A recent Wall Street Journal article titled, U.S. Companies Race to Catch Up in Africa, addressed the issues American companies are facing expanding and selling more products in Africa, a market predicted to grow in the coming decade. According to McKinsey & Co, 220 million Africans will join the middle class as consumers within five years. The Wall Street Journal article states:
“U.S. companies' game of catch-up shows the perils of waking up late to the next big frontier market, Africa. The continent's economy is forecast to grow to $2.6 trillion in 2020 from $1.6 trillion in 2008, fueled by booms in mining, agriculture and development of ports, roads and other infrastructure, according to McKinsey Global Institute. The middle class is growing and total household spending now exceeds that of India.”
While the article features many of the challenges Africa presents, (a multitude of regional logistics and laws, changing governments and difficult environment for supply chain development) the article does not address solutions towards aligning profits with purpose.
Often termed base-of-the-pyramid (BOP) markets, these markets represent the 4 billion people who live in poverty and a potential customer base for corporations. However, approaches are fragmented and vulnerable communities are too often considered ‘problem children.’ Corporations continue to be challenged by how to properly access, invest and operate in these untapped markets.
No matter how large the company or brand, the lack of on-the-ground relationships, understanding about local laws and customs, implications of a weak governance system, and limited local capacity for building partnerships, can undermine authenticity of business and social engagement.
To succeed in Africa, companies need to adopt different approaches and properly navigate the economic, social and political circumstances of these communities.
Social intelligence is at the nexus where companies can look to make up for “waking up late” to the African market. While China may have a better financial foothold on Africa, this is in large part due to U.S. hesitation to grant trade terms to countries that are failing to adequately support human rights, market-based economies, and the rule of law - scruples which China has notably lacked in doing countries in Africa. By demonstrating long-term corporate social responsibility programs and investment in their African stakeholders, U.S. companies can win over the competition and prosper in the continent.
Companies also have the opportunity to extend current social purpose initiatives to improve the health and livelihoods of populations impacted by poor health and malnutrition, lack of access to safe, drinking water:
- Nearly 1 billion people lack access to safe water
- Every 20 seconds, a child dies from a water-related disease
- Maternal Health: More than 350,000 women die annually from complications during pregnancy or childbirth, almost all of them — 99 per cent — in developing countries.
Companies can learn from their peers, exchange best practices and knowledge sharing in the interests of collaborative action. For example:
P&G created the Children’s Safe Drinking Water Program aligned with their products to solve the problems facing many communities due to the lack of access to clean drinking water. The program works with more than 100 partners in 60 countries (many in Africa) to hand out PUR packets, a water purifying technology developed by P&G and the Center for Disease Control – the product has saved more than 16,000 lives.
Green Mountain Coffee Roasters ensures a healthy and prosperous supply chain, from coffee-growing communities in Latin America, Indonesia, and Africa, to manufacturing operations in China. GMCR focuses on the food security for farmers and their families especially during times of drought. GMCR and The Coffee Trust debuted, After the Harvest: Fighting Hunger in the Coffeelands, a documentary about food insecurity in coffee communities.
The Power of Nonprofits
Properly align with nonprofits/NGOs that specialize in key sectors such as healthcare, education, nutrition and economic development. They have the expertise and knowledge in the field, understand the local customs and social intelligence. A couple of non-profit examples include:
InterAction, the largest alliance of more than 190 US-based international nongovernmental organizations (NGOs), is leading a collaborative dialogue between U.S. businesses and its members. The new InterAction Business Councils’ mission is to decrease poverty, promote social and economic development via inclusive partnership development between the corporate and NGO sectors.
Indego Africa attacks systemic poverty by delivering access to export markets and job skills to African women in Rwanda by partnering with artistic cooperatives to produce contemporary crafts for export around the world. that poverty in Africa. So far, Indego has partnered with more than 250 women in Rwanda working for five for profit cooperatives.
Not a ‘One size fits all’ Approach
If U.S. Corporations want sustainable results in Africa, they need to ensure their policies and programs include the following considerations:
- Align the local market community assets and benefits with their business – rather than business interpreting the interests of the community;
- Recognize the social value and considerable assets such as the people, local customs and resources;
- Promote more ethical, responsible and sustainable business policies;
- Change traditional norms and behavior by influencing the development of new lifestyles among poor consumers including new products and services;
- Expand on the networks and usability of the goods/services already owned;
- Design and co-create models from within the communities to include leadership, capacity and infrastructure development.