Last week I got asked two questions which I found quite amusing.
The first question was why it was the case that there are very few African businesses who had weathered the test of time? In other words why are African businesses so short-lived? Having never thought of this issue before, I really didn’t know what the answer was.
The second question was why are African people not active in winter sports? … :-).
Despite the obvious cheek in the second Q, it was the first that gripped my interest.
Why is Corporate Longevity a tricky concept in Africa?
Ok, I’ll be the first to admit that Africa has had its fair share of turbulence, be they wars and animosity between tribes, drought and other evils. In addition, we probably need to account for the fact that institutions that allow registration of organisations as trading units are comparatively new to Africa, in comparison for example to those which were established hundreds of years ago in some parts of the world (e.g. Europe or Asia). But were there ever equivalent systems before ‘company law’ showed up, for example in Egypt during the reign of the Pharaohs? Or to put it in a different way, what institution (whether registered or not), ‘organisations’ or other commerce / merchant bodies have been undertaking trading activities of some sort, under the management or administration of the same family or groups of people, over many years, in Africa?
Thinking about it now, if it is the case that such undertakings are in a severe minority, could the absence partly because of political instability? Or is it a case of lack of management skills essential to ensure sustainability? But doesnt that depend on the environment aswell?
Further, with such a violent history, which others described (I suspect not entirely correctly) as being characterised by ‘savagery’ and ‘backward’ traditional practices, could such have created a restrained mentality in some people, such that they struggled with creativity, or innovation, resulting in a comparatively few that could think beyond the here and now?
I know I’m treading a thin and controversial line of thought here, but there are all just questions.
Or is the anomaly simply because of a lack of resources? Otherwise could it be a cultural thing? Here, like before, I must say I’m a bit wary over suggesting this as an explanation.
Further, could it be explained by the fact that Capitalism as we know it is a largely imported concept to Africa, such that for all sorts of complex and irreconcilable reasons it doesn’t entirely sit comfortably within people’s inter-relationships?
There may be other factors which are responsible for the lack of longevity, such as the lack of discipline (just ask how many people are desperate to drive a Mercedes even when they can’t afford it, yet?) which many have cried foul over. It could possibly even be because of the knowledge gap that exists between some businesses in Africa and those in the developed world (a fact which one would hope the internet, mobile phones, dissemination of knowledge in the form of improving levels of education of Africans, has gone some way to rectify)? Maybe even the comparatively few sources of venture capital has a bearing on the matter, I don’t know.
What I do know, is that there are organisations in Europe, Asia and America that have a long history, and a clear and distinct legacy. Some can trace their roots to a millennium ago (for one, an organisation which was only incorporated in 1958 is able to trace its history to at least 1086. See financial records here).
I think there is something good that African businesses can learn from this.