CEO to CEO: The challenge of leading the African division of a global multinational

As a South African CEO navigating these challenging times, I wanted to reach out to other CEOs and share my personal insights around pressing issues, but also opportunities, in the hope this opens up dialogue around the current climate and topical matters impacting South African businesses.

Africa is not a one-size-fits all market

Being part of a multinational company operating in Africa comes with its perks: a pool of international talent and resources to draw on; access to increased product research and development; and the benefits of economies of scale.

But there is a downside too, particularly when it comes to being the African division within that global group. All too often management paints all offices the world over with the same brush. The expectations placed on a London, Sydney, New York or even Auckland office are applied to branches Lagos, Kinshasa, Nairobi and Luanda. There's a fundamental problem with this approach, starting with a lack of true understanding of Africa and how the continent works.

Our cultural diversity alone makes us an anomaly of sorts; what is appealing to one market can easily be disrespectful to another...in the very same city. Language and the linguistic nuances between different groups can turn a product launch from triumph to tragedy.

One multinational learnt this the hard way, and entered Nigeria with billboards featuring non-Nigerian African models. The brand struggled for years to recover from the initial local backlash despite its ground-breaking products.

This points to the one lesson global corporates have yet to grasp: Africa is not a single, homogenous market. That, and the fact that within the continent's individual markets, exist multitudes of smaller markets that make up the whole. Head offices in other countries don't understand that these subtle differences cannot simply be glossed over, and can have far-reaching business consequences if they are.

A differentiated approach

Beyond marketing and communications, this same one-size-fits-all thinking often governs expectations around management outputs; sales targets; logistics and product handling; finance; and the management of staff. Tackling each of these factors in each individual African market requires a highly differentiated approach - one that cannot be informed by the standards and expectations of our European or American counterparts.

In these established markets, businesses are largely cushioned from currency fluctuations. Infrastructure, such as roads, is excellent, facilitating easy shipping and logistics in even the most remote areas, and staff management is seldom hit with wage strikes and stayaways. Access to resources such as water and electricity is stable, as are most political environments, while business regulations are simpler and less restrictive.

In Africa, this is simply not the case. Currency fluctuations are sometimes suffocating; poor infrastructure makes transporting both products and people difficult; and labour conditions can be incredibly challenging. Water shortages and rolling blackouts compound these operational issues, which are augmented further by complex business regulations that vary from market to market.

These are issues that executives sitting in the capitals of the world have little knowledge of, and have seldom experienced themselves.

Despite these challenges, Africa is bursting with potential. In 2019 the IMF forecast that five of the fastest growing economies globally that year were in Africa. Meanwhile, projections over the past three years have consistently tipped Sub-Saharan Africa as hosting the fastest-growing mobile economy in the world.

The only way for multinationals to tap into this potential and navigate the differentiated conditions of African markets is to really get to grips with these markets and understand how they work.

In the insurance and reinsurance industries, that means having experienced brokers on the ground who are fully rooted in the local market, from its dialects to its natural disasters.

Where understanding meets innovation

The Harvard Business Review (HBR) put it best when it said that in order to navigate Africa's challenges and translate its growth trends into profitable, sustainable enterprises, corporates needed 'the imagination to see the continent's unmet needs as opportunities for growth, and the long-term commitment to build businesses of meaningful scale'.

In the HBR piece, What Multinationals Need to Do to Succeed in Africa, authors Acha Leke, Mutsa Chironga, and Georges Desvaux noted that aside from creating new products, services and sometimes entirely new categories that targeted African needs, tastes and spending power, successful firms had also 'innovated to solve the problem of last-mile delivery' and other typically African challenges.

That is the key. It is only through understanding the market, from the ground up, that companies are able to innovate in meaningful ways that ultimately translate into business success.

But first we need a mindset shift, from the current all-purpose market approach to one that's tailor-made for the most exciting, dynamic markets available today.