Indian companies like Bharti Airtel are pioneering the telecommunications industry in Africa using bold business strategy and the experience they gained from opening up communications in their own country 20 years ago.
“When we took charge of Zain’s African operations, we made a commitment to bring world-class, affordable mobile services to customers in Africa and take our networks deep into rural areas,” says Manoj Kohli, joint managing director and CEO of Bharti Airtel’s international operations. This radical move immediately established Airtel as the world’s fifth-largest mobile service provider, immediately gaining 42 million customers. This unique business trend is being employed by Indian companies in Africa, who have adopted a strategically integrated approach to doing business. By integrating socially, politically and economically into 15 African countries, they differ in strategy from their Chinese counterparts, who tend to operate in isolation, importing Chinese workers and goods. Arthur Goldstuck, an expert analyst in telecommunications in Africa, says Airtel’s aggressive marketing strategy of cost cutting and increased volumes is making inroads into the East African market.
According to Goldstuck, this approach to price fighting in Africa and bringing down the costs of calls, SMS and data has dropped the average tariff in Kenya from 12 shillings in June last year to three shillings. Kohli believes it is incorrect to look at tariffs alone. “We have simply corrected the 20-30% premium that Zain was charging over the normal price. This was unsustainable and we brought the tariffs to more affordable levels for the customers.”
The socio-economic spin-offs of Airtel’s presence has contributed greatly to improving the lives of people, especially in the remote areas, says Dobek Pater, telecommunications and market analyst at Africa Analysis. An increase of 10% in teledensity (the proportion of cellphones in use by every 100 people in an area) is almost equivalent to 1% of GDP growth in some of these countries. However, technical challenges on the continent can be enormous. Initial investment is required to develop infrastructure, which can be very high. Extensive rollout of base stations is necessary for any network to expand into Africa, which is both expensive and time consuming from a regulatory and infrastructural point of view. Airtel has received support from governments across all markets, who share its vision of taking the benefits of telecom to every corner of the respective countries.
The Indian business strategy of social and political integration is key to doing business in Africa, and is the ingredient that has seen Bharti and Neotel successfully expanding their networks and distribution to cover a larger population, particularly in rural areas. The sharing of passive infrastructure in African countries also avoids unnecessary infrastructure duplications and helps bring down costs for the industry. Sunil Joshi, CEO of Neotel, says their approach to human capital development is unique and effective. The establishment of the Neotel Training Academy, where 30 people are currently being trained in telecommunications, is a benchmark of social and economic integration as 70-80% of these people will be employed by Neotel. “We believe in leveraging local resources within South Africa and getting the local context by engaging with government and ICASA. Our approach is to socially align with what the needs in the country are. For example, currently we employ 1,000 people in South Africa, of which the majority is local. We are also very proud of the fact that in terms of BEE we have a level three listing, which shows that we give the right focus in terms of the local dynamic.”
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From India, With Ingenuity

