Aliko Dangote chat with Strive Masiyiwa on doing business in Africa

[Music] 2014 2015 and 2016 voted the most powerful man in Africa consecutively by Forbes magazine take us through the journey in terms of where you started to the power that you exert of African economics and I'd like to say as well African politics today yeah that's what I started with cement in 1919 you know 1989 89 with such attacks out of which letter we had to you know abandon because of massive dumping you know from the you know Chinese and Indian markets but what we did we concentrated on just trading and in concentration in trading needle because we really wanted to see ok fine what is it because we've seen quite a lot of people you know in the past trying to go into industry and trying to go into industry they felt you know most Mandarin families that tried in this realization for very long period of time you know the Korean succeed and we really wanted to know what you find what was the reason in 1990 five we invited at Anderson then which is now KPMG and Accenture to try and you know we held the treat for two days to try and find out okay fine what was the reason we had to go into that with trees because we accumulated a lot of cash between the 1978 to 2000 and a me to 1995 reason being that we got a point where we couldn't turn around our money or won over you know I mean you know there was just a limited amount that you could bring in to Nigeria and were only trading then in Nigeria so we decided that okay fine look well actually rich end of the road the only way for us is to industrialize you know where we can now deploy more of our capital into industrialization but then was scared because we've seen a lot of companies that tried in this realization they failed and we wanted to know why so we had this retreat led by other Anderson and two things came out glad the reasons why people have actually failed there are two areas one is lack of electricity power you know shortage in Nigeria and just to elaborate on that I use the statue stirred a but 623 million Africans still do not have access to electricity those that is half the population that's true so with that well you know we can go on a no there are so many examples if you look at it from the stage that I came from is we are population about 23 million and only having 40 megawatts of power Wow so almost everybody is a powerful you say you know what you look at that so but so with that now we realize that yes we had so much because the universe sorry I interrupted your train of thought day you said the first issue was lack of electricity and they so the second issue was inconsistency in government policies you know because we wake up in the morning the government will change the meanwhile you had already invested so it does not really give you that courage of even investing long time you know so what we decided to do is say okay fine can we sort out the Alexis tree first and also try to see how do we mitigate the inconsistencies in government policies the that one we don't have any control over but the only way for us is to remain friendly with any government coming in and also explaining things and also the benefits that are going to get because if you look at it today in all businesses that we don't I mean we will finish our tax holiday the government actually earns more money than us the bonus when you look at it I mean because the taxes are high you different sort of taxes so we decided that occupy and let us now go ahead and want to be bald but then how are we going to become successful are we going to now start afresh or do we just go on and produce goods that we used to import so that's a while good right now we just did the backward integration by now producing goods that were already trading in because already have the customer base who have the logistics we have all the infrastructure and what we did was now to say ok fine we're going to go and do cement we're going to do but we started with the terminal a small story for example to tell you what we did in cement we started the terminal who open a terminal December 2000 was just one small time LT import bulk cementum back towards Christmas I now went and you know met with lavage it was blue cycle then before the match that please could you try and buy 40% of this business and then you run it but we keep the brand don't watch it they say no no you know we want to have all the you know majority minimum huge 1% so it was a deal breaker and we stock you fine we're not going to you know agree the money that they were supposed to amy was less than four million dollars and so the backtrack on the deal and we certify let us go ahead and face them and within two years we actually took chunk of the market and now we know we have a company worth over 18 billion dollars and I'm sure in the far as regrets that decision we're looking now at dangoty a group having a presence in 17 African countries and it was the first West African country to enter the fourth mm list yes but I mean when we go forward because part of the question you know we want to also tell you that right now we're actually in a massive trajectory we are not about 4.2 billion dollars of revenue and in the next two years we'll be at 30 billion so we are going into a massive transition you know group white so accelerated growth let's say going forward and even more full of hours to cry about strive let's let's come to you and again correct me if I'm wrong but Zimbabwean born your mother was an entrepreneur your father worked in a mine at the age of 12 their accumulated enough money to send you to school in England you then continued with your education and as an engineer came back into Zimbabwe and went to work for the state's telecommunications operator where you were very quickly promoted to senior positions but frustration with a state-owned entity led you to start your own organization can you pick up from there sure first of all thank you for for having me I also want to acknowledge Bubba President Obasanjo who played who's played a great role in both our careers Alico would agree but as you point out I didn't