This piece first appeared in Open Africa, a custom digital publication by Ornico that features interviews, insights and business lessons from some of Africa’s leading CEOs, innovators and decision makers. Download your free digital copy of Open Africa here or go to http://bit.ly/open_africa and share your feedback on social media using the hashtag: #OpenAfricaMag
In the year 2000, The Economist did Africa, and itself, a grave disservice when it ran with the cover story “Hopeless Continent” for a feature headlined “Hopeless Africa”. Ten years later, the media brand, headquartered in London, would feature a picture of a young African boy on its cover, flying a bright kite. The headline this time? “Africa Rising”.
Again, this feature didn’t do Africa any favours. Why not? The problem with these narratives, says Hollard international CEO, Brooks Mparutsa, is that they rely upon data that can lead to superficial conclusions. “Africa is not a country or a single entity, but a diverse, complex continent that is comprised of a myriad of markets, each with its own challenges and opportunities.”
“The problem with a need to simplify everything is that important insights are lost,” he says, underscoring an idea developed in an article, written by Morten Jerven, titled: “Misunderstanding Growth in Africa: how economists get it wrong”. In it, Jerven writes: “For the past two decades, mainstream economists who study African economic growth have been trying to explain something that never happened. Economists have focused almost exclusively on one question: Why has economic growth failed in Africa?”
In his book, Africa: Why Economists Get It Wrong, Jerven discusses how economists have been blinded by the narrative of an Africa riddled with postcolonial failure, and have relied upon data that is narrow at best, or downright wrong at worst. Jerven’s work shows that, in the 20th century, Africa didn’t suffer slow growth but experienced recurring growth. Says Mparutsa, “It’s important to understand that African markets are dynamic and varied, and that they have been growing for much longer than some popular narratives suggest.”
“Poor Numbers – How We Are Misled by African Development Statistics and What to Do about It” is another tome that questions how the continent’s growth statistics originate.
Poor Numbers is the first analysis of the production and use of African economic development statistics. Jerven’s research shows how the statistical capacities of some sub-Saharan African economies have fallen into disarray, and how these numbers substantially misstate the state of affairs of economies in Africa.
So how should one look at growth in Africa?
The Hollard International CEO counsels that understanding economics and development in Africa means looking beyond mere gross domestic product (GDP) and gaining a depth of understanding of each market with economic tools that speak to the variance and complexities of the continent.
“Rather than looking, for instance, at one figure to determine growth, one needs to look at the factors that give rise to growth,” says Mparutsa.
By way of example, he singles out the Gordon Institute of Business Science’s Dynamic Markets Index that measures how African countries become more competitive, how their institutional and economic capabilities progress, and examines the political, economic and social spheres of each country.
“If we’ve learned anything from the ‘Hopeless Africa’ and ‘Africa Rising’ narratives, it is that the simplistic lens with which those outside of the continent use to look at us is misleading. By the same token, if Africa wants to be understood, we’ve got to get our house in order. Those regions that need to get their financial data in order must do this as a matter of urgency, so that we all benefit from credible numbers,” he points out.
But it’s not all about numbers — it’s also about real people
How has Hollard invested in Africa? “Hollard currently has offshore operations in 16 countries – six of those in Africa. To build successful operations in Mozambique, Ghana, Namibia, Zambia and Botswana, we started by appreciating that development is not just about profit. We invest with a long-term view that is all about creating sustainable growth. This, together with our belief that people are more important than policies or money and machines, creates a very human approach to investment,” he says.
“By our measure, a business model that fails to take into account the needs of the country we invest in, and its people, cannot be successful. We can’t be blinded by the thinking that growth for Hollard automatically means good things for the communities that we enter,” he adds. “An obsessive focus on the bottom line easily creates a disconnect between the benefits that accrue to our business and the quality of life experienced by locals in the countries in which we do business. How can we call ourselves successful if we operate in environments marked by extreme inequality?” Mparutsa asks.