Once upon a time in Africa, dreadlocks were frowned upon; if you sported them, you were obviously a rough, subversive smoker of something strange. Now dreadlocks are high fashion and big business. Just ask Jabu Stone—a man who amassed a fortune from the fact that many in African society no longer dread dreads.
<div id="attachment_55" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-55" class="size-large wp-image-55" src="/wp-content/uploads/2017/04/stone183_1-680x1024.jpg" alt="" width="474" height="714" />&#8216;Dreadlock Entrepreneur&#8217; Jabu Stone, Johannesburg CBD; 4 August 2011 &#8211; Photo by Brett Eloff.</div>
On a sunny winter’s afternoon, Stone glides through the din of chatter and radios at his hair salon in downtown Johannesburg, like a man on a mission. He has every right to: in the years since democracy in South Africa, in 1994, Stone has seen his dreadlock business expand to Kenya, Tanzania, Mozambique, Angola, Namibia, Zimbabwe, the United States and Britain, with a turnover of R25 million ($3,489,378.3) from hair products and a dozen salons employing 70 workers.
The black haircare market is large and growing. Its biggest customers: black women. The myth for many black girls growing up was that straight hair made you look pretty and professional. This is why chemical products that straighten—so-called relaxers—account for about 75% of sales in the industry. Now there is a move towards keeping it more natural and Stone is at the forefront.
“Your hair is a unique act of creation; you don’t need to change the structure of your hair,” says Stone.
“Jabu Stone is one of the pioneers of the natural look. He started a trend in South Africa and showed that dreads weren’t for Rastafarians only,” says Pontsho Mokoena, the president of the Afro Hairdressing and Beauty Employers Association of South Africa (AHBEASA).
Stone, a trained electrical engineer, learned the hair trade almost as soon as he could walk.  He grew up watching the nimble fingers of his mother, a school teacher, braiding hair at home.
In later life, he saw a gap in the market. Stone found someone to help him develop a product that worked with the natural structure of black hair at a time when everyone else was looking for ways to straighten it. It was a very modest start, selling merely six units of product a month and renting a chair at a salon.
Stone hit on the idea of getting celebrities, like Nelson Mandela’s daughter, Zenani, to wear his dreadlocks and of allowing word-of-mouth to do the rest, making the unfashionable fashionable.
Research into the black haircare market is scarce, but all agree it is huge. The US black haircare market was claimed to be worth $9 billion in 2009, according to a recent documentary by stand-up comedian Chris Rock. The South African market, according to research company Diagonal Reports, was worth $1.35 billion in 2009. The hot African markets for black hair care are Kenya, Nigeria, Ghana and South Africa.
In South Africa, Stone is on the move. He has a mobile salon that tours the country and sells people the idea of flaunting their own natural, flowing dreadlocks—at a price. It’s still all about the image, he says, and there are even a dozen taxis driving around Johannesburg with a beaming picture of dreadlocked Afro-soul singer Judith Sephuma advertising his wares.  On top of this, there is diversification; you can open a bank account, get a debit card or medical treatment through Stone’s company and there are plans to expand from eight to 24 countries.
“You can only go as far as your eye can see; when you get there you can see even further,” says Stone.
The market is large and wide open with millions of heads waiting for dreads. For a quick, streetwise entrepreneur like Stone, there is a fortune to be made—one head at a time.
&nbsp;

No Business Like Hair Business

Gabon has a population of about 1.5 million people and is an upper middle-income country with a $13.1 billion economy. It may be one of the wealthiest nations on the continent, but it suffers from gaping inequality. The richest 20% of the population accounts for 90% of income; a third live in poverty.
<img loading="lazy" decoding="async" class="alignleft size-large wp-image-47" src="/wp-content/uploads/2017/04/Gabon-1024x692.jpg" alt="" width="474" height="320" />
According to the International Monetary Fund (IMF), growth in 2010 was 5.7%, following a contraction of 1.4% in 2009 due to the global recession. The IMF expects growth to remain relatively flat in 2011 at 5.6%. It also expects public investment and a rebound in mining to underpin growth this year.  On the other hand, the IMF sees a slowing global economy and the associated downward pressure on commodity prices as a downside risk to growth.
Gabon’s wealth relies on oil, which makes up over 70% of exports, with estimated proven oil reserves of two billion barrels at the beginning of 2010. With faltering oil prices and production constraints, Gabonese authorities are set on diversifying the economy away from this reliance on oil. The government plans to transform by creating a business-friendly environment. To achieve this goal, it is embarking on a public investment drive.
Manganese mining and logging are the economy’s other two key sectors. Gabon also has the world’s largest iron ore deposit, which is likely to attract further investment in the mining sector. Agriculture and tourism remain small sectors in the economy due to a lack of infrastructure.
Industry makes up nearly two-thirds of the economy, while services make up nearly a third. Agriculture is a mere 4.5% of the economy.
Gabon has a benign political environment. The incumbent president is Ali-Ben Bongo Ondimba from the long-ruling Gabonese Democratic Party (PDG). He was elected in 2009 following the death of his father, Omar Bongo Ondimba. Despite the opposition crying foul that the vote was flawed, Gabon has remained stable.
<img loading="lazy" decoding="async" class="alignleft size-large wp-image-48" src="/wp-content/uploads/2017/04/iStock_000004501460Large-1024x768.jpg" alt="" width="474" height="356" />
The country is due to hold legislative elections in November. The current legislature’s mandate ends in January.  In May, the president asked the country’s constitutional court to delay the election for a year so that the country can focus on hosting the African Cup of Nations in January. Gabon is a co-host with Equatorial Guinea. The delay is also to allow for the introduction of a biometric voter system to avoid election fraud. With both the ruling party and opposition essentially in agreement for a postponement, the constitutional court is likely to grant the request.

