Africa Business - Seven

I had the opportunity to attend the Annual African Business Conferences in Harvard University. In the conferences were full many bright Africans sharing their business experiences in Africa. There were also a fashion show, concert, sport, and dance events.

The Africa Business Club of Harvard Business School prepared the 7th Annual Africa Business Conference, February 11 – 13, 2005.

The keynote speaker, at the Conference, was Malik Fal, the Regional Director for Africa of the On The Frontier Group (OTF), a competitiveness consulting company. He opened the program by emphasizing that now is the time Africans fight for an economic dignity.

Mr. Fal noted that export dependence on basic commodities has kept African countries poor. Prices for basic commodities have been constantly declining underscoring the need for Africa to get out of the “commodity trap.” He argued that strategic export diversification is crucial for Africa’s development.

For example, while Nigeria is the number one producer of cassava, Thailand is the number one exporter. Nigeria has not developed cassava as an export commodity. About 40 percent of cassava produced in Nigeria is wasted because of the lack of poor refrigeration. Nigeria needs to diversify its export base and develop potential markets for cassava products. For example, cassava could also be used for cosmetics, and thus if Nigeria produces and exports cosmetics made from cassava, they could earn more from this commodity.

Further, the role of African leaders in economically developing the continent should include setting up horticultural research centers and building transportation infrastructure. African governments must also have clear and tangible goals, such as the increasing the GDP of their countries by 10 percent and exports by 20 percent by a specific year.

The private sector must understand customer needs and make products accessible to them. Instead of looking for favors from foreign governments, African governmental bodies and private entities should produce products that people overseas want to buy. The New Partnership for African Development (NEPAD) should not be another “begging tool.”

Mr. Fal further emphasized the importance of developing collective goals. People must have confidence in African trade and finance misters. The approaches and attitudes of African leaders could be effective in arousing entrepreneurship or changing the behavior of people. For example, Ugandan president, Yoweri Museveni has successfully reduced the number of HIV/AIDS victims in his country through anti-HIV campaigns and education.

The first sessions were about ways to find pathways out of Africa’s commodity trap. Jason Bauer, from OTF Group, is discussed about Rwandan government’s coffee export strategy. Bauer found that Rwanda’s coffee exports are in a condition called “the commodity trap.” Coffee prices are declining because more countries are exporting this commodity. Vietnam and Brazil have increasingly dominated the coffee market. Due to the abundance of coffee suppliers, the New York Board of Trade has decreased the price of coffee.

In order to compete with other coffee-producing counties, Rwanda must increase global demand for its high-grade Arabica coffee and develop its own specialties.

OTF also recommended that Rwanda build coffee washing stations and start further processing the coffee that is exported out of the country. Mr. Bauer stated the importance of making quality products and consistently distributing them.

Because Rwanda is surrounded by other countries that have eco-tourism industries, the OTF Group also advised Rwanda to develop tourism. The OTF Group believes that Rwanda must learn from Kenya’s experience in order to be successful with an eco-tourism industry. While the number of tourists that visit Kenya is high, the duration of their visits is very low, and thus minimizes the profit that Kenya earns from tourism. The two advantages that Rwanda has are a high land forest that has over 30 species of primates, and gorillas in the south.

To capitalize on these two assets, the OTF Group suggested that Rwanda develop a research center to attract people who are passionate about gorillas and primates. Organizing a “primate discovery tour” led by primate experts would keep the tourists in the country for longer visits than just driving through parks as tourists do in Kenya. To connect the northern primate area with the gorilla site in the south, OTF Group advised the Rwandan government to build roads. In addition, the OTF Group recommended universities teach languages and sciences in order to accommodate people who have a special interest in primates and gorillas.

The second panel was about the entertainment industry in Africa. Panelists: Ngoran Assoumou, the founder of Rman Interprod; Ben Murray Bruce the Founder of Silverbird Group; Femi Odugbemi the President of Itpan; Joke Silva an Actress & Movie Director; and Toyin Subair the Principle Partner of the Abraham & Co. The panelists stated that the opportunities in the entertainment business in Africa are great. Ms. Silva, actress and movie director, said, “Nigeria … is the third largest movie and video producer in the world.” She also mentioned that Nigeria has what it takes to succeed in business--talent in distribution.” Nigeria’s movie business model is low budget, high quality, and learning on the job. However, some of the panelists argued that short training sessions for people in the industry are still necessary.

The obstacles to the entertainment business in Africa are the lack of a “legal frame work that works.” Mr. Ngoran Assoumou, the founder of Rman Interpor, provided an example based on his personal experience. He found copies of his television production in France, yet had no legal recourse for copyright infringement. Access to capital is also an impediment in entering the entertainment business. The primary source of capital for investment in Africa is from family members. The language divide between Francophones and Anglophones was also mentioned as a challenge to entering the entertainment industry.

The third session discussed the media. Panelists included: Henry J.J. Jefferys, Deputy Editor, Beeld; Phil Molefe, Head, SABC South Africa; and Mahamodo Camara, Deputy Director, Group Jeune Afrique. All the panelists agreed that investing in the media sector is high-risk, because the media must play a watchdog role in reporting corruption in government, the private sector, and NGOs.

The panelists also noted that stories about Africa are currently being written, edited, packaged, and distributed from Western cities such as London, Paris and New York and do not accurately reflect the continent. The stories that come from these entities are directed under the industry adage, “if it bleeds it leads.” This principle prevents information about Africa other than war and natural disasters from being disseminated to a western (and global) public.

The panelists identified the positive movement in the media sector as the development of the “Africa Editor’s Forum.” The panelists emphasized the importance of African journalists taking ownership in telling their own stories.

One of the challenges in the newspaper/magazine business is that in Africa, the price of a newspaper is equivalent to the price of a meal. In addition, African media disproportionately focus on politics and politicians. Furthermore, a majority of the media is owned and operated by governmental bodies, making it difficult for private companies to enter the market.

The last but most existing session was about outsourcing. The young and energetic panelists were March Dadzie the manager of Convergys; Andrew Esemezi the general manager of Supra Telecom; Karim Morsli the co-founder of Rising Data Solutions; and Nii Simmonds the founder of the NAFRICOM.

Mr. Morsli noted the potential to make money in Africa. Mr. Simmonds stated that Africa must skip the manufacturing stage of economic development and “go straight into outsourcing,” by setting up call centers and eventually moving into software development. The main challenge to expanding the “outsourcing industry” is infrastructure.

Africa’s competitive advantages in the outsourcing business are cost; language – in Anglophone and Francophone countries; time zones – proximity to Europe and the United States; and human capital – both in Africa and in the Diaspora. Currently, there are call centers operating in Ghana, Nigeria, Togo, Mauritius and Senegal. Ghana’s data processing centers, however, are only working at 20-percent capacity. The next step in making call centers economically viable is to apply the learning curve to avoid stagnation and to develop other outsourcing businesses.