AFRICA IN 2011

1. Africa is, and will continue to be, one of the fastest-growing economic regions in the world, thanks to surging demand both from abroad (from China and India in particular) and at home (fuelled by urbanization and consumerism), according Pratibha Thaker of The Economist magazine. Including Northern Africa, the continent’s star performers are expected to be South Africa, Egypt, Algeria, Botswana, Libya, Mauritius, Morocco and Tunisia. Collectively, these countries match the average GDP per head of the BRICS, according the Adrian Wooldridge of The Economist. Africa will grow by 4.8 percent—the highest rate of growth outside Asia, and higher than even the much-talked-about economies of Brazil, Russia, Mexico, and Eastern Europe, according to newly revised IMF estimates. The continent was one of only two regions—Asia being the other—where GDP rose during 2009’sglobal recession, according to a recent report by the McKinsey Global Institute.

2. Telecoms, banking, retailing, manufacturing and even agriculture will be the the region’s fastest growing sectors: Agriculture, an area where the continent has long lagged, is poised for takeoff. The continent is home to 60 percent of the world’s uncultivated arable land. The region will see an increase in the buying or leasing of cheap agricultural land by outsiders. Food-importing countries poor in land and water but rich in capital, such as the Gulf States, and countries with large populations and food security concerns, such as China, South Korea and India will be at the forefront.

3. Africa’s consumer market will account for the region’s largest growth. The continent’s burgeoning domestic market is the largest outside India and China. In 1980, just 28 percent of Africans lived in cities. Today, 40 percent of the continent’s 1 AFRICA IN THE GLOBAL MARKETPLACE AFRICA IN 2011 Ten Essential Market Trends for the Global Manager billion do, a portion close to China’s, larger than India’s, and likely to keep growing in the coming years. The number of households with discretionary income is projected to grow 50 percent over the next ten years to 128 million, according to Foreign Policy magazine. And consumer spending in Africa is growing two to three times faster than in the wealthy developed countries and could be worth $1.4 trillion in annual revenue within a decade. On a per capita basis, Africans are already richer than Indians, and a dozen African states have higher gross national income per capita than China, according to development expert Vijay Majahan, author of the 2009 book Africa Rising.

In the last four years, the surge in private consumption of goods and services has accounted for two thirds of Africa’s GDP growth. The rapidly emerging African middle class could number as many as 300 million, out of a total population of 1 billion. While few of them have the kind of disposable income found in Asia and the West, these accountants, teachers, maids, taxi drivers, even roadside street vendors, are driving up demand for goods and services like cell phones, bank accounts, upmarket foodstuffs, and real estate.

4. Rapidly expanding, Africa’s youthful workforce will be a key advantage. With more than 60 percent of the population below the age of 25, Africa has an advantage: it has a wealth of cheap labour, making it most inviting to businesses that are labourintensive. By 2040, the continent is expected to be home to 1.1-billion working-age people, more than either China or India, and is poised to become a serious engine of production and consumption. While African countries have abundant labour, however, much of it is unskilled. That said, pools of highly educated human resources are readily available, but they tend to lack practical management experience. Therefore, skills training and development is a critical area of need; as is the sourcing of trainers to transfer skills to local talent. Scarcity of jobs means that the sheer press of applicants can make identifying the right people difficult. Wal-Mart, the world’s biggest retailer, made a $4.6 billion (32 billion rand) offer on September 27th to acquire the South African retail chain, Massmart Holdings. If it goes through, the acquisition will represent the American retailer’s biggest acquisition in an emerging market and the first by a global retail chain in South Africa. Wal-Mart International CEO Doug McMillion recently announced that Wal-Mart is looking to expand internationally to supplement weakness in domestic sales. Massmart Holdings Ltd. is a South-African based management group that is the third largest distributor of consumer goods in Africa, a leading retailer of general merchandise and a wholesaler of basic foods.

5. Smart phones will be the fastest growing category of handsets, even in the poorer areas, where they often serve as a substitute for PCs. Mobile phone use is growing faster in Africa than anywhere else in the world. It is the only continent in the world where mobile phone revenues are higher than fixed line. Today, cellular phones are the continent’s lead form of communication. GSM service is pervasive and due to low costs, text messaging has become a medium of choice in both business and social communications.

