Think Africa and what pictures come to mind? If you haven’t lived or traveled in Africa, the pictures are likely to be few and a tad hazy. Giraffes on an open savannah, perhaps. Maybe an Ebola treatment clinic. Maybe a colorfully garbed woman carrying a perfectly balanced and heavy load on her head.
These stereotypes don’t begin to capture the diversity of Africa today –a vast continent of 54 countries. Nor do they capture the economic vibrancy and growth that have led expert observers and residents alike to adopt the phrase “Africa Rising” to describe the transitions underway on the continent.
To be sure, many African nations face grave challenges – widespread poverty and unemployment, ongoing corruption and violence, and limited access to world-class institutions and infrastructure.
But, Africa is also home to many of the fastest growing economies in the world. Indeed, the World Bank projects that six of the 12 fastest growing economies in the world from 2014 to 2017 will be in Africa: Ethiopia, Democratic Republic of Congo, Cote d’Ivoire, Mozambique, Tanzania, and Rwanda.
Many African countries are diversifying their economies, transitioning from a heavy reliance on extractive industries to infrastructure, telecommunications, manufacturing, and retail. The middle class is growing rapidly. And the continent has seen progress on many social indicators too. Youth literacy rates are up substantially, for example. Child mortality rates are down.
To meet with leading entrepreneurs spurring Africa’s current growth, Knowledge@Wharton and the Wharton Social Impact Initiative traveled to Morocco in November 2015 to attend the annual gathering of the African Leadership Network.
In this special edition of Knowledge@Wharton, you will meet 18 entrepreneurs and executives who are leading, launching, scaling, and supporting businesses across the continent.
In candid interviews, they described the distinctive challenges they face in doing business in Africa. Early stage investments are hard to obtain in most African countries; angel and early stage investors are few and far between. And while many African governments are demonstrating increasing transparency, stability, and effectiveness, real political risks remain. These realities are challenging enough. Misperceptions can make them worse. Fears lead many would-be foreign partners, investors, and customers to overestimate the risks and underestimate the benefits of doing business locally in Africa.
So, what drives leading African entrepreneurs’ optimism, tenacity, and success in launching and growing businesses across the continent? Five key themes emerged across our interviews.
Coming home to make a difference
A striking number of the entrepreneurs with whom we spoke were members of the African diaspora. Their African-born parents raised them outside the continent – in Europe, Asia, and the United States – but maintained close ties to their home countries. Educated abroad and now adults, the entrepreneurs felt a calling to return home to Africa to build a business and a better world. Head and heart converged on a plan that promised – and in many cases delivered – economic and emotional returns.
Soga Oni’s story was typical. The founder of a recently launched medical devices services company in Nigeria, Songi grew up in a small town outside Lagos. “I spent most of my formative years there,” he reflected. “I did my college in Nigeria. After that, I went to the U.S. for a master’s. I worked for a few years as a software engineer in the U.S. And then I went through a midlife crisis. I wanted to move back and I wanted to know what I could do to help back home.”
Recognizing the African opportunity
Many of the entrepreneurs and leaders with whom we spoke commented on the potential for business growth in Africa. Economic growth has been slow in developed economies in Europe, Asia, and the Americas. Not so in Africa. With the expertise and connections to launch new businesses in Africa, the entrepreneurs seized upon the opportunity to get a first mover advantage.
Acha Leke, a director in McKinsey’s office in Johannesburg, South Africa observed, “In the late 90s, the continent was basically not growing. Growth was about 2-3%. Population growth was about 2-3%. Over the past 15 years, African has been the second fastest growing continent. All the sectors are growing, so it’s been a very exciting time to be here. We still have challenges. But, it is an amazing, exciting time to be part of this whole Africa-rising story.”
Understanding and respecting differences
Many Africans complain that non-Africans don’t understand that Africa is a continent not a country, and a huge continent at that. The entrepreneurs with whom we spoke were keenly aware of the differences among African countries. Successful businesses, they emphasized, understand and adapt to local customs – to the language, culture, and economic status of each country. What works in Benin may not work in Botswana. Local knowledge and local partnerships are key to success, they emphasized.
Addis Alemayehou, CEO of 251 Communications, echoed this theme in describing some of the factors that make Ethiopia, Ethiopia. “The biggest challenge about Ethiopia is perception. … So, people have this preconceived idea about what they should expect when they land on the ground. … [Ethiopia] is a very old country. We’ve been around for 3,000 years; the U.S. is like a teenager compared to us. We’ve never been colonized. We have our own language, our own way of telling time. … There are all different things about the country that a lot of people don’t know. Knowing that, understanding it, and respecting it will get you a lot further.”
Building a new and distinctive brand
While highlighting the importance of adapting and marketing to the local, country-specific economy, many of the entrepreneurs we interviewed spoke of the opportunity and need to create African brands – brands from Africa for Africa. The goal was not just an attractive or even a great product, but a brand – an identity, really – that says this business is not some multinational’s outpost: We are of Africa and for Africa.
Alpesh Patel, the founder of Mi-Fone, noted, “When I left Motorola, I was approached by other brands, but I figured that Africans are actually best served by Africans themselves. … [Mi-Fone is] an African brand, which means basically 100% African ownership. The soul of the brand is very African. The essence of the brand – our communications – is very African and skewed towards youth. We were the first to do this.”
Seizing digital opportunities
And, finally and perhaps not surprisingly, digital products, services, and strategies abound. African business leaders have seen the potential to leapfrog the international competition with mobile phones and mobile banking. The African entrepreneurs we interviewed are, in many cases, pursuing digital solutions to market failures.
Richard Arlove, CEO of Abax, commented, “What attracts people … is the sheer market size of Africa – the numbers of people and also the fact that Africa can leapfrog in certain cases, learning from the mistakes that have happened in other countries. You see that in in mobile payments, in technology, in banking… There are a lot of new ideas, a lot of intellectual property that is being developed in Africa.”
The business leaders and entrepreneurs we met at the annual gathering of the African Leadership Network varied in their ages, experiences, nationalities, and industries. And yet they espoused common themes and values:
- Returning home to make a difference.
- Recognizing the African opportunity.
- Understanding and respecting cultural differences.
- Creating brands that are both world class and distinctively African.
- Seizing the opportunities of the digital revolution.
Combine these strategies with traditional business acumen, smarts, and drive and you can do well and do good across the continent, our interviews suggest. The 18 business leaders and entrepreneurs interviewed in this special edition of Knowledge@Wharton are helping to transform many African economies and the lives of millions.
Katherine Klein, PhD is the Vice Dean of the Wharton Social Impact Initiative and the Edward H. Bowman Professor of Management at The Wharton School of the University of Pennsylvania.
Nick Ashburn is the Director of Emerging Market Strategies at the Wharton Social Impact Initiative.