 Welcome to The Get, the podcast for enterprise leaders delivering timely insights for today's global economy and tomorrow's competitive advantage. I'm your host, Chris Kane, president for the Center for Global Enterprise. And today we sit down with two global business leaders to discuss the myths and realities of doing business in Africa. C. Felsedak, founder and CEO of Agricorp, an Egyptian-based agricultural producer and exporter, and Bawali Adumadi Adui, vice president of investments for the Africa Finance Corporation, a Nigerian-based, Han-African investment-grade multilateral finance institution. Safe and Bawali, welcome and thank you for joining us today. Recently, U.S. vice president Kamala Harris visited Africa to push for U.S. business investment in the continent. While this is part of President Biden's recently announced Africa initiative, there are a myriad of opportunities and challenges for any CEO, U.S. or otherwise, interested in doing business in Africa. For the past 30 years, the African continent has been described as an emerging market global companies need to invest in. Many of the reasons are still valid, if not more so today. Africa is one of the largely untapped commercial regions in the world with 54 countries comprising its continental GDP. It is rich in diversity and natural resources. It has one of the fastest growing populations of over 1.3 billion people, including a burgeoning workforce with more than half under the age of 25. As the continent's economies grow, so does the middle class, which presents an increasing consumer base for businesses looking to tap new markets. However, like all geographies and countries, doing business in Africa also comes with its fair share of challenges. One is the lack of infrastructure, which can make it challenging to transport goods and services across the continent. There are also different political, regulatory and legal frameworks among the 54 countries, making it difficult for businesses to navigate. And like other regions in the world, the lack of transparency and corruption adds another barrier to entry. But weighing the risks and the rewards, we ask the questions how should CEOs approach market entry on the African continent? Can companies rely solely on distributors, or do they need a local representative and priority markets to gather market intelligence, manage distributors, and build relationships with government? But Wally, maybe we can start with you. What are some of the most common misconceptions about doing business in Africa? So one of the biggest misconceptions is that Africa is too risky to invest in. In terms of the work that I do, which is developing infrastructure projects on the continent, Africa is the second least risky region in the world, according to Moody's analytics. So the Middle East has a lower default rate than Africa, other than that Africa has the lowest default rates after the Middle East. So basically, right, means is that on the flip side, the returns on the continent are actually higher than other regions. And so what that means for the risk adjusted return is that it's actually much higher in Africa than the rest of the world. So that would be, for me, one of the biggest points is that the risk really is not as high as it is perceived to be. One of the other misconceptions is that Western models can be copied and pasted, or that perhaps if you have a model that works in one country, it can be replicated across all the countries. And yes, there are some similarities on the continent, but there are some unique differences. So one has to start with particular context for the nuances as you sort of look to expand into other countries in the region. I share the same, but the Baal are staying right now. Being in Egyptian, we are a bit far from Africa. You're on the tip of North Africa. But I think a lot of the things that we will share together, it's not like doing business in any country in the world is different. The cut and paste thing would not work in the countries that Egypt, that's what I'm talking about mainly, because these were by excuses. It's definitely not the same as working in any other place in the world. I would say that. So, Steve, you're in the agricultural sector, both production as well as exporting, yet Africa has lots of agricultural and natural resources. Are there any characteristics about the agricultural sector that are useful to share with people who are thinking about entering the continent as an investment? Your point about North Africa being separated from the rest of Africa is a major, major insight that people have to focus on. And I think the other one that Bawali was referring to is, look, Africa is not a country, it's a continent. And it has 54 different countries in it. And any time you're going to invest in a country, you have to understand that country and figure out what your strategy is for market entry. And you just can't assume that just because you want to be, for example, investing in Asia, that how you invest in Singapore is going to be the way you're going to invest in every other country in Asia. But as it relates to the agricultural sector, are there any insights, Steve, that are common threads across countries in Africa? I think Africa is very unique in the sense of its richness in agriculture. Agriculture dates back to thousands and thousands of years. And Africa on Thursday is not on the map. We are net importers of pretty much a lot of the ingredients that we use in the factories and in the production over here. Nevertheless, I mean, the way that I would approach Africa, I would look at the raw materials that Africa has to offer. I would look at the ports that are in Africa being an exporter or we need an interaction with the outside world. The ports are a major advantage. For example, us being in Egypt, we are four days away by both Europe. We are 12 days away to the US. Working in the position player or a company lead access to the markets and access to the ports. Without having good ports or good lines that come in and out, then the development would be very different. I'm fascinated by the big shippers, the MSEs, the big liners that have the services. I'm not sure if these guys have opposites to Africa or not, but I know that the Chinese, once they came into Africa, the first thing they did was building ports. They're very interested in having ports on East Africa where they can