Reviewed by: www.mba.co.za
Editor: John Luiz
ISBN: ISBN 0195762762
ISBN: ISBN 9780195762761

Africa is one of the least understood continents. Investor perceptions of Africa are clouded with pessimistic news reports and a poorly researched environment of business. But Africa is changing, and it is the right time to reconsider the latent potential of this vast, untapped market of 850 million people. There is money to be made on this continent, and indeed the returns on investment are already substantially higher here than anywhere else. More importantly, the risk associated with doing business in Africa is declining as the institutional environment becomes more predictable and familiar. The wave of democratisation and economic liberalisation which has shaped Africa over the past decade and a half has changed the continent and its business environment significantly. The costs of doing business are declining and the returns increasing – in any language this is an environment worth investigating.

Managing Business in Africa examines the African business environment using a rigorous approach and by sourcing leading subject experts. It will be an invaluable tool for those seeking to understand this continent - its possibilities and complexities - and for those who wish to master management theory and practice more generally. The book is roughly divided into two parts. The first covers the environment of business more generally and examines Africa’s social, economic, political, regulatory, legal and institutional conditions. The rest of the book examines what constitutes effective management in this unique African business atmosphere. It looks at the role of human resource management, cross cultural management, strategic marketing, leadership, business ethics, financial markets, operations management, change management, amongst others and concludes by analysing how strategic management theory and practice needs to be adapted to Master the Business environment in Africa.

The principles of good management apply universally and in this respect doing business in Africa is much like doing business elsewhere - with some nuance. However, having said that it is undoubtable that the business environment (including the social, economic, legal and political) is highly complex in Africa because of the continent’s unique history, diversity, geography, political and institutional landscape etc. The result is that one cannot do business here without recognising that this legacy has shaped the business environment in ways that one cannot ignore. For example, a multinational corporation entering South Africa with the aim of using it as a platform to do business in Africa needs to understand that it will have to confront the country’s apartheid legacy and the country’s attempt to overcome that legacy. The South African government has adopted a complex system in these efforts that affects various components of the business environment. A case in point is Black Economic Empowerment (BEE) which legislates ownership requirements so as to reorganise assets to those who were previously disadvantaged under apartheid. This legislation has been contentious and certainly experience elsewhere on the continent has not been without controversy but it is clear that political and social stability in South Africa is contingent upon rectifying these injustices. From an international business perspective this raises the apparent costs of doing business on the continent and may elicit the question of why it should have to pay for crimes of the past. However, what is often overlooked is that it does have unexpected payoffs in that the local empowerment companies bring with it local knowledge and contacts which may be of benefit and allow one more effective access to the local market. The South African case is not unique and various African countries have adopted analogous indigenisation programmes with similar objectives and specifications. In this respect we have a case of where doing business in Africa is not business as usual but the point is that it does not mean that good management principles change but rather that we need to apply them innovatively to a different landscape.

A particular example of how principles may be universal whilst the context changes and that it in turn affects one’s application of management principles is to be seen in leadership on the continent. Nkomo and Cook (chapter 4) state it thus: “Any company doing business on the Continent must take into consideration the complexity of leading in such a diverse context. It is a complexity defined by recognising leadership style as determined by leader and follower characteristics within a particular internal and external context. Understanding these components within Africa requires an appreciation of its unique historical, political, social and economic context.” In other words, leaders in Africa need to contend with challenges that may be foreign to outsiders. There is a sense of social responsibility that goes hand in hand with leadership in Africa – it is impossible to be only profit driven and be sustainable on this continent with its culture, its challenges and its history. A leader needs to deal with the scourge of poverty, unemployment and HIV/AIDS not only because it is the right thing to do but because it makes good business sense in a region where firms are expected to be embedded in the community they serve. Likewise, leaders in industrialised countries may deal with diversity at a superficial level at home (gender, race etc) but in Africa they are forced to confront diversity in its most stark manifestation where it has often erupted into real conflict and operating in these surroundings requires a very sensitive and often brave response from companies.

The goods news is that the business atmosphere in Africa has improved dramatically over the past decade and is likely to continue doing so. NEPAD seeks to provide business with a predictable environment in which the rules of the game are understood and more familiar which will make adaptation easier. But there are still threats to the process. NEPAD has not received uncontested support both by the general populace, who question its pandering to Western ideas, and by renegade regimes clinging to power. Bad neighbours still exist in Africa and contagion from these neighbours remains a threat and indeed there is ample literature on the negative externalities which go with bad neighbours. Consolidation of the political and economic liberalisation since the late 1980s have yet to be consolidated and therefore the threat of reversal remains real – declining, but real. The result is that the risk environment here is higher than in many other regions but the risk differential is falling rapidly and it is not clear what this differential is (if at all versus other developing regions). The potentially higher risk in Africa is matched by significantly higher returns and this has seen a recent scramble for quality assets in Africa as companies recognise the potential of these large untapped markets. Incomes are rising in Africa and soon the large population will translate into significant consumer markets. Business will have to look at Africa sooner or later as markets become saturated elsewhere. Getting in early has advantages in that it allows one to capture market share and establish brand loyalty and distribution chains etc. before one’s competitors and indeed we are seeing great results for many multinational corporations already doing business in Africa with minimal investments. The African market has been severely underestimated (much like the Asian market was prior to the 1980s) and the international focus is still not on the continent as business has suddenly ‘discovered’ Asia and other emerging markets but Africa’s time is coming much earlier then many others predict. What we have sought to do in this book is to provide more information and analysis on managing business in Africa because information lowers risk, both real and perceived. The principles of good management may be universal but the context and the people differ profoundly in Africa and this book will help navigate this environment successfully.

Managing Business in Africa is intended for a number of different markets. There is a clear gap in the market for a textbook on the environment of business in Africa. The book could be used as a stand-alone textbook for a course on business and development in Africa, or a reader across courses. It is ideal for MBA and Executive Education courses and should also appeal to management consultants, the business community, government officials, and those interested in Africana and development.

John Luiz is a Professor of Business Administration at the Wits Business School (University of the Witwatersrand), South Africa, specialising in Economics, International Business, and the Environment of Business. He is widely published internationally and is actively involved in management consulting and training to leading corporations.

Link to online catalogue
Managing Business in Africa: Practical Management Theory for an Emerging Market