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.

 

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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Nurturing Africa’s most plentiful natural resource: talent

10|12|2015

African countries need to create a deeper pool of skilled and competent workers for the current and future job markets. That is why I am always on the lookout for new and original ideas to help boost education and skills development. I came across a company the other day that pays people in Nigeria to learn computer programming and then hires them out to work remotely for Fortune 500 companies in the US.

Fostering talent

This is a brilliant way to foster the kind of talent that African countries need to develop both socially and economically. Sure, some might argue that it is a shame they are using their skills to benefit companies outside of Africa. But this concern is far outweighed by the enormous opportunities it gives Africans to get valuable experience in global companies. Experience that can then be brought back and put to good use at home.

Private enterprise, public benefit

The company is called Andela and it provides a shining example of how the private sector can create a profitable business, while at the same time promoting broad and inclusive socio-economic development. The big question is: can this model be used on a much wider scale across Africa? It could be an ideal solution to the problem of training people in remote communities that don’t necessarily have the required resources or institutions on the ground.

I will continue to keep my eye out for original ideas that could release the potential of Africa’s latent workforce. In the words of the company itself: “It’s time to stop viewing [Africa] as simply a youth bulge—it is a talent bulge.”

Quick facts about Andela

Here are some quick facts about Andela and its raison d’être, courtesy of The Wall Street Journal:

  • Andela was founded to train the top 1% of tech talent across the continent. After six months in their software-development programme, young men and women work remotely for Fortune 500 companies and start-ups around the world while receiving continuing training and support.
  • With more than one billion people, approximately 60% of them under age 25, and more than 25% of young people out of work in many places, Africa is home to the world’s largest pool of brainpower and talent.
  • While the populations of rich countries shrink and age, Africa’s overall population is expected to double by 2050. Nigeria alone is projected to have more than 750 million people by 2100.

Rosalind Kainyah, MBE, Founder and Managing Director

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A different approach to PE in Africa

30|11|2015

I’m due to moderate a panel on private equity investment at The Global African Investment Summit this week so I’ve been diligently doing my research. I found an excellent interview with Kofi Bucknor, a senior Ghanaian banker and private equity veteran in Africa. He made a number of really interesting points that we then discussed in more detail together later. I plan to bring them up on my panel.

Small is beautiful

Kofi’s central argument was that PE firms in Africa might need to tweak their investment models. He believes that too much money is flowing into too few sectors. As an example, Kofi says that as much as 50% of PE investment in Africa goes into the energy sector, oil and gas and related industries. These tend to be mature businesses that have already established themselves.

 Early stage investment

But what about the smaller and medium sized African companies in sectors like health, education and entertainment? Companies that serve a clear consumer need. Investments in small companies operating in these sectors are more likely to have a direct and positive impact on local communities than big one-off investments in mature industries like oil and gas. And it is a profitable strategy too. Investing in businesses at an earlier stage will, over the long term, creating much bigger uplift in returns. In the words of Kofi:

“More time needs to be spent growing businesses and creating giants.”

 Mobilise local savings

Kofi also talked about the sources of investment too. He argued that the best way to benefit African communities in the long term was to mobilise domestic savings. Garner money from local sources and use it fund investment vehicles that support local SMEs.

 Are Governments holding back business?

However, the greatest challenge to the growth of African domestic business is the macro-economic backdrop.  African governments hold far too much debt. And burdensome budget deficits tend to be funded by yet more borrowing. It might be ok if government spending was channelled towards investments that promoted economic growth. But it doesn’t seem to be. The only real impact of all this borrowing is higher interest rates, which are bad for business.

So maybe governments should ‘step out the way’ and borrow less, so the continent can attract the capital it needs. Capital that can then be directed towards investments in businesses that innovate and promote inclusive and sustained economic growth.

I’m really looking forward to discussing these issues, and more, at our panel next week. I hope to see you there!

Rosalind Kainyah, MBE, Founder and Managing Director

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GE getting it right in Nigeria

04|11|2015

Here’s a great example of how a big name like GE has used its core business to do the right thing by local people, while also making money.

GE is planning to invest $1bn over the next five years in the Nigerian oil and gas services sector. In itself, not very big news. Big multinational companies are frequently investing large sums of money looking to take advantage of Nigeria’s number one international export.

But GE’s investment is different. Unlike so many former oil and gas-related investments by large multinationals, GE is committing hundreds of millions of dollars to benefiting the community in which it operates. And this is no mere ‘box ticking’ gesture to keep the local authorities happy.