Iron Ore Galore

Every household has a dirty carpet and that’s where I literally made my first buck as a businessman,” says Base Sebonego, beaming at the memory. 
That first buck came in 1995 with a one-man carpet cleaning company. Sixteen years later, Sebonego is a multimillionaire through turning ideas into money. 
In a highly educated and developing country, where the private sector has relied heavily on government patronage for its survival, Sebonego is the exception. In fact he shatters the historical mould of a successful Motswana businessman in a country where you find well-schooled university graduates in the most menial of jobs. He failed high school; has never been to a business school; started his business with no bank loan or help from government empowerment schemes. Yet, at the age of 37, he has rubbed shoulders with Botswana’s movers and shakers and amassed a fortune. 
Sebonego’s investment portfolio straddles property, insurance broking, textile manufacturing, road construction and he has recently added mining to his repertoire. 
Sebonego’s life is the quintessential rags to riches story. Standing at just over 5’4”, his unpolished English vocabulary belies the medley of ideas his brain is constantly digesting. Doing this interview was not easy either. With several appointment cancellations, more than a couple of double bookings that resulted in postponements, the piecemeal interview suffered the interruptions of a mobile phone that rang incessantly and streamed a barrage of SMSes. 
“I have so many things happening at the same time, but nowadays I have come to accept that I do need a personal assistant,” he says rather apologetically. As disorganized as he is, that is his modus operandi, and it seems to have worked well for him. 
Sebonego was destined to be a businessman. Despite being one of the best students doing pure sciences at high school in Maun in the late 1980s, he often skipped school and spent much of his time at the “driving school of a family friend, fascinated by the number of clients he had and the money this guy was making”. 
“I was&#8230; (he counts with his fingers) &#8230;just 15 years old. What else was I supposed to do with my father away on trips half the time?” 
In 1994, after obtaining a certificate in Animal Health and Production at a technical college, Sebonego worked for the government for six months before absconding to sell insurance. This helped him buy his first car, a brand new Toyota Tazz, a far cry from the Range Rover Sport and CLK 63 AMG he currently drives. 
The following year, armed with a bucket, brush and a car wash pressure machine, he headed for Francistown, Botswana’s northern city. He did his insurance work alongside washing carpets. 
“I targeted schools where government housed teachers in a village set-up. I would literally knock at any of the front doors and offer to clean their carpet for free. The neighbor would see the carpet hanging on the fence to dry, and by the end of the week all the carpets in that neighborhood would be clean and my pocket would be full.” 
But charging 20 pula ($2.95) to clean a carpet was not enough. He moved to a bigger client, Supreme Furnishers, a furniture company where he charged an unbelievable P9,000 ($1,330). This job, he says, was a watershed that showed him he could actually make a lot of money. 
It was at this time that Sebonego met a woman who operated a cash loan business from Palapye, 160 kilometers away. The two of them talked, she liked his entrepreneurial intuitiveness and determination; the following week, Sebonego was in Palapye working as a partner in the business. In 2001, cash loaning by non-commercial banks was a relatively new business system in Botswana. Sebonego’s contribution to the business was the introduction of a commission-based sales team, a concept he borrowed from his three-year stint in the insurance industry. He targeted people like teachers, unions, bank employees and even parastatal institutions. The pair opened up outlets in four other towns because, like Sebonego observes, “people will always need money, and how far it comes from, they don’t care”. 
The money and power bug bit him and he wanted more. He wanted to be in control, so he parted ways with his partner and took over the Palapye operation. 
I ask him if he is a greedy businessman. The man, who never fails to extol God and his eternal belief in Him, jumps out of his chair before settling back down. 
“Let me tell you something, I am a seriously, seriously, seriously spiritual guy. When I see someone struggling I feel really bad. I once pounced on the property of a client of mine who worked for a local bank. She was dodgy because she had evaded me several times instead of renegotiating her repayment plan. I took possession of her TV and radio set. I remember feeling terrible about it, but I was going to sell them off if she hadn’t come to pay me, which she did that evening.” 
Even though the cash loan business gave him more than a healthy bank balance, it was to be his next business that would catapult him into the multi-millionaire league. It began with a chat over a barbeque with some lawyer friends and gave rise to his next big idea. His friends complained of having trouble with their clients, many of whom were unable to settle their legal bills. Sebonego’s brains were already in overdrive. 
After a year of research and product development, Sebonego launched Mosele Legal Services in 2004. The idea was simple; a legal aid subscription-based business that would outsource clients’ cases to other law firms. He approached the Citizen Empowerment Development Agency (CEDA) for a P100,000 ($14,730) loan but was turned down. “They said it was not a viable project even though I had no competitor, it was a tried and tested model in South Africa and if they had the capacity to give millions of pula worth of loans, what was the problem?” 