bring in the goods and ease of moving around. Bawali, a lot of experience in ports and an infrastructure, as Steve's point is that without the ports, it's very difficult to have a business, at least a globally connected business in Africa. Your thoughts on that? Is that a current barrier to entry for companies wishing to invest in Africa? Maybe you could just describe the current state of port and infrastructure development across the continent that would be very tied to commercial success. Yes, I mean, most goods travel from Africa to the world and visors are using the ports infrastructure. And it is important that these ports are run and operated efficiently. So you have situations where some ports, there's no economies of scale, and so they have to be some transshipments or larger ports and the goods being put on a smaller port, which is double handling and increases the cost of ruin business. What I'm seeing in the work that we do today is actually a lot of these ports are currently upgrading the infrastructure to allow for larger vessels to birth. What that does is reduce the cost of transportation and obviously eventually the cost to the end users. But even in addition to the port infrastructure, you have a lot of the peripheral works around making sure that they have strong IT systems in place, the equipment that they're using are efficient. All these things, including the infrastructure, equipment, IT systems, appropriate manpower, et cetera. There's a lot of development work going on right now on the continent to upgrade the African ports and this will result in lower cost of doing business and lower cost of living for the citizens. So port efficiency and clearance efficiency is really key in a sector like SEAFs, right? So if you're in an agriculture where you have things that if there's an inefficiency, then your product is going to spoil and become unusable. SEAF, if it's stuck in places where it shouldn't be stuck. In some other industries, maybe it's not so much, right? If you have a product that is coming out, it doesn't have a time stamp on it for its relevance and usability. SEAF, in the agricultural sector, what would be the most important thing for an operator in a country to know in order to become best practice for your company and the companies who are importing and exporting agricultural products from Africa? I think that the ports and efficiency of the ports is tied to a lot of other businesses in agriculture. If you're in the para business, for example, you understand how the fashion moves into three or four different seasons a year and it's very, very critical. If you go into XYZ in the U.S., teachers, they have to arrive before summer by three months. They arrive during another summer and it's an old production, old style, whatever. If you look at the global players, it doesn't exist anymore, a product without a stamp of expiry. It could be an expiry in the design, it could be an expiry in the food, it could be an expiry in whatever. If I look at Africa today, I would see Africa as a hub for agriculture. I see Africa as a hub for a parent. I see Africa as a hub for pharmaceuticals. I would think of Africa as a convergent market. It's a market that needs investment. It's a very different market than any other market that you see in Europe or in Asia or North America. But going back to the port efficiency and then you go back to the road efficient. Because once the stuff gets on the port, then it needs to be transported. A lot of those countries don't have ports because I'm not sure maybe Wallach can answer that. How many countries in Africa actually don't have any ports? Yeah, it's about 17 African countries and I don't think any other continent has as high a percentage of landlocked countries and so that is a significant bottleneck in terms of transportation and so it increases the cost of doing business intra-Africa collaboration to ensure that these landlocked countries can get the goods and services that they need and they can also export as well. So let's talk about collaboration. How can African countries make it easier for business investment? And maybe how can other countries, Steve was just mentioning China and I've opened the discussion with Vice President Harris and President Biden's initiatives. But how can other countries like the US or other countries in Asia or the EU make it easier for their countries to invest in Africa? Maybe we ought to start Bawali with you with how can African countries make it easier for business investment? Right, so everyone says that infrastructure is the work of the government but the government cannot build all the infrastructure and its entirety. The African government should definitely build some key infrastructure that are public. Also a significant opportunity for public-private partnerships and what the governments can do and can continue to do is to make the environment more conducive in terms of ensuring that the right policy and regulatory environment are appropriate, you know, increase the ease of doing business. And I think that is a significant thing is the government to increase its role as an enabler of private sector investments and of public-private partnerships. So if there were one example of a successful collaboration where governments either African and or international governments are collaborating and enabling progress with the private sector, does one come to mind that would be important for CEOs to think about and be mindful about how to utilize? I mean I think if you look around the African continent you'll see some countries that are significantly working to improve the ease of doing business. Rwanda comes to mind as one example where there's been a lot of significant and consistent work being done to increase the ease of doing business and they actually are making a lot of progress, measurable progress and you actually see a lot of inflow of foreign capital into the country. So I'll say that there are a lot, for example several organizations within the African continent such as the Africa Finance Corporation such as Africa 50 have been established and they have been established with collaboration within the public and the private sector to build infrastructure on the continent and to to basically increase the cost of the private sector. From a North African perspective are there examples that come to your mind about how governments and private