It was 1996, and Sam Jonah knew he was in trouble.
Jonah was chief executive of AngloGold and had just led the company’s listing on the New York Stock Exchange, making it the first African company on the Big Board. He was on a routine follow-up roadshow when the Rwandan genocide filled the airwaves, and Jonah spent much of the next year explaining that his company had no operations in Rwanda. “Most investors then still thought Africa was a country,” he recalls, “one country. And once Rwanda hit the airwaves, we were all Rwanda.”
Today, fewer experienced international investors or managers would confuse Jonah’s native Ghana with Rwanda. Most would recognise that the language, region, geography, resources and governance of the two countries are deeply distinct, and that Ghana and Rwanda are only two of 54 African countries (55, depending on who’s counting). Both Africa and those doing business there benefit from a better understanding today of Africa’s many and diverse parts.
But if you look only at Africa’s parts, and not Africa as a whole, you’ll miss it. It’s one of the more surprising conclusions from spending much of the last year talking about Africa’s growth with some of the top chief executives succeeding there.
The most obvious reason to consider Africa as a whole is economies of scale. Tom Gibian is among the pioneers of private equity in Africa. His firm ECP began investing in Africa in 2000. “In Africa, you can’t be a little pregnant,” Gibian says. “The Asian shipping lines and logistics firms saw this early on. Their business just didn’t work if they had to give up their manifests for last-mile transport. Once they decided they were coming to Africa, they were all in. They made sure they could transport to every major port.
Gibian continues: “The same is true in my business. We found that, to build a world-class private equity business, you couldn’t go small. To attract the right capital and world-class talent, you had to do the whole continent.”
Tim Solso of global power leader Cummins had a similar perspective, especially in regard to talent. Like ECP, Cummins has a whole-of-Africa strategy. Solso was chief executive when the strategy was developed. When asked why he didn’t focus on a couple of big national markets or one regional market, he replies it was “Never an option. My goal was to move the needle for Cummins. It had to make sense from that perspective.”
Solso also found that a continental vision helped to attract the talent Cummins needed to succeed. “The guy I asked to lead us in Africa is a phenomenally capable talent in our organization, and was previously leading distribution in Asia. For him to come and attract the team he wanted, the opportunity had to be big: all Africa.”
Africa can seem disintegrated. Its intraregional trade is only 12 per cent of its total trade, the smallest of any global region. But that figure belies the trend. First, it measures only formal trade and even those who gather the statistics say that nearly half of total trade is informal. Second, trade strengthening programs are being driven in each of Africa’s five active regional trading blocs. Most ambitiously, negotiations began in 2012 to combine three of these blocks (COMESA, EAC and SADC) into one trading region. This “Cape to Cairo” meta-trade zone may be a long time coming, but its advance to the negotiating table is inarguably the result of a trend towards integration.
Inward investors like ECP and Cummins are certainly beneficiaries of that trend. But the real drivers of it are internal to Africa. An emerging set of competitive African companies and their leaders are displacing a prior model of African competitiveness based on single-market dominance and rent-seeking. Companies like Togo’s Ecobank, the South African telecoms giant MTN and the Kenyan communications firm Scangroup have the financing, systems and management to compete across borders, rather than rely on them for protection.
While it makes sense to consider Africa’s trading blocks and countries distinctly, some of the most widely held distinctions among Africa’s regions are in fact blurring. Consider the most common division of all: north Africa from the rest of Africa. Nearly every international organization, including all the Bretton Woods organisations, measure and manage their affairs in north Africa in complete isolation.
But is it in isolation? Consider the experience of Morocco’s Attijariwafa Bank, which has pursued a distinctly Southern growth strategy, acquiring banks in Senegal, Mauritania, Mali, and Togo. Attijariwafa is not alone. Both of Morocco’s leading construction firms are pursuing Africa growth strategies, as is leading Algerian conglomerate Cevital. Asked if he thinks of himself as African, Attijariwafa’s chief executive Mohammed El Kettani says warmly “Yes, always. In the early 1900s, part of the family went south to Senegal and Cote d’Ivoire and they did business there for forty years and built up wealth and then returned to Morocco. My wife’s parents also spent many years in Mali and Cote D’Ivoire, trading. My eighty-five year old mother-in-law speaks Wolof (a tribal language of Senegal) to this day.”
Perhaps it is not surprising that the one international financial institution that reflects Kettani’s reality clearly is the one closest to it – the dynamic African Development Bank, which covers all of Africa.
It is surely a mistake to view Africa as one place, but it is as much of a mistake to view it as no place at all. It’s an identity brought home to me recently by Scangroup chief executive Bharat Thakrar. Bharat spoke while doodling idly, not looking down. “Very few Africans can trace the outline of their country. But we all know what Africa looks like,” he said. Still looking at me, Bharat slid over the table a perfectly rendered outline of Africa.