I’ve spent the past several years with the most successful business leaders in Africa, today the fastest-growing continent on earth. Africa’s uncertainty is all encompassing. How big is the market? What does the consumer want? Where will the highways be? Will there even be a highway? All unknown. That doesn’t keep Africa down, as the billion-dollar companies in Africa (there are at least 150 of them) can attest. So what can they teach us?
The first is to focus on the long-term trend because the short-term landscape is frequently obscure. Information is scarce and is in any event likely to change before anything of significance can be built. Nigerian cement producer Dangote (DANGCEM:NL) is investing across Africa as well as in Burma and Iraq, countries where operating conditions and the regulatory environment are far from certain in the short term. Pent-up demand, however, is likely to create opportunity for the cement producer that can manage through the uncertainty. Dangote’s management is betting they can do so better than their competition, particularly those from mature markets.
Of course, you don’t need to be from a fast-growth market to succeed there. General Electric’s (GE) chief executive, Jeff Immelt, has been working in frontier markets the better part of 30 years. When a deal was held up in Angola for more than a year because of uncertainty surrounding land tenure, he counseled the team to proceed anyway. “If you insist on waiting until everything is understood, you will never go,” Immelt told me in an interview.
Uncertainty is not just an impediment to be overcome. Enormous wealth can be created by helping customers navigate it. James Mwangi is the CEO of Equity Bank. Delivering coal and fruit as a child, James recognized that his neighbors had significant savings but were wary of keeping their money in banks. “This customer needed his money nearby because his life is unplanned,” James said recently. “The cost of financial services was not the principal hindrance. The physical distance was.” James broke banking out of branches and into trucks and eventually into shops and storefronts, which are easily available to the customer. Equity has done more transactions in two years than in 26 years of branch banking, a model made for the predictable.
In the ongoing wake of the financial crisis, people and businesses in the U.S. have been struggling against a tide of uncertainty. Africa holds some valuable lessons on how to build great businesses in response.