sector are working collaboratively to advance and enable progress for private sector companies? I'll tell you one of the difficulties that we find is Egyptians who are North African countries working in Africa. For example, we have a Commessa. The Commessa is a free agreement that we have with several countries on the east coast of the African continent. Very strange, but we didn't do the business in Africa in the past and we'd go into the Commessa with that treaty going into a country, for example and then the customs just doesn't approve of the treaty. They say, no, you have to pay customs. So I think one of the things that you need to do if you get on the tip of the problem is the rule of law. The rule of law between Egypt and the Commessa or between Egypt and the US or between Africa and the US. Two parties. This has to be respected and it has to be respected on every level. I cannot send a shipment in June and get a duty on it and then another one in September with no duty. So it has to be, that's number one. That number one thing is that everybody has to respect the same rules from there. If you don't have that on the ground as the number one on your checklist, then everything makes it more difficult. So execution and compliance with the commitments seems to be a worldwide dilemma for business. Let's talk a little bit about from your experience examples of successful foreign companies operating in Africa today. What are some of the key factors contributing to the success of these companies? You have to come to mind and see why don't we start with you and then Bawali, maybe you could talk about some success stories from foreign companies operating across the continent. If you look around today, you will find the top successful companies or all multinational companies. You look at Pepsi, you look at Coke, you look at the Union neighbor, you look at Proctor and Gamble. I mean, those guys have done such a good job in Egypt and I would see them just wake up in the morning and say hey, let's go and get the bottling plant running in Rwanda or in Egypt, whatever. You need a local partner. That's my number one, number two, number three. I would put that on the top of the list. You have to choose your local partner. You need a local partner because everything in every country is different. If I want to go start the business in the US, I don't need a local partner. If I want to start the business in Belgium, I just go to Belgium, start the company and start operating. But doing business in Africa is a bit unique. It's a bit different. So I would think on your priority list, number one, you want to enter the market, you get the local partner, you're happy with the local partner, stay with them, give yourself two or three, four, five years and note that, you know, if you want to continue by yourself, this is what most of the multinational, they start through the local partner and then today they're 100% multinational owned. So you have to go in but you definitely need a local partner. I want to come back to the local partner discussion after Bawali offers up for examples of successful companies. So over to you, Bawali, and then I'd like to come back for any insight you both have about advising a CEO about how do I pick and qualify a good local partner as opposed to picking a local partner and then having a disastrous experience. I would say if you look at some of the multinationals that Steve spoke about, a lot of them have stayed in the countries or the regions that they're doing business in notwithstanding the cyclical environments, right? And so yes, sometimes you see some companies enter the market and then you have a downturn or a bit of instability and they need, right? It's not easy to re-enter once they're stabilized and like every economy, you would have economies within African context that are cyclical, maybe have some periods of economic downturn or political instability but you have to be able to sort of stay with the good times, the bad times and even innovate and ensure that you are innovating and then when the opportunities come and things stabilize it is those that are on ground and remain that will be able to reap the advantages of that. Okay, so let's talk about how do I pick and how do I qualify a local partner. Steve, this is one of the things we talked about at the beginning of the conversation. How would you advise me as CEO of a company interested in coming to Africa to identify a good local partner for me so that I don't have a lot of misfires and are there any tricks of the trade that you would bring to the attention of a CEO? If I was a CEO in Europe or in North America and wanted to come into country Europe, I would go in through the chambers of commerce, okay? I would knock on the door of the French chamber of commerce. I would knock on the door of the American chamber of commerce. I would get on the plane and get there. Usually the people that work through the chambers are reputable companies, the serious companies, the companies that have been in the business and then from there I start to maneuver my way around. I would look for the companies that are doing a similar business that I'm doing. I would stay away from government because they're only getting their good news and good vibes, good stories. I would definitely have to meet with them but as a number one priority, I would meet them on my last business. I would concentrate on the chambers of commerce. Bawali? Yes, actually I completely agree with that. One is the access to network that Cesar has spoken about. But also the access to information right? Because again, Africa has the perception of risk in reality it is much different and so you need an entity that has credible reliable information and can sort of be that concrete for partnerships for information thereby sort of reducing the time to entry. Alright, so let's move on to one of the things we talked about earlier which was the tremendous potential of a young and promising workforce across the continent. What are the business skills that you each see as being prevalent in Africa that companies should be aware of and what areas need investment by either local or foreign organizations to further develop Africa's human capital potential? And I'll let you both answer and then I have one of my own examples I'd like to bring into the conversation but Bawali, why don't we start with you first. What are the