start off as an entrepreneur I started off as a professional telecommunications engineer at a time when all telecommunications in Africa most of the world was run by the state so we used to call them plain old telephone companies pots so as a pots engineer but that's about as funny as that God because we didn't do very much Zimbabwe at the time had one of the highest teller densities in Africa which meant the number of people with the telephone and ours was 1.4 percent the average African teledensity was 0.7 percent so that just gives you an idea of how many people had a telephone if efficiently you got on the on the telephone waiting list you could wait 35 years and you know so it was we didn't do very much so that is where you must have seen the opportunity no I didn't actually because it was all under the state so I left and went and started a construction company but as technology would have it about five years after I left the whole mobile industry began to emerge and what I quickly spotted was it was being driven by private enterprise it was private entrepreneurs particularly from the construction world because they had to go out in little towers so people like myself and I Gibbs awareness and another Buccaneers began to see that you know this could be an opportunity for us so I was watching what was happening globally and I thought well you know I can just go over and persuade the government to give me a license so I went and said you know there's this great new technology would you give me a license I and I can provide service to the people and they almost locked me up as a national security threat they said you can't front telephone this is about the state and our ability to to monitor and control people so we won't allow you to do so listen a non grata so not quite at that point because they hadn't realized I could cause quite a bit of trouble cuz I then sued them which had never been done I hear the former president was not very amused when he heard that this little Turk was taking him to the Constitutional Court to challenge the premise of why you should have a monopoly in telecommunications and and I did it under a provision in the in the in our constitution on the freedom of expression I said if 75% of the people have never even heard a telephone ringing why do you have a monopoly you must open it up so we can provide service to the people and so it took five years before the Constitutional Court and I brought down the monopoly the court ruled that the monopoly was illegal so then I was persona non grata then you a person non grata but I want to also throw out the stash that the patella density wind from when you started north point 75 percent to 75 percent teledensity today across the African continent yes that works out but it just means that you know more people some people have more than one phone so obviously a lot of us got involved you know it became one of the great phenomenon and I of course I ended up in Nigeria courtesy of President Obasanjo and we went there to get the revolution going so it was a great revolution 25 years on you know 75% of the African people on the phone often when we have great entrepreneurs on the stage I don't think we go to this question quickly enough and that is lessons learnt mistakes made and you can this is not the first time asking you this question but perhaps for our audience here today again if we're talking about establishing great businesses there are those who say that you don't succeed if you haven't failed at least once or twice well I think mostly when you look at it it depends on the government policies well now when you look at it I mean my brother stripe just talked about telecom was out the you know aggressive nature and not only the aggressive nature of also looking at you know things outside the box the telecom industry wouldn't have actually been you know you know successful in especially in Nigeria because at the time we now came in in Nigeria happy taxable which we don't offer any tax holidays or any incentive to services but President Obasanjo was very very creative you know I mean does it was not that because he's here you know that he's sitting somewhere but what he did was to say okay fine let them also because there was a claim that I was not going to be any profitability and he said that ok fine look you know what I'm gonna give you five years tax holiday even though it wasn't in the tax law but as a president he had the prerogative of approving a tax holiday so which he did and that was what even allowed them to commit because the calculation then was look the entire country both land and mobile we had 500,000 lines yeah okay in 2000 and today we are taking about one foot seven million lines so you can see so it depends on the government of the day it depends on what you can convince them and what they really want to try to take to the next level but our own for example today now what I keep saying we have it there's a big difference between Africa and maybe Asia mainly when you look at Asia market is a market of exports but we have local demands so that's demand in whatever that you do you know the opportunities are enormous because we are like an import continent you know we import we export mainly raw materials and we import a lot of goods which is why you know it costs us it gives us a lot of imbalance in a foreign exchange installation so not many mistakes in your history mistakes energy reserves that we have had you know we've been always a very very focused company there are lots of businesses that we have dropped you know along the line for example why I'm banking we had two banks and we decided that no you know it is much better for as well no professionals in terms of banking you know a low professional bankers so and what we said as a rule in a company any business that ten of us in the company top ten of us can not wake up at night and explain to you the process from A to Z we don't have business in being that business I don't want to be in a business where somebody would sit me in the room and tell me how the process is because you know let me give you an example