Building profitable businesses in Africa: A triangular construct theory
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