break-even in a neighbouring West African country for the first five years of being there mainly because a Nigerian was the face of the company. The change in fortune only occurred after they hired an indigene, with a Nigerian as a deputy. This was a big lesson for this CEO. In their subsequent internationalisation endeavours within Africa, they have consciously and tactically chosen to mask the Nigerian origin of the firm and its identity. This makes me wonder if other foreign firms – especially those from outside Africa – suffer the same fate. Will a German, British, Chinese, Japanese, or American firm in Africa face similar challenges? One may also wonder if the home country of a firm truly matters.

Research suggests that the home country of a firm is a reasonable part of its corporate brand and identity; and where a brand originates matters for many reasons. It might signal high or low quality, for instance. Arguably, Chinese products are to a large extent regarded as inferior to either European or American products. With the passage of time, China as the country of cheap labour and production is no longer a sustainable brand proposition. Chinese firms and government understand this and are doing their best to enhance their brand value. The gradual emergence of global brands with Chinese origin – such as Huawei and Lenovo – is a classic expression of the brand building efforts of the Chinese government and firms. These brands usually signal quality, value and benign-ness. In that regard, the Nigerian government and firms may need to look to the East for some useful lessons in brand positioning, market penetration, and country reputation management.

Whilst one might see reason with regards to the liability of foreignness, the antagonism amongst African countries and the poor economic relations inherent in the continent is rather strange, disappointing, and unhelpful. Despite the advantages of the globalised world economy, regionalisation and regional economic blocs are veritable mechanisms of withstanding and minimising the negative onslaughts of globalisation and its discontents. The European Common Market and Monetary Union are all attempts to take advantage of, and cope with, the excesses of globalisation. The European investment in Airbus is a clear strategy to push back on the dominance of Boeing – an American firm – in the global aerospace industry.

Regional economic integration holds significant positive benefits. It is almost impossible to see a French company rejected in the UK simply because it is French, and vice versa. Unfortunately, African countries are yet to wake up to this reality. The many boundaries and structural obstacles in the continent – represented and sometimes orchestrated by the multiple regional blocs – will continue to frustrate economic relations in the continent and dampen entrepreneurial pursuits. Ultimately, the quest for a better and developed Africa through private sector engagement will be pushed back and made much more difficult to realise.

Upon reflection, my recent encounter with the business leaders suggests that Africa needs a common voice to harmonise economic relations within and between African countries and economic regional blocs. It is the primary responsibility of policy makers to do this, and bodies like the Nigerian Export Promotion Council (NEPC) and the Nigerian Ministry of Trade and Investment, for example, and probably their counterparts in other African countries, might be in this space already. Notwithstanding, it behoves on African entrepreneurs to creatively work with the different governments to achieve this goal. This is where responsible business-government relations becomes a critical strategic option for businesses in Africa. Thought leadership is also necessary. In this regard, Tony Elumelu’s Africapitalism agenda – “an economic philosophy that embodies the private sector’s commitment to the economic transformation of Africa through investments that generate both economic prosperity and social wealth”– needs to be encouraged, supported, and developed as a robust economic philosophy for the continent.

Africapitalism is a creative push back on the disadvantages of globalisation. It is an entrepreneurial quest and mindset, which challenges the conventional win-lose mentality of entrepreneurs and businesses in Africa to create shared value (i.e. win-win outcomes) in and for Africa, instead. If adopted and mainstreamed, Africapitalism has a strong potential to offer an antidote to the negative Nigeria brand and the antagonistic trade relations in Africa, which have continued to set Africa backwards.

Nigeria is the second largest market in Africa and has a relatively open economic culture. The government of Nigeria and business leaders should be at the forefront of this economic agenda. The idea of capturing national governments for personal gains, which seems rather prevalent in the continent, is anachronistic, unfair to the African society, and ultimately unsustainable. Economic patriotism, which is at the heart of Africapitalism, is unashamedly good for Africa, and should be promoted within and for the continent.

Amaeshi is an Associate Professor (Reader) in Strategy and International Business at the University of Edinburgh, UK, a Visiting Fellow at the Doughty Centre for Corporate Responsibility, Cranfield School of Management, and a Visiting Professor at the Lagos Business School, Nigeria. He is also a member of Thought Leadership Forum, Nigeria

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