Once again drawing on his past experience as an insurance consultant, he carried on with the concept of sales reps. He offered shares to an attorney, whose responsibility was to interact with fellow lawyers. The company soared to dizzying heights, reaching around 20,000 subscribers in a couple of years. 
“A very productive and ambitious young fellow who always aimed for greater heights,” says Paul Chitate, Sebonego’s former boss at Botswana Life Insurance. Chitate now owns First Sun Alliance, a successful insurance broking firm. “I am proud of him as a person I trained who went on to use his experience as an insurance consultant to develop his own products.” 
Booze flowed, women were plentiful and entertainment was endless until everything came down like a pack of cards. In 2008, the company was dragged before the high court by its underwriter, the Botswana Insurance Company (BIC). BIC sought an audit of Mosele Legal Services after reports of illegal insurance practices, fraud and money laundering. BIC flexed their muscle. Comprising a consortium of political, business and legal heavy-weights, including former president Festus Mogae, it was a given that battling with a giant like BIC was going to be messy. It was. It was also a public relations nightmare for Mosele. 
“They just wanted to rattle my business from under me,” says Sebonego. He spreads his hands on the table as if distracted. “I saw it as a hostile takeover. These guys are the titans of the economy and I don’t have a big surname or the money on my side, but the truth set me free.” The high court threw out the claims as unsubstantiated rumors. 
Sebonego claims Mosele now has 34,000 subscribers. But with such an extensive investment portfolio, how much is Sebonego really worth? Getting such information as the net worth of any businessman is a tough business in Botswana. A culture of secrecy tantamount to the culture of Swiss banks prevails amongst businessmen who refuse to divulge their investment interests. Even a bill that seeks to compel politicians to declare their assets has been floating around parliament for over a decade. But for Sebonego, divulging details about his worth is a particularly sensitive subject which borders on paranoia. 
“There is a serious problem of the ‘pull-him-down’ syndrome in this country. When people see you climb the ladder or when they know how much you are worth, they want to see you down—down—down,” he jabs the air with his index finger pointing downwards. “We don’t band together like the Chinese or Indians or Zimbabweans to help each other. This country is dirty,” he continues. “You survive best when people don’t know anything about you.” Sebonego says this kills entrepreneurship which survives on role-modeling for upcoming entrepreneurs. This reference to the ‘pull-him-down’ syndrome is such a common thread throughout the interview it is hard to imagine it as anything but the truth. 
Seasoned Sunday Standard journalist Prof Malema admits to the difficulty of finding information on the assets of businessmen in Botswana. This is compounded by the fact that many of these businesses are not floated on the Botswana Stock Exchange. He concurs that Sebonego may be a multi-millionaire, but he says the Mosele Legal Services court case dealt a huge blow to his net worth. “His construction business is not so big but his new company, Home Assist, the one modeled on Mosele, has the potential to become big.” 
Home Assist is one of Sebonego’s latest pet projects. It is a home maintenance guarantee scheme for subscribers. Another is the setting up of a weekly newspaper to report “the real stories”.
Preparations are at an advanced stage and the weekly is expected to hit the streets within the next two months. 
“Five years from now, I want to be the biggest small-stock producer in Botswana or the region and have my own commercial bank,” he giggles and rubs his hands together as if he can’t wait. 
For a man claiming to be the cleanest businessman in the land and to win business without political connections, it sure would be a giant leap from the carpet cleaner of 1995.
<h3>Sunrise Economy?</h3>
Sebonego’s rags-to-riches story mirrors that of his country. At independence in 1966, Botswana was one of the poorest countries in the world with a largely illiterate rural population. The country has since observed the highest average growth rate in the world, thanks to huge diamond deposits and a government that exercised prudent fiscal management. 
The economy is slowly recovering from the hard knocks of the 2009 global recession. 
But the International Monetary Fund says the economy is staging an impressive recovery with the help of rapidly rising prices for rough diamonds. The IMF says since the second quarter of 2010, Botswana’s pace of economic growth has been one of the strongest among middle income countries. 
The government of Botswana expects the country’s 2011-2012 GDP to surpass the P101.5 billion ($15 billion) mark in current prices. The country continues to enjoy good credit ratings internationally. Unemployment stands at 17.5% with more than 30% of the population living below the poverty line. The government has embarked on a privatization drive and outsourcing of non-core services, albeit at a slow pace.
<div id="attachment_39" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-39" class="wp-image-39 size-large" src="/wp-content/uploads/2011/10/iStock_000003898766Medium-1024x682.jpg" alt="" width="474" height="316" />Okavango Delta</div>
Foreign exchange reserves stood at P54.9 billion ($8.1 billion), enough to cover 18 months of imported goods and services. The average year-on-year inflation was 6.9% in 2010 according to the country’s Ministry of Finance.