in 2017 we had the toughest challenge of time 2016-17 in Nigeria because of the falling oil prices from 120 to $30 a barrel I was working fine so how do we then devaluation setting how do we really retain and maintain our profitability and we had a lot of shareholders and all what we need to do is to go back into the trench and I was arguing with the people running the operations and said I know we can actually cut a lot of our cost we can even make much more money when you look at it all our companies we actually doubled our income minimum compared to 2016 just because we know our business in and out so that's the difference that we have is not you know unlike for example a frog from South Africa and South Africa and Autopia we are also powerful uses bahadin cell power we consume and now it turns out to be that our power cost is just about one third of the power cost of the National Grid and that's the reason why we're much much more profitable company than any company in Africa and that adage of course is a reiteration what I suppose Warren Buffett came out with it from the first place in the investment space don't invest in companies that you don't understand and I will yes very much underpinned circuit we're partners philosophy as well in terms of investing in companies how did Shankar put it biscuits and bread rather than Bitcoin and the other element was cement and caviar not caviar cement rather than caviar so there we go strife let's pick up on that issue that I said about mistakes being made and learning from them there were a lot of people in this room yesterday who didn't here who weren't here yesterday I didn't hear about your Nigerian experience which is well documented but I think it's very important that we have that shared commonality with Nigeria and your first experience wasn't a positive one although President Obasanjo we will have the pleasure of speaking to you later sir and again your policies were much celebrated over the two terms that you were president in Nigeria sure well look you know I my brother comes from the biggest African country and I come from one the smallest so one of the first things you realize when you come from a small country is that you're not going to grow very big unless you leave you see you know you can you can achieve a lot in Nigeria without ever stepping out of Nigeria but when and I know you'll understand this from Singapore you you've got to quickly start looking beyond your own borders and then in my case of course I I also I also didn't need of encouragement because I was literally booted out so he left them Bob we're in 2000 I haven't had an opportunity to get back since I've been quite busy so have moved to South Africa and I began to from South Africa to look at how do I get into the rest of Africa and you got a bear in mind that we don't do much into trade between ourselves as Africans which is a major issue inter trade compared to what in Asia you have 48 50 percent inter trade so it was not common for Africans to begin to look for opportunities within Africa as Africans was one was quite exotic people we're more used to seeing Germans and Italians pitched up when Nigerians and Zimbabweans pitched up our own people thought were crooks or they would say you know what's wrong with your own country I remember being asked that at at at the border post you know why are you here I'm come to invest what's wrong with your own country so so it was it was difficult in the sense to be I didn't realize how difficult it would be for us to go out to other African countries and look for opportunities we also didn't have access to to capital because our capital doesn't move so we can't invest from one country to another except if you are South Africans so even so you may you may have the capacity in one place to do something but when you arrive in another country yo that capacity isn't available to you you're literally having to start again because we as Africans because it's not it's not normal alright this in your machine when I went with wasn't Joe he left office 10 days later we went to Tanzania and when I went to and Anand and announced an investment four hundred million dollars to build this mint plant they say okay this man you don't cook the up combination you know so they never really believed that yes an African will invest in Africa if you look at it today our investment in South Africa or in Tanzania we're actually the biggest African investors but there is quite a lot of areas that we have to look at if you look at it majority of those areas they've been control over 40 50 years by foreigners that's right by mainly Europeans so when you go in there they will do whatever it takes most homes that were actually going to work ended up up to the Supreme Court so there is still an element of suspicion I mean but you just have to be very very strategic about you handle the situation by you get there you know I mean we've had issues when we are going in but now most of the countries that were entered actually we've been number one but they will give you a long run easy process people that they've been there I mean for example I don't want to mention the name of a country but as a country we wanted to do our cement the chairman of the company you know so is the Minister of Finance so Minister of Finance gunda will issue all our incentives and whatever you know but we so went ahead I met the president during the time when Obama arranged this meeting with African the president called me by says okay are you the same dumb butcher serious well you're a real fighter and I think should carry on fighting but he couldn't come out and say it in his own country they finish it came to Nigeria sure sure can you quickly fast-track to the end of that story you had tailed out of there but it took you ten years you pay two hundred and eighty five million dollars for televisions license and then you had to you were you were presented with a bribe which you refused to pay a four million dollars by the governor who threatened to throw you out if you didn't pay it well he pretty much did so you know you take those kind of threats