6. M-commerce will flourish in 2010. The provision of financial services to ordinary people by way of mobile banking will thrive on the continent. The widespread availability of mobile phones on the African continent allows African entrepreneurs to sell their products and accept payments over the internet without a computer, a website, or even a bank account. Roughly, only 23 percent of Africans have access to banking services, but an estimated 8 million Africans use their cell phones for payments. Pan-African mobile operators are promoting free roaming services, making Africa the first region in the world to offer this innovative service. Since 2000, 316 million people have signed up for mobile phone services, more than the entire population of the United States. – McKinsey Quarterly, 2010

7. Africa is well positioned to profit from natural resources as global demand for commodities continues to rise. The region contains a disproportionate share of the world’s mineral wealth at a time when mineral prices are soaring. Nigeria is home to the tenth-largest oil reserves in the world. In other parts of the region, oil will drive growth in Angola, the region’s third largest economy, Congo-Brazzaville and, within a couple years, Uganda. Mineral producers, such as Mozambique, the
Democratic of Congo, Tanzania and Zambia, and strong agricultural economies, including Ethiopia, Kenya and Malawi, will benefit from rising demand and should achieve economic growth of 5% and above in 2011.The continent’s production of oil, gas, minerals, and other natural resources is projected to grow at 2 to 4 percent per year for the next 10 years. At current prices, this will raise the value of resource production to $540 billion by 2020—and possibly much higher depending how commodity prices rise.

8. Ghana is expected to become the sub-Saharan region’s fastest growing economy in 2011, with growth expected to reach double digits. As oil comes on stream in significant quantities (first official pumping began Dec. 15, 2010) for the first time, the influx of money will pose a difficult test of institutional accountability. Will Ghana use its new-found oil wealth more wisely than the others have done? Despite promises from the country’s leaders, this remains to be seen. Considering neighbouring countries, Ghana’s democratic record is still among the best in West Africa.

9. South Sudan is likely to become Africa’s newest country in a January 2011 referendum. Additionally, Africa’s democratic credentials will be tested during 2011, as several sub-Saharan states plan to hold elections. Nigeria—the region’s most populous country, largest oil producer and second-biggest economy after South Africa—elects a new president and legislature. Other sub-Saharan states that plan to hold elections include, in rough chronological order: Benin, Uganda, Chad, Madagascar, Zambia, Cameroon, the Democratic Republic of Congo, Liberia and Gabon—and in January southern Sudan is due to hold a referendum on independence.

10.Rwanda is touted as East Africa’s best investment destination: The World Bank listed Rwanda as its champion pro-business reformer in 2010. According to a new report by the International Finance Corporation (IFC) and the World Bank, Rwanda is East Africa’s best destination for investment. The IFC – World Bank report, ‘Doing Business in the East African Community 2010’, highlighted that reforms make Rwanda one of the fastest places in the world to start a business, followed by Kenya, Uganda, Tanzania and Burundi respectively. The nation’s leaders have announced aggressive plans to raise per capita GDP from $230 to $900 by 2020, using information technology to transform the nation into an “African Singapore.”

Rwanda is also leading Africa in the ICT Revolution: Rwanda is set to become sub-Saharan Africa’s hub for information and communications technology (ICT).Named East Africa’s number one ICT nation by the United Nations Conference on Trade and Development (UNCTAD), Rwanda has benefited from ICT-based investments by lucrative international players such as Microsoft, Nokia, and Terracom. New infrastructure connecting Africa to the rest of the world will boost bandwidth, cut costs and stimulate businesses that rely on technology. This includes the recent arrival of new submarine fibre-optic cables and satellites. Many high capacity international backbone network projects have been built to connect Africa to the rest of the world on an open access basis. Algeria, Botswana, Mauritius are also implementing projects to become ICT regional hubs.

According to the Economist magazine, the biggest concentration of overlooked markets is in Africa (which is in many ways an overlooked continent). Pockets of great risk and instability certainly remain, but the long-term trends look good. In 2011 an increasing number of companies, looking at the West’s flat markets, will decide that volatility is at least a sign of life. Companies that move first will enjoy lots of advantages. They will be able to forge deals with aggressive young companies: companies such as Angola’s Banco Africano de Investimentos, which is expanding in Europe and Brazil, and Egypt’s Orascom Telecom, which is expanding across the Middle East and beyond. They will be able to strike infrastructure deals with local governments. And they can shape the tastes of future consumers.

Companies that succeed in these neglected emerging markets are not only putting down roots in the world’s most fertile soil. They are giving themselves a chance to establish business habits for years to come. WAM

Columnist, Erika Amoako-Agyei, is an international business consultant and the owner and founder of a computer hardware and software consultancy that provides IT and business planning services to corporate clients in West Africa’s mining industry. She is based in the US and provides cross cultural management and communications training to global firms and expatriate professionals entering into Africa. She keeps a blog at www.AfricaBusinessReview.net and can be reached by email at: erikaagyei@gmail.com.

Managing hazards for effective and sustainable business

Everyday, the oil and gas industry must contend with an array of health, safety and environmental concerns throughout the range of operations. In the face of increasing regulatory oversights, as well as increased public scrutiny, companies need to implement effective safety management systems to help protect their workers, the general public and their environment. An industry is confronted with the challenge of establishing specific systems, programmes, and processes to manage and monitor activities that affect their performance. Safety Management System (SMS) supports safety sustainability and business performance throughout the life cycle of a company’s assets.