From Cleaning Carpets To Cleaning Up

He tells his investor relations teams to discourage “the wrong kind of investors”, wants more global environmental regulation and taxes and believes that companies have an overwhelming responsibility to their supply chains. Sunny Verghese has an unusual outlook on business.
The Olam CEO has overseen the remarkable growth of the agricultural producer and processor from a sideline operation in Nigeria to a global business spanning 65 countries. The company’s success has come in part by turning social responsibility into a competitive advantage, making a solid business case for the kind of social investment that is only now finding its way into mainstream corporate culture.
Olam began with modest goals in 1989 as an offshoot of the Kewalram Chanrai Group, which had been operating textile factories and cotton spinning operations in Nigeria since the 1960s. When the oil price slumped in the late 1980s, the country began to suffer from an acute shortage of foreign exchange, and businesses struggled to find hard currency to buy inputs and spare parts. In response, the Kewalram Chanrai Group looked for a sector with quick export potential. They began with cashews, and expanded from there.
“When we looked at what was required for us to win in this business, it became evident that the large players were already very well entrenched and we were late to this game,” Verghese says from the company’s Ivorian headquarters in Abidjan. Despite the fragile political situation in Côte d’Ivoire over the past few years, Olam has continued to invest, opening the world’s largest automated cashew processing factory in February in the northern city of Bouaké.
In the late 1980s and early 1990s, the industry was undergoing huge change, as West African economies liberalized and broke up the state monopolies overseeing their commodity exports. The cocoa and cotton boards disappeared and were replaced by a fragmented, poorly structured industry of traders and license-buying agents, who had previously bought at the farm gate on behalf of the government. The rules of the game were changing, and Verghese saw an opportunity to take on the existing players.
“[Before] they could sit in London or New York or the major commodity trading hubs and source their raw material from the government monopolies, without really having to come here, dirty their hands or manage the emerging market risk,” Verghese said. “When the government monopolies started dismantling and disappearing, they started facing significant counterparty risk issues.”
The new traders were not able to manage pricing risk, so when the markets turned against them, they would default, leaving international customers without supplies.
“It was difficult for the customer overseas to come and enforce his contractual obligations in these markets. So counterparty performance and forward selling premiums became big issues under those circumstances,” Verghese explained.
“That’s when we realised that we had a significant opportunity to develop supply chain infrastructure and build counterparty credibility that was very high, so that in other countries, given the volatile pricing environment, we were still able to deliver reliably on a contract.”
Olam thrived in the new African markets, spreading across the continent and into major commodities, such as rice, cocoa and cotton and in niche products, like cashews. To do that, he explained, “we started at the origin and we resorted to buying at the farm gate, or as close to the farm gate as possible.”
But this was only part of the struggle. Creating supply security meant building loyalty and improving the lots of the smallholders that make up the majority of growers.
“Buying from the farmer directly, helping him improve his productivity, providing him [with] microfinance—in terms of loans—or agricultural inputs and market access, helping him to upgrade the quality he was producing, allowed him to dramatically raise his income and his livelihood, and therefore become a loyal supply partner for us.”
Verghese talks in terms that are becoming common in emerging markets and agribusiness. Companies, from brewers to traders, have begun to articulate what the Olam CEO calls “mutuality” to their investors and shareholders.
The reasons, he says, are relatively straightforward. Beyond it simply being “the right thing to do”, being welcomed into a country and being sensitive to its context is fundamental to being able to work there unimpeded.