pretty serious if somebody's got a couple of guns at his disposal so I did I did leave you know I'm not gonna fight with guns so but I persisted I took the matter to international arbitration as are saying yesterday and to be fair the Misses the other thing the arbitrator's were appointed by Nigerian courts and they were majority Nigerian judges and and we went before us several arbitral hearings every single one of them ruled on by Nigerian judges in our favor you know to the very end of the process so again there is a legal framework don't bet people mislead you otherwise we we stayed in those courts of course it was a little long but it can be long in India - or Indonesia you know that brings us to a point of what you need in terms of investing across the African continent as in other frontier markets there is a level of persistence understanding that the rules and regulations across the 54 countries in Africa are very different as you've both just described oh yeah it is not easy to apply one set of rules and no implicate that's in in other countries in an orc but I also want to get to the point now where we've spoken about the corruption where are we in that scale because I want to understand how we've progressed how you as leading businessman across the African continent are engaging or negating the element of corruption do you still get faced with it at this juncture in Africa's story a quick comment from both of you well yes you do but it's not you know even other countries the only thing is that you just have to learn to say no you know I mean once in while somebody knows that yes you are not going to give that it might take you longer to get things done you know because you are not going to agree to you know pay because especially you know the kind of companies that both myself and my brother strive with that we run you can't really be involved in giving anybody you know right what you always do is that we don't even go and ask governments to give us anything outside what do you normally do we look for sexual sectoral incentives so which means that anybody who is going to invest in that sector he's entitle to it you know they're not going to do anything special you know to you so if they are not going to do anything special to you then you actually don't need to give anybody brave to do you know anything at all so but there are other countries I mean in to be really fair most of the countries that we went to you know to establish businesses outside Nigeria only one country that actually know somebody access who you know if bribe me so the situation has improved dramatically it has is it has dramatically really I mean even the minister who act meet with bribe I portrayed him to the President and say that look this guy asks me for money so the next time when I'm coming into the country I should bring you know a briefcase full of dollars and I reported the case to the president you know but we still didn't do the business there strap your experience yeah look I'm I'm actually sometimes stunned by just how dramatically the business environment has improved in Africa it has really really improved it is much easier to do business let's look corruption is there but it's found all over the world and we've we've got to fight it black eye 40 tonight and the official involved you know served a prison sentence and so you've gotta fight corruption takes two people it's two parties if you yourself decide you're not gonna pay that's it if this the only it requires two so if you're gonna invest but if you're looking for shortcuts it doesn't matter where you are you will end up in a cooperative so I think I'm gonna leave it there on the corruption side we know that corruption is prevalent all over the world but I want to leave you with what strive has said and also have been you know Alico has concurred through the fact that the business environment in Africa has improved dramatically and instances of corruption have dropped dramatically Elika in the beginning you said that it was Arthur Andersen that had done the survey then it had turned to - KPMG obviously and said that inconsistency of government policies and lack of energy were the two biggest challenges for businesses and actually led to a number of failures in the business space let's talk about those two today because again in building a long term business across Africa these are two challenges that have not gone away or have they let's start with the consistency of government policy we have seen many transitions happening in the political space across Africa as corruption is dissipating are we seeing more political stability and consistency of policies drive with the power thing that statistic that you shared by the way President Obasanjo myself and Ally co-working as what is called the Africa progress panel were the people behind that report that produced that that study shared by Kofi Annan that's right and the state of power in Africa and and it just shows you one of the things that we try to do which is that as business leaders we realized that if the environment is going to change we cannot just be totally focused on our businesses we have to be going out there engaging the leaders those President Obasanjo said sometimes it's not that leaders want to be cynical they just don't yet know what is required to make the environment a success how we are supposed to work together after there's a huge continent okay it looks like it's easy to see Africa's one landmass okay but don't forget this is like you guys looking at Asia from Laos to China to Vietnam to Singapore as if it were one country and throwing their Myanmar and Pakistan and burner and ever repeated Myanmar Burma as one can do two countries but it's one so but you gotta realize we have exactly the same issues the development levels are different the political issues are different I'm surprised sometimes just that actually it's much more integrated than it sometimes looks so what we are working towards is to create one market push for greater consciousness that if we work together as a continent there are more benefits and including power