From the deepwater offshore platforms to on-shore oil and gas production facilities Safety Management System (SMS) helps to:

• Comply with increasing and evolving regulatory demands
• Minimize operational risks for various hazards
• Improve reliability in remote, high risk environments

The afore mentioned needs/ issues constitute effective and sustainable business performance. One of the greatest threats to effective and sustainable business performance however is exposure to hazards in the work place.

EXAMPLES OF A HAZARD

Workplace hazards can come from a wide range of sources. General examples include any substance, material, process, practice, system etc that has the ability to cause harm or cause adverse effect to a person under certain conditions.

Workplace hazards also include practices or conditions that release uncontrolled energy like:

• An object that could fall from a height (potential or gravitational energy)
• A run-away chemical reaction (chemical energy)
• Entanglement of hair or clothing in a rotating equipment (kinetic energy)
• Contact with electrodes of a battery or capacity (electrical energy)

TYPES OF HAZARD

A common way to classify hazards is by categorization. These include:

• Biological (bacteria, viruses, insects, plants, birds, animals, and humans etc)
• Chemical (depends on the physical, chemical and toxic properties of the chemical).
• Ergonomical (repetitive movements, improper set up of works station, etc).
• Physical (radiation, magnetic fields, pressure extremes (high pressure or vacuum), noise, etc,
• Psychological (stress, violence etc).
• Safety (slipping/tripping hazards, inappropriate machine guarding, equipment malfunctions and breakdown).

MANAGEMENT OF HAZARDS

The first step in managing hazards in an establishment is to put in place a hazard control programme.

A control programme consists of all steps necessary to protect workers from exposure to a substance or system, and the procedures required to monitor worker exposure and their health to hazards such as chemicals, materials or substance or other types such as noise and vibration. A written workplace hazard control programme should outline which methods are being used to control the exposure and how these controls will be monitored for effectiveness.

Each control programme should be specifically designed to suit needs of the individual workplace. Hence, no two programme will be exactly alike.

Choosing a control method may involve:

• Evaluating and selecting temporary and permanent controls
• Implementing temporary measures until permanent (engineering) controls can be put in place
• Implementing permanent controls when reasonably practicable

For example in the case of a noise hazard, temporary measures might require workers to use hearing protection. Long term, permanent controls might use engineering methods to remove or isolate the noise source.

Some hazards and their controls will be specifically outlined in legislation. In all cases, the employer has a duty of due diligence and is responsible for taking all reasonable precautions, under the particular circumstance to prevent injuries or accidents in the workplace.

In situations where there is not a clear way to control a hazard, or if legislation does not impose a limit or guideline, the employer should seek guidance from occupational health professionals about what is the best practice or “standard practice” when working in that situation.

Remember, a legal limit or guideline (such as exposure limit) should never be viewed as a live between “safe” and “unsafe”. The best approach is to always keep exposure or the risk of hazard as low as possible.

MAIN WAYS TO CONTROL A HAZARD

The main ways of controlling a hazard include:

• Elimination (including substitution): remove the hazard from the workplace
• Engineering Controls: Includes designs or modifications to plants, equipment, ventilation systems, and processes that reduce the source of exposure
• Administrative Controls: Controls that alter the way the work is done, including timing of work, policies and other rules, and work practices such as standards and operating procedures (including training, housekeeping, and equipment maintenance, and personal hygiene practices).
• Personal Protective Equipment (PPE): Equipment worn by individuals to reduce exposure such as contact with chemicals or exposure to noise.

Whether the operations involve pipelines, tanks or terminals, there is need for a system that will assist the oil and gas company to:

• Comply with key regulations
• Extend the working life of aging assets
• Maintain asset security and reliability
• Develop worker competency

Regardless of the location of the process operations, there is need to:

• Identify and manage HSE and security risks
• Comply with HSE regulations
• Reduce production disruptions and loss of market
• Optimize operations due to economic pressures and tight margins
• Develop strategies to cope with aging infrastructures and workforces
• Manage organizational challenges

An institution of sound and result oriented hazard management system will certainly guarantee effective and sustainable business performance in the oil and gas industry. WAM

DR. UDEME UDOFIA is a serving lecturer at the Faculty of Science, University of Calabar, Calabar, Cross River State, NIGERIA He can be reached at these contact details uddyudofia@yahoo.com

“If you want one year of prosperity, grow grain. If you want ten years of prosperity, grow trees. If you want 100 years of prosperity, grow people.” – Chinese Proverb

In today’s era of globalisation, conducting business internationally requires culturalawareness and effective cross cultural communication skills. Yet, many executives, volunteers, and expatriates are often sent into foreign markets with little or no understanding of their host culture. For the Western traveller, there are few destinations on earth that present more cultural differences than sub-Saharan Africa. What might be acceptable in Europe or North America may be frowned upon in Africa. Many of the goals may be the same, but the business styles and ways of communication differ greatly.

