Cytonn CEO Edwin Dande speaking during the discussion at the Strathmore Business School.
Today I had the privilege of speaking to MBA Students from IESE Business School attending a two-week immersion program at Strathmore Business School. The topic was about “Challenges and Opportunities of Doing Business Across the African Continent.”
My focus was really on East Africa; my key message is that the opportunities are as myriad as the challenges. By any key message, East Africa is at a better place as an investment destination than it has ever been:
- Macroeconomic indicators such as interest rates, currencies and exchange rates are more stable now than they used to be decades ago,
- The demographic trends are very supportive – the population growth rate of 2.6% p.a. is higher than the global average of 1.2% p.a.; and rapid urbanization at 4.3% p.a. is way higher than global average of 2.1% p.a.,
- Ease of Doing Business indices are pointing in the right direction – for example, Kenya ranks #61 in Ease of Doing Business, compared to rank #129 five-years ago,
- Governance indices point the right direction as indicated by an improvement in Kenya’s corruption perception index score to 28 from the previous score of 26, with a higher score in the index reflecting less corruption and better measures to prevent corruption,
- Specifically, for Kenya, we have a lot more going for us:
- We are the gateway to the East African Region through the Mombasa Port and through Jomo Kenyatta International Airport (JKIA), making us the regional business and transit hub,
- We are the global leader in mobile money payments through M-Pesa,
- We have a vibrant entrepreneurial culture,
- Our wildlife tourism is second to none in the world,
- Our marathoners are second to none in the world, and,
- The Obama heritage gave, and continues to give, us global brand recognition.
A student engages the panel of speakers during the forum at the Strathmore Business School.
However, there are no opportunities without challenges. Based on my experience, I see these are the major challenges to doing business and growing in Africa:
- I see the first challenge as the pervasive corrupt environment. It makes it very hard to conduct business, not just in terms of things like dealing with government bureaucracy and obtaining statutory licenses, but also when processes are corruptible, it is not the best ideas, goods and services, that carry the day, but the most connected tenderpreneurs. It is however comforting that the President has made fighting corruption a key agenda of his legacy.
- Mediocrity remains a major challenge. Just see how we build or repair some of our roads – simple patchwork that washes away in a few years. We need to have a culture of delivering the very best work, goods and services. The tenderpreneurial culture of getting the most amount of money, with the least amount of work, in the shortest time possible, is concerning.
- Finally, we need a more cohesive culture and nation where we are not disrupting business and growth every five-years to fight and bicker along ethnic lines. Moving millions out of poverty requires long periods of sustained and uninterrupted growth. For example, for countries like Singapore to achieve their current status, they had to go through 30-years of uninterrupted GDP growth.
IESE Business School Students at the Strathmore Business School applauding the speakers during the forum.
In summary, the East African region presents compelling business opportunities across almost all sectors given the compelling underlying economic fundamentals; it’s just about picking your industry, your strategy, your team and executing hard!
Some of the Q&A Discussions:
- What is the most striking difference between your experience working in the West and working back in Kenya? I think I would say work ethic. We can certainly take more pride in our work, work a lot harder, and be more thorough with our work output.
- What do you consider Cytonn’s competitive advantage? I would say it is our culture. It is team oriented – we like team players not stars. We are results oriented, you just have to deliver and let the results speak for themselves. We are also trying to make the work place a fun place to be and giving our young talent a lot of responsibilities and room to learn and grow.
- What are the best sectors in Kenya to invest in? I think it does not really matter what sector you pick. We can use better healthcare, better roads, better internet, etc. In frontier markets such as Kenya, the issue is supply at an affordable price, not cost. So, pick any sector, deliver a great product and service, at a competitive price, and you will be good to go.
- Looking back, what class during your MBA do you find most useful? The technical classes like finance, discounting cash flows, accounting were great, they taught real practical skills and frameworks, but with the benefit of hindsight, the biggest challenge I see is in the soft skills; managing and leading people, especially talented and driven people, is incredibly challenging.