benefits and perhaps or sorrow just bringing the African Union's a recent free trade agreement obviously the African Union not shared by president Paul Kagame President of Rwanda the Republic of Rwanda 44 African countries signatories to the treaty of the one trade agreement so yes we are making progress in that regard we can leverage power resources across the continent as well start leveraging of one another strive sure I think what power needs is the sort of boldness that we saw on the telecommunication sector if what President Obasanjo was prepared to do on telecommunications we're done in Niger around the way to bring the incentives for the private sector to come and build a power with so little power we what risk are you taking by letting us have a shot we can fix this power thing it's not it's not it's not beyond us but it's about the policies of accepting that the private sector could be a power providers or your water providers or your sanitation provider it happens around the rest of the world well acknowledge a cement guy and I'm a telecom we may not be the guys to do it but believe you me there young aliquots and young strive Massey was out there ready for the challenge to fix power and it could be completely transformative the World Economic Forum we use that term leapfrog all the time obviously you know we can transform my power it's not really something very very difficult the infrastructure is there and we don't really have to have one you know we don't have to have one single power well you know because sometimes we will talk about inga and they produce this you know but we have to also look at the issues about running the infrastructure most countries they can produce their own power some solar some coal some you know it depends on really what you want to do but fixing power I think if they are the right incentives and the right regulation Africa can get out of there issues in the next 10 years again entrepreneurship and the success of entrepreneurship across the African continent is going to be reliant on the power resource so hopefully we'll see that purpose well it has to happen because I can assure you that future elections will depends on what kind of power you deliver you don't deliver power you don't get reelected so and you know power is very very necessary is not something it's not a luxury we need to get that empower on population I am going to almost move out of the Facebook a live broadcast and then go back to Chatham House Rules but I want to close out on the consistency of government policies as you highlighted in the beginning that's one of the biggest challenges you have faced in building a sustainable business across Africa is it improving at least it has improved dramatically just actually improve quite a lot there is more clarity right now and part of the excitement of doing business is that when you wake up there's also something new you know not something very damaging so also put that mitigant you know in the business you know calculation if now for example I'm going to do business I will take the worst-case scenario and I'll go ahead with it if he doesn't pay I'm not going to go into it but right now there is more consistency few countries also having sort of issues you know there are countries that were invested and were still having couple of issues one or two you know not many you know so it has really improved dramatically and you know the issue that when you look at future in the next 17 years also by the next by 2030 if you are not really in Africa even be able to make money you can and I think that certainly for those of our leaders listening I this is really what I would be saying the big challenge for us in Africa going forward is how do we deal with unemployment of our young people we we have an extraordinary challenge of the tech a lot of the technologies and the industries that we can build today do not create a lot of jobs the key for us is to promote entrepreneurship and the underpinning of entrepreneurship is first of all education we have to throw ourselves at education like never done before and this is a great region for us to understand what you can do in that area and that education is only as good as we pivot with it to skills you can be an entrepreneur but if you have no skills to sell to underpin what you're trying to do there's nothing more you can do so we have to address those two issues we have to get education moving we have to get skills training moving vocational training skill kids to do things with their hands if we don't then all our hope goes up in instability in migration issues that we'll be beyond the next generation to deal with so for me Africa's boss is half full extraordinary potential we have the young vibrant the world's youngest population average age 19 we can do extraordinary things the consumers of tomorrow are African we will be 40% of the world's population by the turn of the century so this is where you gotta be and you start today and we invite you to come and be partners with us and when we talk about those partnerships I do just need to stress that we've got two of Africa's leading philanthropists on the stage strive and is what city have the High Life Foundation and over the last 20 years they have educated 250,000 orphans across Africa and they also the Family Foundation funds 40,000 bursaries on a yearly basis again African orphans in the education space strive I mean of course alica they don't go to a foundation and you sir personally seeded that foundation in 2014 with 1.25 billion u.s. dollars so again education and vocational training in the heart of what you both do so thank you very much we're now suspending the Facebook live transformation Jenna thank you very much for your time to drive with us you got a very much [Music]

Channel: Kenyan Wallstreet

Views: 67,450

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Keywords: Africa Business, Aliko Dangote, Dangote Strive Masiyiwa, Strive Masiyiwa, Strive Masiyiwa Aliko Dangote, Aliko Dangote Interview, Strive Maiyiwa Interview

Id: njSmnYql8ZM

Length: 39min 39sec (2379 seconds)

Published: Mon Apr 09 2018