Insights

Kina Advisory provides insights on topical issues facing the industry today as companies operate and invest in Africa. Read through our latest thought pieces that give an insight into Kina’s way of thinking, as we discuss ideas that challenge the way business in Africa is conducted, offer solutions to those challenges and highlight the success of others.

 

Are your contractors managing the social impacts of their activities?

25|04|2016

Aligning social performance roles and responsibilities between project operators and their contractors is tough at the best of times. Project investors and operators are under increasing pressure to manage costs, and projects now deemed ‘uneconomic’ are collecting dust on a rather large shelf at headquarters. On the other side, contractors are facing fierce competition for the surviving projects with many squeezing their already tight profit margins just to keep a foot in the game.

Every day there seems to be another example of the challenges of managing the social performance issues associated with large capital infrastructure projects.  Many project operators have to navigate the complex dynamics of communities impacted by such projects, labour disputes, issues of human rights and the use of increasingly precious water, land and other natural resources.

In addition and increasingly, host Governments are enforcing more stringent local content requirements on project operators in an attempt to capture greater socio-economic benefits.  However, not all local suppliers have the capabilities of large international contractors and so the challenge becomes balancing local content requirements with high health, safety, environment and social standards.  The unfortunate truth is that a project operator will only ever be as good as the poorest performing contractor in their supply chain.

The business case for a more cohesive approach between operators and contractors has been well documented.  A 2011 executive briefing entitled ‘Shared Value, Share Responsibility’ by the International Institute on Environment and Development (IIED) clearly articulates both the challenges and actions required to improve performance in this area. IIED looked to the 2010 Macondo incident in the Gulf of Mexico to demonstrate the enormous impacts which poor contractor management and supply chain coordination can have.

Whilst some might continue to argue that alignment on social performance issues between project operators and contractors is a ‘nice to have’, I believe it is essential.  After all, owners can ill afford projects that suffer cost and schedule over runs (or stop completely) as a result of community unrest – particularly when margins are so tight to begin with.  Getting it right from the outset has never been more important.

As a colleague recently reminded me, ‘social performance management is not core business, but it must be core to the business’.  I believe this sentiment also lends itself to the supply chain.  Just as a contractor’s health and safety performance is fundamental to a successful operation – whether drilling an exploration well, building a process facility or shopping center, or constructing a road – so too is their ability to understand and manage the social impacts and opportunities which come with that activity.

At Kina we understand that each operation and project will bring unique challenges that require unique solutions.  There is no ‘one size fits all’ approach that will bring about alignment and cohesiveness, but we offer a range of tools that can help both project operators and contractors better manage social challenges.  We help our clients prepare for and manage the social risks inherent in their supply chains but we also passionately believe in building capacity within the supply chain – helping local suppliers enhance their social performance capabilities.  This is good business and ultimately can only lead to better outcomes for project operators, contractors and host communities.

Trina Fahey, Partner

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A Japanese concept that sums up Kina’s ethos

21|04|2016

Have you ever heard of the Japanese concept of nemawashi? No? Neither had I till I spoke to a Japanese client of mine the other day. Nemawashi, she explained to me, is an informal process of quietly laying the foundation for some proposed change or project by talking to the people concerned, gathering support and getting feedback. The Japanese consider it a fundamental first step before any major change or project gets underway. Successful nemawashi means that changes can be carried out with the support and consent of all sides.

Building consensus

I think this neatly encapsulates the work Kina does for its clients. We help to build consensus and trust between the companies that want to invest in African countries, and the governments and societies that will influence or be affected by those investments. We prepare the ground for our clients and make sure that, from the very outset, business, government and society understand each other’s fundamental motivations and needs. A successful, long-term business cannot be built without this understanding – this nemawashi.

Going around the roots

The literal translation of nemawashi is “going around the roots”. It refers to the process whereby – before you transplant a tree – you gradually introduce soil to it from the new location. By doing so you get the tree accustomed to the new location, before you move it.

At Kina we “go around the roots” on behalf of our clients. We believe in a gradual process of acclimatising them to the countries in which they plan to operate. We help to forge links between them – ‘the company’, and the government and society in the countries where they wish to operate. These links are based on mutual understanding and respect.

Our triangular theory

We call this our triangular theory of doing business: It is founded on the idea that the key to unlocking long-term profits in African countries is to understand how governments, business and wider society interact with one another. It’s not just about having conversations with governments and society, it’s about having the right conversations. In fact, it’s all about nemawashi.

