NASTASSIA ARENDSE: The African continent offers a number of opportunities for businesses looking to expand into new markets. Musa Kalenga, CEO and founder of Bridge Labs, talks to us about some of the considerations you should take into account as you navigate the African continent.
MUSA KALENGA: Ja, we had a great event, well attended, with a lot of curiosity around how you take your business from our being essentially based in South Africa to the rest of the continent. Some of the points that stood out were essentially around the leadership approach and what management should be thinking about on the ground. The few that stood out for me were in particular this adoption of innovation, and understanding that it’s not possible to take a cookie-cutter approach by just doing what you’ve done here to work in a different market.
The second thing that was quite important is speed. It’s not really a luxury to be able to move into these markets at your own pace, because they work very differently. So it was very important to understand how quickly to get into markets, make mistakes and get out.
And the last was kind of from a more structural perspective – the importance of having either relationships or some kind of feet-on-the-ground presence as far as people being able to give you insight and understanding of the markets that you are going into.
So I think those are three that really stood out for me. We spent a lot of time speaking about the implications from a financing perspective, from a manpower and resource perspective, because there is a big feeling that there is a lot to be done but not enough human capital and resource on the ground.
NASTASSIA ARENDSE: One of the points you did mention which I’ve seen various articles on, is “Africa is the final frontier”. To somebody who is a listener out there, who has possibly been thinking of doing business or even expanding out in Africa, what do I make of the statement “Africa is the final frontier”?
MUSA KALENGA: It was a statement based on my experience. I used to work for Facebook and I was part of the founding team setting up the Sub-Sahara Africa office. I made it in a bit of a humorous way in that my brief was “Ride into Africa on a horse and make sure that we get a billion new customers out of this continent,” because Facebook were also viewing kind of Africa as a place where they’d unlock value in their final push to world global domination. So a lot of businesses are also looking at with the same view.
If you look at the data that’s coming through from most research houses, it’s starting to quantify the opportunity in Africa. That’s starting to contextualise things like urbanisation, things like technology, things like geography and agriculture, and making it really, really attractive to global investors. So when people are looking at Africa, they do look at it as a final frontier. That and the fact that we’ve got a really good population size to make a lot of money out of. A lot of corporate businesses are looking at that and seeing it as a major opportunity.
So being the final frontier for me is a nice way to sum up the sentiment around the opportunity. I think there is a lot that still needs to be unpacked to make it commercially viable, but I think a lot of people are definitely looking at as a place where they can get real value.
NASTASSIA ARENDSE: The one thing that I find quite fascinating, and perhaps you can expand on it, is what you call the “Kalenga Conundrum” in the context of “being human is good for business”.
MUSA KALENGA: Yes. I’ll be writing my second book very shortly. I try to sum up the feeling that I’ve been getting around technology, because I do a lot of speaking about technology. And I’ve spent some time inside businesses, trying to understand what it is that stops them from fully maximising the opportunity. And through all of that I’ve realised that essentially as we see the human condition getting better incrementally, if you look at HDI, the human development index, anywhere around the world the numbers are going up and to the right, so the human condition is getting better. Number one, Sub-Saharan Africa is the lowest – I think it’s at 0.553. But the incremental rate at which we are improving human lives for me is a problem.
If you look at another graph, which I also spoke about, which essentially is the graph that shows Moore’s Law, it’s got this rapid J-curve that accelerates to the right. And, if you put those graphs on top of each other, the question I always ask is why is it that we are only incrementally improving human lives but technology is improving at such an exponential rate. The gap that that creates is what I call the Kalenga Conundrum, because how can we be trying to send people to the moon but we can’t feed people on earth? That’s a core value proposition that we need to try and understand, and it’s a core ethical and moral standpoint that businesses need to confront. In order for your business to be sustainable into the future you need a market to serve.
So the Kalenga conundrum is simply a provocation, to say technology is great and it’ll get better and do amazing things. But don’t forget the human element, because if you don’t look after that in the long run I think your business is dead as well.
NASTASSIA ARENDSE: Speaking of businesses being able to be sustainable, what are some of the considerations one should take into account when it comes to doing business on the continent?
MUSA KALENGA: There are a few things. There is always the argument around whether you bring in expats or you develop locally, and there are lots of anecdotal examples of people that have done one or the other and got it wrong. I don’t think there is a formula. I think it’s more about sense-checking, understanding your own business and being able to have a feel for the ground.
And so for businesses that have gone into East Africa, as an example, I use the example of when we were launching a beverage brand in Kenya. We thought that we would have this wonderful packaging with perfectly frosted glasses of the product. And when we got into the market we realised that people actually drink warm beer, and it’s a thing. People don’t drink warm beer. So you’ve invested all this money trying to understand and package but meanwhile you’ve missed the mark. So being able to have an understanding of going into these markets – almost naively, for lack of a better word – really helps.
The second thing is, when you go into the markets, the rate and appetite you have around failure is important. My sense is that a lot of South African businesses don’t really adopt risk-orientation when they go into markets. Therefore it’s kind of like this is our one chance, we’ll make it work or we are not going to get this thing right – which is completely wrong. It should be an iterative approach to say, we are going in here, we probably don’t know what we are doing, we are going to cap our risk in terms of our initial investment, but we’ll learn a lot in the process. And in so doing we are going to get better at our understanding of that market.
So I think that kind of approach really helps to shoulder the burden of trying to figure out this market all at once and then understanding the nuances of the different countries. There is nothing worse than a blanket approach because we happen to be in Africa and there are assumptions about what happens in these countries. I see now most people are grouping them according to geography, north, south, east and west. But I think even within that grouping you can double-click on each market, which country, and there is a nuance which you need to understand there as well.
NASTASSIA ARENDSE: Are there countries or perhaps even regions in your perspective that are ripe for expansion?
MUSA KALENGA: Ja, there are a few, and for different reasons. There are what I call the blue-eyed-boys kind of countries right now. Rwanda and Ethiopia kind of fall into this space, and I think with good reason. If you go to Rwanda, they’ve managed to get a lot of things right from a policy perspective. They’ve created a more enabling environment within the East Africa region, as far as businesses going in there and being able to start trading within 24 hours. They spend a lot of time and energy reconciling socially a lot of the issues that they had after the genocide. They’ve spent time and a lot of money to make sure that they are getting their ecosystem right. So I think that’s a great market to look out for.
I think Ethiopians similarly are also starting to realise the power of some of the natural resources they have, and are investing in that honestly and starting to explore offshore as well as export opportunities.
I think a lot of other landlocked countries are starting to figure out what role they can play as far as things like aquaculture and agriculture exports, etc. But I think it’s starting to get okay to explore those things while for along time it was not really commonplace. A lot of it was because you were still trying to service a very localised market, but I’m starting to see a lot of expansion, a lot more global thinking as well.
NASTASSIA ARENDSE: Musa, thank you so much for your time today