By 2050 – a generation from now –the world will have close to 10 billion people. A quarter of those (according to the UN) will be living in Africa. Nigeria’s citizenry will be bigger than that of the US. The pressures this population explosion will place on Africa’s economy are massive: infrastructure, health care, employment, education, energy – all need to expand and develop rapidly if Africa is going to be able to cope.
Meanwhile Africa moves in contradictory directions, and even the biggest stumble. After an ambitious expansion plan in which it invested $4 billion between 2011-13, Nestlé in June 2015 announced it was cutting 15 per cent of its workforce in 21 African countries. “We thought this would be the next Asia, but we have realised the middle class here in the region is extremely small and it is not really growing,” Cornel Krummenacher, Chief Executive for Nestlé’s equatorial Africa region, told the Financial Times. Without a powerfully growing middle class – and the business leadership and investment that requires – Africa may continue to drag its feet.
On a continent where volatility is a way of life, South Africa, Africa’s leading economic powerhouse, could once be relied on to provide expat expertise but, according to Louise Cooke, CEO of Parmalat SA [a global player in the production and distribution of foods that are essential for everyday wellness], “the old model of South Africans going into the continent to run things doesn’t work – and it’s been shown time and time again.” And it is becoming trickier to tempt people from beyond the continent to relocate to Africa; the sheer expense of doing so is a key factor. According to a recent White Paper by Guy Lundy, a Partner in the Cape Town office of Odgers Berndtson, “anecdotes abound of having to pay $250,000 for two years of rent up-front for a modest semi-detached house in Angola, or having to budget three times more for food in Nigeria than in South Africa.” Yet locally educated and trained senior executives are a scarce resource. For Steve Felder, East Africa Managing Director of Maersk Kenya Ltd, there is a “dearth of local executives with suffient leadership experience, particularly in Francophone and Lusophone (or Portuguese-speaking) markets”.
The bigger challenge
According to Lundy, “in many cases African executives make better expats in other African countries, because they are more accustomed to the hardships that Westerners struggle with”.
There is still a lingering suspicion that business education at African establishments may not be up to international standards; yet as Lundy puts it, “a bigger challenge than the education gap is an experiential gap… Bridging this gap requires significant investment in training, which many African governments will happily support through mechanisms like tax breaks because they see the value of training locals."
It’s undoubtedly the case that companies need to adopt a long-term perspective when it comes to Africa, and in this respect they need to groom future leaders for their own businesses. Maersk, for example, has an ‘African Leadership Development Programme’ in partnership with the University of Stellenbosch in South Africa, from which 110 African managers have graduated. For Lundy, “the regional executives that are usually most effctive at driving African expansion are those who have solid experience in challenging emerging markets like India and elsewhere in Asia, or ideally who have previously successfully led another company across Africa”.
Parmalat’s Cooke says that the specific challenges Africa poses “takes a certain type of individual with tenacity and adaptability but also the willingness to get their hands dirty”.
Modernisation or Westernisation?
Understanding that Africa is not homogenous – that there are critically important national and regional differences – is vital for expat executives, from wherever they come.
In the view of Nkosana Moyo, founder and executive chairman of the Mandela Institute for Development Studies, companies need to be open to a wide range of leadership models and approaches: “We have confused modernisation for Westernisation. Our continent’s struggle with development is partly to do with trying to mimic other people and not being ourselves.” If there are lessons to be drawn from the experience of multinational companies that have dug into Africa, it’s that tenacity and taking a long-term perspective are vital, together with adapting to local differences while adhering to international standards of governance. Without this, neither the company nor Africa will progress.
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By Paul Butterworth MNI, Global Head of the Maritime & Shipping Practice at Odgers Berndtson