“We believe in emerging markets it’s relatively easy to get a license to operate from the government but it is tougher to get a license from the community to operate in those markets,” he says. “You can only build a sustainable business in these markets when the community gives you license to operate. If they see you as a foreigner, as an exploiter of their resources, as not adding any value, they don’t want you there.
The growing trend towards consumer activism and responsibility has added momentum to the requirement.
“Our customers, like Nestlé or Unilever, in turn have demand from their consumers who are not satisfied in snacking on a bar of chocolate or drinking a cup of coffee without asking searching questions about where this coffee or cocoa is coming from. Is there any child labor involved? How environmentally sustainable is the supply chain for this product being used in their chocolate or their coffee?”
The company is creating its own “Olam standard” of sustainability, and is in the early stages of an environmental footprinting exercise to work out the carbon impact of its individual products and supply chain.
Verghese can rattle off statistics about the threat that climate change poses to the world’s population, and the links between global energy, water and agricultural supply. He talks about the water requirement per kilogram of meat in the same terms that most CEOs talk about their financial statements. His sense that there is an imperative to act, despite the high cost, is strong, although he acknowledges that to do so alone risks unilaterally imposing a drag on the company. The competition could gain short-term advantage by avoiding unlegislated “obligations”.
“It’s a catch-22 situation,” Verghese says. “We believe that the long-term solution is that carbon should be priced and carbon should be taxed because you cannot influence behaviour if that is free.
“I think stakeholder pressure will intensify to a level where everybody will have to comply with the minimum standard. So we are taking the view that it is the right thing for the sustainability of our business so we should do the right thing here, because if you want a business that is enduring, then we can’t take [that] view.”
The issue of “enduring” business, and the kind of long-term view that encourages corporate responsibility, is difficult in the current funding environment. Olam listed on the Singapore Stock Exchange in 2005 and the demands of “typically transient” shareholders with short-term investment horizons frustrates the strategist in Verghese.
“When we are investing in plantations, say a rubber plantation, the first yield is [after seven years]. The first maturity is [after] 12 years. The cash flow break-even is in 14 years,” he said. “As a CEO there is very little incentive for you to think that far ahead, because analysts are looking at the next quarter and getting upset if you [deliver] below expectations.”
“The problem with the current capital market structures and CEOs and their time horizons persuade people to be very short-term in their outlook.”
Despite this, he has no intention to change tack.
“I tell my team your job is not to go and market the company, your job is to go and de-market the company,” he said. “You have to tell them ‘are you sure you want to invest in us? Because here is the deal: we’re going to be cash flow negative for five years’. Most people would fall off their chair.”
Continuing with the heritage of the company’s early days and trying to improve its footprint “from seed to shelf” is going to become a competitive advantage all over again, as best practice in sustainability becomes more widespread and pervasive.
“One of the reasons why we have succeeded is the way that we have innovated our business model,” he says.
“We feel that benchmarking best practice is an important first step, but is lousy strategy, because at the end of the day, everybody is trying to follow best practice, so if you achieve that goal, you will at best be at the middle of the pack.
“You can never be a leading company, or a very successful company, by just being middle of the pack. If you want to be exceptional, you need to create the next practice.”

Tag: Business

FORBES AFRICA SOCIAL MEDIA

From India, With Ingenuity

No Business Like Hair Business

Iron Ore Galore

From Cleaning Carpets To Cleaning Up

Turning Cashews Into Cash