Published on : Thursday, July 24, 2014
At a recent gathering of top executives, working on the agenda for the Africa Hotel Investment Forum (AHIF) – Africa’s top event for hotel investors, research was undertaken by the Forum’s organiser, Bench Events, to find out what the essential principles are for doing business successfully in Africa.
The main findings were that African markets are progressively being seen as open for business and regardless of perceptions of eminent risk, the continent is not considerably different from others. Yet the continent’s complexity and rich diversity point to the need for flexibility when it comes to business strategy. Three main factors considered most likely to distinguish success from failure when doing business in Africa are: 1) Appreciation that every country in Africa is unique, 2) The importance of receiving support from local experts and 3) placing a high value on relationships.
To the first point, several executives agreed that it is vital to remember that every country in Africa is unique, and in order to do business successfully, every single country needs to be understood in its entirety. Kofi Adomakoh, Head of Project Finance and Export Development, African Export Import Bank, recently said: “The time has come for everyone doing business in Africa to take time to understand all of Africa and not just view it as one block”. Michael Cooper, Vice President Development Sub Saharan Africa, Hilton Worldwide agreed and commented that investors should “remember that Africa is not one country.” On the major issues, it is necessary for the industry as a whole to talk to each government. “Collectively we must continue to put pressure on all African governments for open skies and visa free travel,” he added.
To the second point, there was a strong consensus that appreciating local players, receiving support from local experts and building strong local partnerships are critical for business success in Africa. Kevin Underwood, Global Leader of Leisure and Culture, Aecom, stated: “Any development project must have a local sequence and one must understand the culture of the African countries. There are no shortcuts.” Filippo Sona, Director, Head of Hotels (MENA Region), Colliers International, agreed and advised “Contact local companies and get local expertise to develop in Africa. Use local resources.” Al-Karim Hamir, Chairman & Managing Director, Prime Assets also concurred: “You definitely have to have a local partner to learn and climb the ladder.” To be successful, it is also necessary to identify, nurture and retain talented and committed local staff. Andrew McLachlan, Vice President, Business Development, Africa & Indian Ocean Islands, The Rezidor Hotel Group, commented: “Having local feet on the ground is essential and creating teams of excellence is important – the stronger your professional team is the better. Like a strong football team – you need to pick the best in every role”.
The third major theme that emerged from the research was the importance of collaborating with various organisations: co-operate with all levels of government, join forces with the investment world and build strong relationships with all of them – perhaps more than in any other continent. Lourie Kruger, VP M&A and Treasury, Kingdom Hotel Investments, stated: “The only way to grow your business effectively is to have really strong relationships. When you don’t have the infrastructure like you do in other markets, those relationships make everything much more efficient.” Klaus Lengefeld, Sector Leader Tourism, GIZ, agreed and said: “Sit together. Many organisations are investing a lot into sustainable development but do not work together with the hotel investment world”.
Other general success factors that emerged from the study included: invest in people, focus on positives, be patient and persistent, have realistic expectations and be prepared for any hidden costs or surprises. Also, experienced foreign investors repeatedly note that nowhere else is there such a direct correlation between careful planning (and flexibility about plans once formed) and a successful outcome.