business skills that you think today are prevalent in Africa that a company should be aware of and trying to access? So like you said, we have a young population and they're brilliant, they're hungry for knowledge and information. Additional training is an excellent opportunity on the continent today. You have areas of technology as well and so a lot of people maybe learn a trade but may not learn it in a professional way and so they're sort of an opportunity to upscale them and ensure that they are operating in accordance with international best practices and then because the population is quite young, you also have a lot of entrepreneurship, so there is an opportunity to sort of support the investments and the training of entrepreneurs in a sustainable way where you can invest in them and actually be able to help them to grow and scale their businesses. And I think another area on the continent you have a lot, roughly 50% women, but a lot of these women fall off the educational system, the primary and secondary school education. What does it mean if you can actually keep them in the educational system in the primary and secondary school and thereby obviously increasing their earning potential over the course of their life span and so you need programs on the continent that work on sort of the gender equity issue when it comes to education. See, skills that you see prevalent in Africa today that companies ought to be tapping into and taking advantage of. I would think what Wallace said in training is very important. I mean you do have a young population that does need training. If I'm going to start a factory I'm going to start operation in Africa. I mean, it doesn't matter if the population is already young but they cannot, you know, are not trained. So I would invest in training. I would look at the young population being a workforce. I mean, but the young population alone is not the answer. There's a young population in India as well. There's young population in Southeast Asia as well. So having a young population is the answer to all your problems. It's a plus, okay? But it doesn't mean that's the reason that I would go to do business in Africa. We had a colleague come to us three or four years ago and said, look, I want to talk to you about data scientists and the world is in need of and demanding more data scientists across all different sectors of business. And 20 years ago companies went to India to get software programmers and developers because the skills in India are tremendous in world class. We in Nigeria, this was a Nigerian discussion, have tremendous data scientists skills and pools of talent. We can be the contemporary equivalent to what India was for software development and programming in the fields of data science. And we can do it at a very competitive price point for the global market. It was a new thought to me. We were quite impressed with the idea and I guess Boali maybe you ought to talk about this one because you operated the intersection of reality of tangible goods same time information skills and technologies. Do you see data scientists as a potential area for African human capital potential and value? Definitely. I actually am familiar with a few educational institutions that are training data scientists and there is a huge pipeline of people that are currently going through the vocational the training programs. You know, I think time will tell because it's one thing to train it's another thing to place them and so it's really when you are able to place them in jobs or when they start companies and are successful that you have the true validation of the business model. But from where I said, extremely optimistic about training of young Nigerian data scientists computer engineers you know, and in any areas where of high demand really, where it's a technology based business, my information based business, there's all you need is a laptop right and so even with that there is a barrier to entry for some unfortunately but you need a laptop you don't have to travel to get the training and you can deliver it in a cost-effective manner. Then you can sort of increase the pipeline of people coming to the program you can train them in other softer skills and you can get them jobs or you can empower them to start their own companies. Great. Well, thank you both very much. One of the major focus areas for the Center for Global Enterprise over its 10 years of existence has been Africa both as a marketplace but also as a management opportunity to include women into the workforce and management hierarchies as well as how to create scalable and sustainable businesses. So I will probably have future episodes about doing business in Africa and you all have been tremendously gracious to be our starting episode on this theme. But before we let you go, we always like to use the last minute or so to give our listeners one strategic insight to consider. We call it our emerging critical issues moment. So in one word or phrase, please tell us what emerging issue do you see on the horizon that business leaders need to put on their radar? You have to fasten your seat belt. Okay. The pace of business here I think is much faster with the amount of regulation, the amount of pop-ups that you get every day with everything but you definitely need to have your seat belt on because every day you wake up with new regulations, new systems, new currency, new interest rates, new, you know, the fluctuations are very high but the rewards are more so high. Sounds like you have to be a trapeze artist to succeed. Bawawi? I would say looking out for new markets and that comes with being innovative and seeing opportunities where there are problems. But I would say, you know, the companies that can look out for new markets and really think with that innovation in mind but also with the adaptability in mind will do very well. And when you say new markets, you don't just mean geographic markets, you mean business markets as well? Yes, I mean actually in terms of business models. Okay. Great. So finding new ways of doing things within the context of what they do and how that ties in with the market that they're looking to enter. Great. Well thank you both very much. You've been listening to The Get sponsored by the Center for Global Enterprise celebrating 10 years of convening global enterprise leaders around the most important business transformation issues.