THE recent alarming news, that proved to be wrong, that Indian telecoms giant Bharti Airtel was planning to close shop in 15 African countries, again drew attention to just how slippery doing business on the continent can be.
Turns out, while Airtel has had a rocky run in Africa, it’s not throwing in the towel – yet. It is just shaking up the business, and reorganising.
With America’s erratic new president Donald Trump set to upend the world economic and political order, and a seeming revolt against globalisation everywhere, there are fears that Africa could end up holding the rough end of the stick – again.
However, is there a way to do business in Africa that is more insulated against global tremors? Many business people and talking heads on these matters say, yes, there is, but “only if you understand Africa”.
EQUITY BANK EXAMPLE
And that is one of the hardest things to do. Or is it? Kenya’s Equity Bank demonstrates both the difficulty and simplicity of “understanding Africa”.
Equity Bank, under the stewardship of its long-term quirky-minded chief James Mwangi, has garnered a customer base in excess of 9.2 million in the six East African countries where it operates, making it the largest commercial bank in Africa by customer numbers.
Equity Bank started life as an obscure rural building society in 1984, and the modern bank dates back only to 2004, when it converted into a fully-fledged commercial bank.
In 2006 it listed on the Nairobi Securities Exchange.
Equity’s story has been well told, but today what interests us are the “ugly” things about it. It’s probably an undisputed fact that Equity’s corporate logo is the ugliest of any bank in Kenya, and possibly in Africa.
But when you talk to its directors, they tell you that ugliness is the magic recipe. The house is very recognisable, and “every simple person in Kenya understands and aspires to it”, one of them said.
And the dirty brown, “breaks down the social barriers”. The director told me; “the people we targeted initially, the farmers, the working class men and women in the town, their clothes and shoes are always brown from the dust and dirt of honest work”, he said, “that dirty look in our logo and colour schemes in our offices makes them comfortable”.
In some areas of Nairobi and the country, Equity Bank did something that no sane business, would do. In the rainy season it spread saw dust on the banking hall floors! The aim was to make the toiling masses, who don’t drive, and would have walked through muddy streets, feel comfortable about coming in and banking their day’s wage. No fancy carpets, no gleaming tile floor. It worked like magic.
I bring up Equity because it leads to the story I was recently told by the founder of a virtually unknown but wildly successful “small enterprise lender” in Uganda.
The founder is emphatic that in Africa, one of the things that kills businesses is “premature publicity” so she made me promise not to identify it.
But for those looking to make in Africa, the micro lender’s experience is telling.
In the areas where it operates, lending mostly to boda boda (motorcycle transport operators) she said, they charge the highest interest rates. However, despite that, they have the longest client lines.
WHAT DO THE PEOPLE WANT?
She was intrigued enough to find out why. Nearly all the other microfinance competitors, it turned out, are funded by either small or big donors, so they can afford to charge lower interest rates.
She started hers with her own money, and makes no pretences about it being a social enterprise affair. It is a hardnosed upcountry capitalist concern.
That seeming disadvantage, though, was a boon. The customers told her; “Yes, your interest rates are higher, but we come to you because your company doesn’t call us for endless meetings. We hate meetings. We want to be left alone to work”.
Then they told her, “now we are also giving you a year or so. We don’t want to waste time coming to the bank. We don’t want to see you people. Make arrangements so we can bank by mobile phone. If you don’t, you will soon not see us”.
Many microfinance institutions, on the other hand, because they get donor money, have to keep doing interviews for reports to send to Europe or wherever. And there is always a donor dropping in, and the clients have to be rounded up to meet the “visiting VIP” and testify about how the micro lender has changed their lives.
The reality is that the people hate that so much, they are willing to pay a small premium not to attend the meetings and be patronised.
And she too had her “Equity Moment”. Her company imported fancy linked chairs for their banking hall, for their customers to wait.
However, the people were disgruntled, and many of them took to sitting outside on verandah floor.
Surely, how can the cement be better than a soft Chinese made chair?
Her people soon found out that upcountry, in many small businesses, the partners usually do their banking together. And even people who run individual accounts, often like to carry along with company.
In rural Uganda, banking is serious business. Many don’t undertake it alone.
Customers who arrived early, would wait for their partners to get there before approaching the teller.
However, they don’t want to wait cooped up inside. They would rather sit outside and watch the village or town go by. The linked chairs were inconvenient because, unlike the plastics, they couldn’t carry them out to the verandah.
Today, their customers are happy again. They got rid of the fancy new waiting chairs, and brought back the old ugly plastics.
There are fortunes to be in Africa, but clearly many times it requires that you put aside nearly everything you have read in best selling management books. And, secondly, if you can’t hire an anthropologist, then be one yourself.