“At Hollard, we employ exactly the same ‘doing well by doing good’ strategy in our international ventures as we have always done here at home in South Africa,” he continues. “Ours is a partnership business model in which everyone needs to win in order for us to consider ourselves successful. By ‘everyone’ I mean Hollard, our partners, our customers and the communities in which we operate.
Hollard’s international CEO says that empowerment and upliftment are key deliverables everywhere that Hollard operates. “We expect the outcomes to be sustainable long after the initial business transactions that get us started in a particular country,” he says.
Get the fundamentals right
“Building successful partnerships is founded on getting the terms right and, for us, this involves an exhaustive assessment of the insurance market of a country we want to invest in, as well as the political stability of that country. We also investigate the regulatory environment, the strength of that country’s institutions, and the status and potential of infrastructure, as well as social and economic systems.”
Mparutsa says that, once Hollard is satisfied with the fundamentals, it starts the search for a strong local partner with professional staff who are as highly qualified, technically experienced, forward-thinking and passionate as Hollard’s own teams.
“The cultural ‘fit’ is crucial and, for us, that means a shared entrepreneurial and innovative mindset; an appetite for growth that’s centred on excellence and diversity; and a genuine focus on the people who work for us, as well as those we serve,” he says.
Trumping all these considerations when entering a new international territory is the need for an intimate knowledge of the local market. “We’ve found that by partnering with local specialists who are fully au fait with the country, culture, history, geography and politics (as well as the prevailing and emerging market trends, and data on consumer segments, distribution channels, and more), we are able to rapidly develop appropriate solutions that are geared to meet each market’s specific needs.
“This is an extension of the ‘local is lekker’ strategy Hollard has rolled out in SA. At a time when the trend is to centralise, we’ve opted, instead, to set up branch offices all over the country so customers have access to our world-class products and services, but also have the comfort of dealing face-to-face with local people who understand them best,” says Mparutsa .
Disruption is a good thing
Hollard is often approached for advice on investing in Africa. “What we realise is that our vantage point at the southernmost tip of Africa doesn’t equip us to make assumptions, or deductions, about any of the countries to the north of us. But operating successfully in the heavily stratified South African business landscape does offer a unique perspective of some of the complexities we could face going north.”
Africa is not a country. There are 54 countries on this continent, each with their own languages, cultures and sets of sub-dialects and sub-cultures. In one distinct country, regional, religious or cultural nuances may mean distinct market differences.
Mparutsa says Hollard appreciates that each country’s political, legal and commercial structures are as distinct as their topography. “Each country needs to be viewed as an entirely separate market. Lumping Ethiopians, Ghanaians, Mozambicans and Namibians into one homogenous but easy-to-understand African ‘set’ is a recipe for disaster,” he asserts.
In terms of trends Hollard has noticed in the territories it operates in in Africa, says Mparutsa, “We’re seeing a move away from reliance on commodities (albeit forced by price pressure); foreign direct investment (FDI) is driving mega-infrastructural development; there’s greater business sector diversification; urbanisation continues to pose challenges; and, as access to technology improves, we’re seeing the emergence of a more-mobile middle-class and a lower-income market we can engage with meaningfully for the first time.
“The result is massive disruption and, while it comes with its risks (you’d expect a responsible insurer to point this out), we believe that it’s a good thing because innovative change is where the magic happens,” he adds.
“Expansion into emerging African markets has given us an opportunity to do things differently and to innovate, not just by developing new products, but also by opening new distribution channels. We’ve also got to cross-pollinate by tweaking and implementing ideas arising from different African offices. We relish this.
“We’re focused on developing simple, easily accessible products and services to meet an entirely fresh set of needs. In the process of growing our own business, we’re adding capacity to our partners [and] contributing skills to their employees, powerfully altering the choices available to our new customer base and impacting positively on their quality of life,” Mparutsa states.
For Hollard, Africa is a complex continent of diverse countries, but it all comes back to a core belief — ‘doing well by doing good’.