Flip side of SA business venturing into Africa

EXPANDING into other African countries has been a priority for South African business leaders over the past decade. It’s a sensible approach to growth and to managing risk. But to venture forth into the world when one’s backyard is not in order carries its own risks.

The economic prospects of major African economies have never looked better. The International Monetary Fund estimates that the rest of Africa will on average grow just more than twice as fast as SA’s economy. The “Africa growth story” has been one SA’s companies have been eyeing, if not pursuing, for a while now. But like many of the growth themes of post-apartheid Africa, too many people have been left out of it to care how it works out.

In an age that characterises “capital” as footloose and business as borderless, it is easy to imagine that multinational companies can decouple their fates from those of their countries of origin. Indeed, money can move at a flash across computer terminals. Just not as fast as we think.

Nation equity is defined by academics Durairaj Maheswaran and Cathy Chen Yi as the equity or goodwill associated with a country. It refers to factors beyond product performance that determine how a company’s products are viewed. Nation equity is determined by the history, culture and the politics of a country. It is the national brand identity that SA’s companies carry as they get on with their business abroad.

Though we are able to articulate our differences and grievances against one another in exquisite detail, the rest of the world just sees a bunch of losers who need to get their act together. Unemployment, exclusion, xenophobia — the rest of the world doesn’t care how we apportion blame among ourselves.

A few months ago at a seminar hosted by the Tiso Foundation at the Gordon Institute of Business Science, the question of SA’s relations with the rest of Africa, corporate and otherwise, was a major theme. Some of those gathered there warned against the myth of South African exceptionalism and the related inability to learn from other African countries.

We have clearly not learnt much from notorious episodes of mass expulsions of those considered “alien” from countries such as Ghana, Nigeria and Uganda.

Another warning sounded at that gathering was that SA Inc should not think it can avoid problems in its backyard by going to other African countries. It might find the same challenges there. As it turns out, it is finding that it is local challenges that are following it elsewhere.

The challenges that add fuel to prejudice — unemployment, poverty and humiliating living conditions in marginalised spaces such as hostels (which were bad enough with employed men) — are challenges for all SA.

There are too many South Africans without a stake in the economy, who reap no fruit from the country’s supposed status as the “gateway to Africa” and who have no hope of enjoying the niceties of an “Afropolitan” lifestyle.

It is odd that those of us with a globalist disposition find it easy to preach the gospel of global interconnectedness, but sometimes fail to see the ties that bind us to our immediate neighbours. We can recite the statistics about exports to the rest of the continent, the earnings made outside SA or the country’s risk premium. A quarter of the working-age population has, at best, an indirect linkage to all this activity. The public sector mediates this linkage through corporate tax receipts and other spillovers from business outside our boundaries.

It’s trite to say that the government could do a better job at easing the lives of the poor. But business has to help fix its backyard. Because an interconnected global economy also means that the country risk you seek to escape can catch up with you in unexpected ways.

• Makhaya is an independent economist.

Picture: THINKSTOCK

Picture: THINKSTOCK

EXPANDING into other African countries has been a priority for South African business leaders over the past decade. It’s a sensible approach to growth and to managing risk. But to venture forth into the world when one’s backyard is not in order carries its own risks.

The economic prospects of major African economies have never looked better. The International Monetary Fund estimates that the rest of Africa will on average grow just more than twice as fast as SA’s economy. The “Africa growth story” has been one SA’s companies have been eyeing, if not pursuing, for a while now. But like many of the growth themes of post-apartheid Africa, too many people have been left out of it to care how it works out.

In an age that characterises “capital” as footloose and business as borderless, it is easy to imagine that multinational companies can decouple their fates from those of their countries of origin. Indeed, money can move at a flash across computer terminals. Just not as fast as we think.

Nation equity is defined by academics Durairaj Maheswaran and Cathy Chen Yi as the equity or goodwill associated with a country. It refers to factors beyond product performance that determine how a company’s products are viewed. Nation equity is determined by the history, culture and the politics of a country. It is the national brand identity that SA’s companies carry as they get on with their business abroad.

Though we are able to articulate our differences and grievances against one another in exquisite detail, the rest of the world just sees a bunch of losers who need to get their act together. Unemployment, exclusion, xenophobia — the rest of the world doesn’t care how we apportion blame among ourselves.

A few months ago at a seminar hosted by the Tiso Foundation at the Gordon Institute of Business Science, the question of SA’s relations with the rest of Africa, corporate and otherwise, was a major theme. Some of those gathered there warned against the myth of South African exceptionalism and the related inability to learn from other African countries.

We have clearly not learnt much from notorious episodes of mass expulsions of those considered “alien” from countries such as Ghana, Nigeria and Uganda.

Another warning sounded at that gathering was that SA Inc should not think it can avoid problems in its backyard by going to other African countries. It might find the same challenges there. As it turns out, it is finding that it is local challenges that are following it elsewhere.

The challenges that add fuel to prejudice — unemployment, poverty and humiliating living conditions in marginalised spaces such as hostels (which were bad enough with employed men) — are challenges for all SA.

There are too many South Africans without a stake in the economy, who reap no fruit from the country’s supposed status as the “gateway to Africa” and who have no hope of enjoying the niceties of an “Afropolitan” lifestyle.

It is odd that those of us with a globalist disposition find it easy to preach the gospel of global interconnectedness, but sometimes fail to see the ties that bind us to our immediate neighbours. We can recite the statistics about exports to the rest of the continent, the earnings made outside SA or the country’s risk premium. A quarter of the working-age population has, at best, an indirect linkage to all this activity. The public sector mediates this linkage through corporate tax receipts and other spillovers from business outside our boundaries.

It’s trite to say that the government could do a better job at easing the lives of the poor. But business has to help fix its backyard. Because an interconnected global economy also means that the country risk you seek to escape can catch up with you in unexpected ways.

• Makhaya is an independent economist.

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