For example, the Western need to produce quick and tangible results can clash head on with the African slower pace and long-term outlook. Consider the case of a Western negotiator presenting a business proposal to a team of African executives. Following the presentation, the African team may respond, “We will study the matter.” Finding the answer too vague, the Westerner may press for something more specific: “How soon do you think you can get back to me? In one or two weeks? In a month?” This only makes the African team uneasy as they dislike being pressed to act prematurely. The lack of patience on the Westerner’s side can undermine his negotiation efforts and create anxiety and distrust among the African team. By ignoring how culture impacts local business practices, the visiting executive may inadvertently lengthen the consideration stage of the proposal or, worse, risk losing the interest of the other side altogether.

The African approach to decision-making does not mean that local businesspeople are unable to make quick decisions or get things done individually. Rather, it represents the cultural significance of consensus and consultation, which tends to guide the decision-making process in Africa’s group-oriented cultures. Conversely, in the time-driven cultures of North America and many parts of Europe, people pride themselves on conducting business at lightning speed and favour a quick and individual approach to decision-making. Operating from this perspective, the Westerner who resorts to the ‘hard sell’, by applying pressure to influence decision-making, will not only break the lines of communication, but could potentially cause irreparable damage and costly mistakes.

For Western operations to compete successfully in Africa, Western business leaders must understand the role culture plays on business development and relationship building.

…For Western operations
to compete successfully
in Africa, Western
business leaders must
understand the role
culture plays on business
development and
relationship building.. .

In a forthcoming book, titled Business and Social Etiquette in Africa: A Guide to Understanding Culture and Business Practices, I focus on providing readers with deep insights into the intricacies of managing and communicating effectively across cultures. As a former expatriate manager for the IBM Corporation in West Africa and a current consultant for global companies operating in Africa, I draw from my years of experience and research to illustrate why the global marketplace is still largely dependent on the human element—the way people communicate, how they make decisions, what motivates them to act and how they build trust, credibility and lasting relationships. When international associates are motivated by a different set of cultural values— when they judge situations from different perspectives— communication breaks down, walls go up, and deals fall apart. By zeroing in on the people dimension of doing business in sub- Saharan Africa, Business and Social Etiquette in Africa departs from the common practice of drilling readers on the do’s and don’ts of doing business in African cultural environments. Instead, the material focuses on familiarising people with the basic values, belief systems and biases that inform the business styles of African people.

Though technology has connected us to almost everywhere in the world, the effectiveness of these connections depends greatly on creating a common perspective. Technology alone cannot handle the complex task of interfacing with people of different cultures. A corporation’s website cannot give you insight to the way decisions are being made on the other side of the world. This is only possible when we understand the people with whom we are dealing. And in order to understand people we need to understand the cultural context in which they are operating. In order to bring home contracts that lead to mutual benefit and sustainable business growth, expatriate personnel have to become skilled cross-cultural negotiators, managers, and team builders.

Over the next two decades, Africa is primed to become a leading destination for the growing global market in offshoring and outsourcing services. But for a global enterprise to compete successfully in Africa, a customer service representative in Ghana has to be able to communicate effectively with counterparts in the United States. Factory managers in Kenya’s textile mills have to be able to respon accurately to the requests of European clothing buyers. And marketing people in London must be able to negotiate with Nigerian distributors in Lagos. In short, a culturally competent expatriate can save themselves and their companies the cost of expensive mistakes simply by embracing cross-cultural skills as part of a broad strategic focus.

It is important to note, however, that there is no ‘one’ African culture or society. With over 900 million people spread across 54 nations, the continent is culturally complex. Even in the sub- Saharan region, commonly referred to as “black” Africa, differences exist not only among countries, but within countries as well. Ghana is not Angola and Angola is not Tanzania. Still, there are some common beliefs and core cultural values that transcend national boundaries, languages and ethnicities and form a fundamental cultural unit.

By placing special emphasis on the sub-Saharan region of Africa, my goal is to give people insight into the deeply embedded social customs of the region, many of which are implicitly understood, but have no explicitly stated rules for social conduct. Examples include African hospitality, speech patterns, social reciprocity, decision-making, boss-subordinate interactions, relationship building and the social fabric of community. These deeper cultural values are rooted in the subconscious and are, therefore, difficult to identify in other people. However, these customs provide the framework for the social expectations of interpersonal interactions.

In Business and Social Etiquette in Africa, readers will gain from practical strategies on how to recognize, respect, and effectively manage cultural differences at both the interpersonal and organisational levels. Opening the book is a foreword by Dr. Olufemi Babarinde, a leading authority on the African region and a post-graduate professor from the Thunderbird School of Global Management (ranked No. 1 in the world for International Business). WAM