Our Top Company rankings this year make fascinating reading. These annual lists are a more concrete and accurate measure of the state of Africa’s commercial health than any other statistics. The performance of individual companies reflect, broadly speaking, the overall condition of national economies – although there is at least one exception which proves the rule. More of that later.
The ranking charts which appear in the first half of this issue also reflect the broad spectrum of economic activity on the continent. This gives the lie to the myth that the extractive industries sector is the only viable sector in Africa.
The extraordinary achievements of Nigeria’s banking industry have become so spectacular that for the first time in the history of modern Africa, South Africa’s supreme position at the top is under serious challenge. North African construction and telecoms firms are among the biggest on the continent while in East Africa, pride of place goes to breweries and airlines.
South Africa is still far ahead of any other country in terms of manufacturing and also in the range of industrial and agro-processing lines but other countries are catching up.
South Africa’s economic strength has traditionally been constructed on a foundation of mineral wealth on which a sophisticated financial structure was erected. From this base it was possible to expand both the agricultural and industrial sectors and ratchet them up to world class.
Nigeria, and other African countries, enjoying some of the best prices for commodities in over two decades, now find themselves in a similar position to South Africa in terms of revenues from mineral sources.
Nigeria has moved to the next stage and now has a solid financial foundation. It is also taking the lead in creating capital markets, as are some North African banking institutions. (See African Banker magazine). From here, one can expect a natural expansion into manufacturing. If the country’s entrepreneurs are searching for inspiration, they need only look at the career of Aliko Dangote, one of six Africans to make this year’s Forbes list of the super rich. His organisation built its empire on the back of manufacturing.
But now to return to the ‘exception-which-proves the rule’ I mentioned earlier. This is Zimbabwe. Despite inflation running at a ridiculous 100,000% and an estimated four million of the population seeking livelihoods outside the country, 18 of the top 50 companies in southern Africa, if you exclude South Africa, are Zimbabwean.
Even more surprising, the most capitalised firm at around $303m is involved in entertainment and leisure activities. There are all kinds of explanations for this conundrum – from the facetious to the mind-numbingly analytical – but perhaps the only sensible explanation is that soundly-run companies can not only survive but even thrive even if all around them is collapsing.
But it now seems that Mr Robert Mugabe, in his wisdom, has decided that the country can do without such stalwarts. If his ill-conceived ‘indigenization decree’ ever sees the light of the day, he will have successfully slaughtered the last of the golden-egg laying geese in the country.
Idi Amin Dada tried a similar experiment in Uganda in the 1970s. He got rid of all Ugandan Asians – he told them: “I like you, but I like your business more” and allowed his cronies to take over some of the best established business not only from the Asians but also from the Baganda whom he detested.
The feast lasted 40 days. After that the businesses were dead and buried. Before his intervention, Uganda, with cheap power from the Owen Falls dam and an abundance of cotton, coffee and sugar, had been the most industrialised country in eastern Africa. Today, despite sterling work by, among others, President Yoweri Musaveni, Uganda is economically the weakest among Kenya and Tanzania.
And the deported businessmen? The Mehta and Madhvani groups went out into the wider world and have become massive global players worth billions of dollars.
I hope it won’t come to that in Zimbabwe.
In any case, what the tables show is that despite everything, Zimbabwe is a rich country that has been sadly and badly misused. The law, as passeed by parliament, bears no resemblance at all to the Black Economic Empowerment movement in South Africa. BEE aims to redress the appalling system whereby blacks (and Asians and Coloureds) were legally barred from certain economic activities or kept away from management positions.
The success of BEE indicates clearly that management and business talents abounded with the black population and when given an opportunity, they produced remarkable results. But BEE is not about window dressing or forcing companies to hand over control to unspecified individuals who may have no inkling whatsoever on how to run businesses.
BEE companies are not ‘something for nothing’ firms. They have to compete fiercely to win contracts and if they get it wrong, they go out of business.
The stance of Mugabe’s government also runs contrary to the currents now washing across Africa. Look at the charts in this issue – they are a clear demonstration that free, unfettered, private businesses are the solution to Africa’s needs. Anything else is a recipe for disaster.