ACT LOCAL, GO GLOBAL

“The crawling traffic from the airport down Accra’s Liberation Avenue gives you plenty of time to admire the sprouting skyscrapers ascending alongside. One is decorated with the decal of Standard Bank’s Stanbic Bank, just one of its 23 shiny branches across Ghana. Across the road the $56 million Icon House is taking shape, financed in part by Rand Merchant Bank, Stanbic will be using it for its new head office in Ghana.

A few blocks away the sprawling Accra Mall boasts a Shoprite, a Game and a Mr. Price. On the way you will pass Woolworths, while street vendors push MTN pay-as-you-go cards at you through the taxi window”.

This lengthy quote above by financial analyst and columnist Stuart Theobold appropriately sums up the foothold South African businesses have in Ghana.

Apart from the companies mentioned above several others are also active including SABMiller, Multichoice, Goldfields Ghana, Nandos restaurants, Izwe loans and South African airways. These companies are profitable and present in other African countries too.

Not to be outdone, the next most noticeable African firms operating in Ghana are from Nigeria. In the financial sector as many as 5 banks and insurance companies are active. Others are Glo mobile, Oando, Sahara Energy, Afren, Main One, Chicken Republic and Dangote Cement.

Several North African companies are also present like Libya’s Sahel Sahara bank and Afriqiyah Airways.
Many of these companies were successful in their respective countries before they decided to expand and seek bigger opportunities abroad as many African countries became stable and business-friendly.

These are companies who have physical presence here. This article will only be concerned with companies having physical presence. Other companies export their products here using local agents.

The balance sheets and assets of these foreign-owned firms have grown in size and they have become profitable after they ventured abroad. I am thus quite surprised by how few indigenous Ghanaian companies that are doing well have dared to set up operations in fellow West African countries and into Africa at large.

On the African scene the few Ghanaian firms I know who have set up operations in African countries include RLG Communications (present in Nigeria and Gambia and hoping to set up in Guinea and Sierra Leone). Waste management firm Zoomlion also has branches in Togo, Liberia, Angola and Zambia and still growing. Investment firm Databank has a branch in Gambia whiles mining equipment supplier Equipment and Planners also has operations in Liberia.

Other indigenous companies like Kasapreko, Danadams, Interplast and others export their products to other African countries.

Whereas South African and Nigerian companies make their onward match into Ghana, Ghanaian companies are not eager to do the same. I have struggled to find any indigenous Ghanaian firm that has a thriving operation in South Africa or Nigeria like the way their companies are entrenched in our business landscape. It could be that our investment climate is friendlier but I do not want to believe so.

So is it that Ghanaian firms are risk-averse or they do not have the motivation or financial capacity to venture abroad. Or is it the culture of ‘mempe meho asem’ (translated as ‘I do not want trouble’) nature of our beloved people that also plays out in the corporate world? It will be good to have an empirical study to uncover some of these reasons.

Arguably Ghanaians are the second commonest Africans you will bump into after Nigerians when one travels to Europe, North America and Asia. If we could be that adventurous to travel and seek better opportunities for education and work, why is it that these same traits be seen in the corporate world?

East Africa is a region where many firms set up branches in each others countries easily. Profitable Kenyan firms have operations in their neighbouring countries and beyond. Well-known Kenyan firms like Kenya Commercial Bank (KCB), Equity bank, Safaricom, Nakumatt, Kenya Airways and others have strong operations in Tanzania, Uganda, Rwanda, Burundi, South Sudan and beyond.

Trading with fellow African countries is also called Intra-African trade and this trade has been low compared Afro-Asian and Afro-Western trade. According to Ernst & Young, in 2011 intra-African investment accounted for 17% of all Foreign Direct Investment (FDI) on the continent. Since 2002, it has trebled to reach a $103.9 bn in 2010 and still growing.

Setting up operations in the sub-region and on the continent has many advantages.
It increases production, growth and employment at a faster rate than focusing only on local markets. Since opening up operations in Gambia and Nigeria, tremendous opportunities have opened for RLG. The firm is now constructing an ultra-modern technology hub in Accra and thinking of entering other countries in Africa. The firm’s success at home and abroad has not gone unnoticed. Microsoft has signed a partnership with RLG.

Having operations abroad helps to offset losses that may occur in a particular firm’s home country. During the height of the global credit crunch in 2008, lots of financial institutions in Europe and North America lost billions, collapsed or were bailed out by their governments. Spanish bank Santander had losses in its primary market in Spain but because it had branches in many other countries in South America, the strong profits from its South American arm made it fair far better than its counterparts. It was no surprise that Santander was able to buy two troubled British banks-Allied & Lester and Bradford and Bingley.

Barriers of entry into African countries could be lower than global markets. This is because neigbouring countries have similarities in consumer taste, standards and local culture. Going abroad also helps firms to specialise and become more competitive.

Thankfully in West African we have an economic grouping called ECOWAS that’s to integrate member countries economically. Ecowas Trade Liberalisation scheme (ETLS) is a mandate meant to remove trade barriers like customs bottlenecks, taxes, market access and so on. It was the ETLS that made some nationals of West African countries to vehemently complain a few months ago when Ghana’s Trade Ministry sought to close down foreign-owned firms operating in Ghana’s retail sector.

Many Ghanaian firms can go abroad and grow if the necessary technical help is given to them. Pharmaceutical company Danadams produces Anti-Retroviral (ARV) drugs and exports to 4 West African countries. According to the Managing Director Dr. Yaw Adu-Gyamfi ,the company now operates only 20% of its ARV production capacity.

If they could secure a World Health Organisation pre-qualification certificate through the help of the government, they can export to many more African countries and increase employment from the current 208 to 500 staff.

I will like to see indigenous Ghanaian banks and micro finance institutions go abroad like the Nigerian banks are doing. Ghana’s biggest bank the Ghana Commercial Bank (GCB), Agric Development Bank, UT Bank, First National Bank and others that are doing well locally should try setting up in Liberia, Ivory Coast and Gambia for a start. They can then venture abroad.

GCBs counterpart in Kenya the KCB has 19 branches in South Sudan, 14 in Uganda, 11 in Tanzania 9 in Rwanda and 169 at home in Kenya. The KCB made a profit of $60 million in the first half of 2011, an increase of 30% over the previous year thanks largely to its foreign branches.

Lastly, Kenyans largest media company the Nation Media Group which has newspapers, radio stations, Television stations and websites has operations throughout East Africa. Here in Ghana, Multi-media Group (Joy fm, Multi TV etc) and Despite Group (Peace fm, UTV etc) are our media empires. If they could be ambitious and look beyond our shores like the East Africans are doing, they could grow and be really profitable in my opinion.

At a forum organized by the US embassy in Ghana for entrepreneurs from northern Ghana, RLG Chief Executive Roland Agambire said “I have never been shy to fail. After all, entrepreneurship is about perseverance, trust and honesty”.

He could not be more right.