“C” IS FOR CAPITAL
June 14, 2023 – When you have an appetite to get on the ground to learn and you are given the bandwidth to learn firsthand about customers, the business environment, accurate data, and the right type of business setup, you can make better decisions about capital investment.
A Kikuyu proverb reminds us that “just as rainclouds don’t guarantee rain”, investing financial capital in Africa does not guarantee profits. Why? Because “capital” is so much more than monetary assets.
I like how French sociologist Pierre Bourdieu defines capital:
Social capital: investing in networks and relationships
Cultural capital: investing in people, values, experiences, and knowledge
Economic capital: investing in infrastructure – hard, soft and digital
You have to be willing to invest and allocate the financial and human resources to match your ambitions for Africa in all three categories of capital.
Social Capital
Your networks and relationships, built in-person and on the ground through regular interaction, are critical. Without these relationships, you will not be able to convince anyone of your genuine interest in doing business in their country.
Strategic relationships also shape business opportunities, and they generate many benefits. These relationships enable you, as a company, to build a positive identity in the market, helping build strong networks that increase your resiliency in hard times, and gain you access to key decision-makers. Perhaps most importantly, relationships minimize the risk of doing business. It is in everyone’s best interest – yours, your employees, local businesses, the local community and government – that your business succeeds because it creates employment and business opportunities.
Cultural Capital
Smart companies hire and invest in local talent as much as possible because these are the individuals who instinctively understand business etiquette, networks, and cultural nuances much more than foreigners ever can.
Training occurs at all levels of the company from the receptionist through to the CEO. It will range from your company values and mission to more practical things like learning new software programs and leadership development. And don’t forget that your “expats” also need training – such as on the new culture they find themselves working in so they understand how decisions are made, work ethics, time keeping and communication styles.
Successful companies know that investing in people through jobs, as well as training and development goes beyond employment. When you contribute to the development of a skilled local workforce, not only does your business prosper but you also need fewer or no expats. You also leave the communities where you work significantly richer in skills, which translates into a better economy, prosperity, and stability.
Economic Capital
Inadequate infrastructure remains a major obstacle in Africa preventing its nations achieving their full economic potential.
“Hard” infrastructure, i.e., roads and rail, seaports and airports, power lines and water supply (including irrigation) are all visible assets that (traditionally, at least) provide a foundation for growth.
“Soft” infrastructure, meaning services, institutions, and policies are just as critical when it comes to the quality and inclusivity of economic growth.
However, perhaps the most important form of infrastructure is now “digital,” which supports not just the transmission of data and information, but is offering up a whole new economic model and ways for people to tap into new career opportunities .
Dangote Cement is an excellent example of a company that understands the need to invest in social, cultural and economic capital. They started in Nigeria, and today produce cement in more than ten countries in Africa. How did they do it? They had the appetite and gave their managers the bandwidth to do their homework. They identified their challenges, came up with options to overcome them. They engaged with government and the local business community to share their needs and understand what could and could not be provided locally. Based on this, they adapted their business plans and budgets accordingly for social, cultural and economic capital investments. These varied per country but could include things like creating their own onsite power generation, launching an in-house manufacturing training academy and/or vertically integrating their supply chain. This is why they are Africa’s leading cement producer today, with annual revenues of US$2.5 billion.
Investing in Africa is necessary, though not always in the ways we assume or in the ways we invest elsewhere. With the foresight of Appetite and Bandwidth, companies will really know how and where to invest their capital.
You can read more about A for Appetite and B for Bandwidth,, as well as about how other companies are investing in social, cultural and economic infrastructure, in my book, “Africa: Open for Business” which was just voted Best Africa Business Book of the Year! It’s available on all Amazon sites in print, audio or ebook format.