Of the $1bn it plans to invest, GE says:

“$750m will be allocated to sourcing local supplies and employee training in the surrounding communities, as well as expanding GE’s service facility in Onne [in port Harcourt].”

The remaining $250m, GE says, will go towards building a manufacturing plant that will employ and train 2,300 local people in nearby Calabar.

Empowering local people

This is an astonishing amount of money to be spending on helping local communities. But GE says the benefits of reliable local suppliers and a skilled local workforce will in the long term far outweigh the cost of the initial investment. Kenny Yeats, GE’s operations leader and regional services manager, says that investing in Africa’s future leaders is a “big focus” for GE. “We believe that when you equip people with necessary tools and empower them with specific skills plus techniques, they would be able to deliver sterling performance,” he says.

Foundations built on local know-how

I agree completely with Kenny. It is far more cost effective in the long term to train and employ people from the surrounding area than to draft in expensive professionals from abroad. With this in mind, GE is spending $2.4m alone on training Nigerian engineering graduates to form the core technical staff of its oil services operations in the Port of Onne.

And, according to GE’s website, the Calabar site will: “Lay the foundation for knowledge and technology transfer to Nigerian sub-suppliers [and] academic institutions.” The site will also include a training centre for technical and leadership development, with GE planning to invest $2m to support building and equipment upgrades, curriculum development and teacher training.

This is a far-sighted investment that will reap long-term rewards, both for GE and Nigerians. Bravo GE!

Rosalind Kainyah, MBE, Founder and Managing Director

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What we are up to & News

22|07|2019

Cranfield Names Rosalind Kainyah in Top 50 “BAME” Female Leaders

The Kina Advisory team is delighted to announce that our Managing Director, Rosalind Kainyah, has been named as one of the top 50 Leading Females professionals of Black, Asian and other Minority Ethnic (BAME) women by Cranfield University.  The 50 inspiring women come from backgrounds historically under-represented in the senior leadership pipeline.  “Click Here” to read the full post

25|04|2019

Global Trade Review, West Africa 2019 and Rosalind Kainyah

Kina Advisory is delighted to confirm that Rosalind Kainyah, our Managing Director is one of the speakers at this year’s Global Trade Review, West Africa 2019.  Rosalind will be using her expertise to help explain the following, “What needs to be done to stimulate foreign direct investment in west Africa?”

In this interview conducted by Iyabode Soji-okusanya (Head Of Corporate Banking at Access Bank Plc) Rosalind will be touching on areas such as:

  • Ease of doing business: What are the main operational, financial and physical trade concerns for foreign investors?
  • Regulatory framework: To what extent is consistency an issue? Which West African markets and regulatory areas are of greatest concern? & What would investors like to see from regulators?
  • Physical infrastructure: To what extent is a lack of physical connectivity a barrier to fixed investment?
  • Who will be West Africa’s key partners in building a stronger, more resilient economy? What do investors see as the key areas of value they can bring to the region?

To see a full breakdown of the 2 day event, please click the below link.

Global Trade Review, West Africa 2019 and Rosalind Kainyah

10|01|2019

Aker Energy announces successful drilling offshore of Ghana

As a Non-Executive Director on the Board of Aker Energy, Rosalind Kainyah (Managing Director of Kina Advisory) is thrilled by the news of results of the first appraisal well drilled by Aker Energy offshore Ghana. The hard work begins but Rosalind is confident that Aker Energy will be an exemplary partner in Ghana – for the benefit of the country as a whole | To read the full press release, please click here. 

01|11|2018

Rosalind Kainyah | Arise Invest Interview About Cal Bank

MD of Kina Advisory, Rosalind Kainyah has been interviewed by Arise Invest,  Arise is a leading African investment company backed by three reputable cornerstone investors, namely Norfund, Rabobank, and FMO.  Rosalind has done many interviews relating to investing in Africa, but this article focuses on her role as a board member of Cal Bank, “what excites her about this role” & “why become involved with Cal bank”, as well as looking at her background. We hope you find the article enlightening (Click Here for the full Article).

12|10|2018

IWF Ghana | Generating Sustainable Wealth in Ghana

Rosalind Kainyah, Co-President of the International Women’s Forum Ghana (IWF Ghana) will be hosting the Forum’s first weekend retreat. With an all-female audience of around 50 Ghanian leaders, this retreat will focus on the common thread which binds the audience together: Generating Sustainable Wealth: How to create viable local companies which can become partners or suppliers to international companies in sectors like: oil & gas, mining, energy, construction and Infrastructure. Rosalind and other guest speakers will answer this question and many others from our business stand-point. (more…)