Rosalind Kainyah, MBE, Founder and Managing Director

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How to build a successful business in Africa

22|03|2016

Kina Advisory CEO, Rosalind Kainyah, explains the philosophy that drives the company, how it makes a difference to Kina’s clients, and what it takes to build a successful business in Africa.

 

Can a company ‘minimise’ its tax payments and still be socially responsible?

25|01|2016

I came across an article in The Economist (Jan 2nd 2016) on whether firms can be “socially responsible” while avoiding taxes. It reminded me of when the late Australian business mogul Kerry Packer was asked by a government committee if he was a tax avoider. His response was: “I am minimizing my tax. And if anybody in this country doesn’t minimize their tax they want their heads read because, as a government, I can tell you: you’re not spending it that well that we should be donating extra.” It’s a typically controversial quote from a controversial figure. I am not saying that I agree with Packer, but his words do bring to mind some important questions about the relationship between business, the state and society. 

Less tax, more good works

Is it possible for a company to avoid tax and at the same time call itself socially responsible because it is has an impressive CSR budget? Some argue that money saved by paying less in taxes can be put to work far more usefully by corporations, who can invest it directly into jobs, training and opportunities, and other ‘good works’, than by governments, who tend to spread it too thinly to provide tangible benefits to local communities.

I do not agree, for two reasons:

First, I think we start getting into great complexities when there is any link between social investment and taxes. I think the two should be completely separated. Taxes are usually paid on income after taking out all ‘allowable’ expenditure. I think companies can always include money spent on social investment projects as part of such expenditure. This means it comes out of their gross earnings and the company is then taxed on its net earnings. This is why we advise that social investment should be linked to business objectives, so that they can genuinely be part of project costs. Even a company’s pure philanthropic activities can be treated as costs before tax.

Second, I think it encourages bad habits in governments when companies take over their responsibilities. Companies and individuals pay taxes so that governments can provide public services. It is not for companies to say: because governments won’t do what they are supposed to do with their tax dollars, we will take over their role. They should join with other citizens to ensure governments do what is right.

CSR: a taxing dilemma

Ultimately, however, making this an argument about taxes versus social investment completely misses the point of what CSR should be about. It’s not about either, or. CSR is about your entire approach to business: It’s about making corporate decisions that will generate important long-term benefits for the country in which you operate. Such as employing local people over expatriates; using local goods and services rather than importing from abroad; and training local people in the skills you need.

Work with, not against, government

If a company believes its CSR policy justifies paying less tax, then it has missed the entire point of CSR. Paying your fair share of tax is socially responsible, as is making a tangible benefit to the communities in which you operate. Genuine CSR is a about aligning your own corporate objectives with the legitimate aspirations of the host country. It is about partnership and having the right kind of conversations with governments and with society. This is what ensures a more profitable and sustainable business in the long-term.

Rosalind Kainyah, MBE, Founder and Managing Director

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What we are up to & News

13|07|2018

Derick Omari wins the Queen’s Young Leader Award

From 4000 finalists from across the common wealth, Derick Omari, a graduate of the Class of 2018 at Ashesi University, Ghana is awarded the Queen’s Young Leader Award.  Dericks goal … “My greatest desire has been to make a substantial positive impact in Africa. To receive the Queen’s Young Leaders Award along the way to this dream is a great honour.”  Click to read more

12|07|2018

Congratulations to the 2018 class of graduates from Ashesi University

Kina Advisory congratulates the 2018 class of graduates from Ashesi University. We particularly want to mention a young female graduate, Teni Agana, who has an inspiring story. To know more, just click here:

04|04|2018

Key to investment success in developing countries

Published in the The New Model Corporate Affairs Director’, Managing Director Rosalind Kainyah discusses understanding the socio-economic environment and creating the right conversations as key to success in investing in new markets in developing countries and the role of the Corporate Affairs Director. Click here to read the full article.

29|03|2018

Ghanaian women empowered in business

Empowering women in business is a key aspect of the fifth sustainable development goals. The 2018 Mastercard Index of Women’s Entrepreneurship (MIWE) names Ghana as having the highest percentage of female business owners at 46.4%.

It is encouraging to read about businesses led by women that also consider environmental sustainability, such as the collaboration between Redavia, a German rental solar company, implementing a solar farm for the Ghanaian hospitality group Linda Dor.

27|03|2018

Congratulations to the Young CEO of the Year

Kina Advisory congratulates Dr Amy Jadesimi, CEO of LADOL for winning the Young CEO of the Year award at the 2018 Africa CEO Forum. Amy is a role model for young and old, men and women alike https://t.co/stvCAA5FEr.