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.

 

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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Click here to view the interview with Kofi.

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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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VW’s ESG Failing

01|11|2015

News on Wednesday that VW slumped to its first loss in 15 years just shows the damage a failure of ESG can wreak on even the biggest and seemingly most inviolable companies. It put me in mind of a good quote I read in the FT the other day.

“ESG is no longer a specialism … but integral to the majority of markets and business models.” Exactly!

Here is the full quote:

“With respect to ESG specifically, the analysts say it is no longer a specialism segmented from the main market but integral to the majority of markets and business models in our view. Furthermore, the prominence of politics, regulation, resource usage and climate change are likely to keep this issue on the front burner for some time to come.”

The FT went on to show a breakdown of potential “ESG black swans” to be aware of for the future. Regulation, politics and resource usage come very high up the list. All critical factors that need to be borne in mind when it comes to investing in Africa.

Rosalind Kainyah, MBE, Founder and Managing Director

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Building profitable businesses in Africa: A triangular construct theory

29|10|2015

Foreign companies investing and operating in Africa often talk about the challenges of getting necessary approvals from government to develop or move their projects forward. In a conversation with a seasoned investor in Africa, we discussed the need for businesses to have, not just conversations, but the right conversations with governments and with society. I described this as “the triangular relationship theory”. At one point of the triangle is government, and at the other two business and the society.

Getting to grips with how these three points of the triangle interact could be the key to sustainable business and unlocking long-term profits.

  • Government and business: The greatest concern, to put it mildly, of any government is to lose the acceptance of society. Even your most ardent dictator needs to feel wanted.  Those in government know they can be voted out or overthrown at any time.  Businesses are either not aware of this fundamental anxiety of government or, if they are, of its implications.   Conversations with governments are often focused on what the business wants, and sometimes wants NOW.  Instead, a company can gain a competitive edge by demonstrating it appreciates the problems that are top of a government’s list of priorities. And these are often not the same as what is top of the company’s priority list.  Companies need to include in their conversations with government ways to address problems of national importance. They need to demonstrate the benefits they can bring, not just in terms of tax revenue, but provide tangible data on how they will boost the local economy through local employment; develop a local supply chain; support initiatives that develop job-relevant skills and give citizens opportunities for social mobility; and even help a country move further along the industry value chain.
  • Business and society: Businesses also need to have the right conversations with the right segments of society.  Often, companies have a stakeholder map which has the name of every single person they think could possibly impact their business, be influenced by their business, or become their advocates.  However, the reality is that each business should look hard at the eco-system around it. A company’s best advocates are those closest to home – employees and their dependents, local suppliers and their employees and dependents, and communities directly affected by operations of the business.  I genuinely believe helping society is a bona-fide business strategy that will reap long-term rewards.
  • Society, business and government: In short, each business should look hard at the eco-system around it and target the people with ‘skin in the game’ – employees, local suppliers and impacted communities.  They are the groups of people that a company should engage in conversation explaining their business plans and objectives – in ways that are accessible and understandable – and make the beneficiaries of their social investment projects.     They are the groups of people who will not only speak convincingly on behalf of the company but are also an important part of the society that government wants to please.  But to be true advocates, they must genuinely feel they have a meaningful share in the prosperity created by the business.

Nobody says this is easy. Many companies will have experienced the day-to-day frustrations of doing business in an African country: the stultifying bureaucracy, inability to find reliable local suppliers and the shortage of local skills. In many ways, one could argue this is the fault of governments. However, it is all too easy for companies to be vilified, especially when they fail to benefit society more widely. Pointing out examples of exploitation and neglect by the corporate world is a perennial vote winner.

That is why it is so important for companies to convince governments of the positive role they can play within communities. Show them they are investing for the long term.  I passionately believe that responsible business can create growth that is genuinely inclusive. To achieve that growth we don’t just need to have conversations with government and society, we need to have the right conversations with government and society. I started Kina to help foreign investors in Africa do just that.

Rosalind Kainyah, MBE, Founder and Managing Director

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What we are up to & News

21|10|2019

Rosalind Kainyah MBE will be chairing the 5th Africa Oil Governance Summit

Rosalind Kainyah MBE will be chairing the 5th Africa Oil Governance Summit on the 22nd & 23rd October 2019 & facilitating the 1st panel on “Value addition to petroleum resources extraction through industrialization: The possibilities and the challenges”.  For a full break down of speaker & agenda, click here.

23|09|2019

Africa | Attracting a New Wave of Investors

Rosalind Kainyah our Managing Director will be moderating a panel discussion for Invest Africa & DLA Piper on Wednesday 25th Sept 2019.  The Topic: Attracting a New Wave of Investors: Corporate Governance and Meeting International Standards | For the full details of who’s on the panel and focus points, click here.

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.