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Saturday, 24 May 2014

THE STANDARD RAIL GAUGE IN EAST AFRICA COULD BE A BLESSING OR A CURSE



China retraces its interaction with Africa to the slave era when the Kunlun (or dark skinned people) were brought into the Chinese Peninsula by Arab traders during the Tang Dynasty era and also from tales based on Zheng He’s travels to coastal East Africa.

A few centuries later, the Opium Wars seared a certain mental caricature about western hegemony, which was further exasperated by the military dominance of the Japanese Empire who aped Western methods in their control of Chinese Machurian territory.

It is imperative to note that the China we know today is not the China of the 1940’s -1950’s when the mind set then was of a common enemy i.e. poverty and a Western colonial influence. In retrospect, this “common” past has aided China in forging an impressive relationship with Africa.

While the West and Bretton Woods institutions have taken a big brother approach of giving stringent political and economic conditions in order to turn on the aid taps in Africa. Beijing has taken an approach steeped in neutrality adhering to its five principles of peaceful coexistence, “it respects African countries’ choices in political systems and development path suited to their own national conditions and does not interfere in internal affairs of African countries…”

Many will question the advent and advancement of the Sino-Africa relationship, especially due to the astronomical increase in trade over the decade. It stood at 10$ billion in 2000 and 198.49 billion in 2012 of which 113.171 billion of this was contributed by China’s imports from Africa.

China has an insatiable appetite for energy to drive its growing economy, and China National Petroleum Corp Economics and Technology Research Institute estimates that China's oil demand in 2014 will reach 518 million metric tons. Of this estimate close to 60% is imported and 20% of that import comes from Africa.

China’s energy security is a phenomenal concern to the country given that it surpassed the United States as the world’s largest consumer of foreign oil, importing 6.3 million barrels per day compared to the United States’ 6.24 million in late 2013.

Given this it seems that energy security overrides other concerns, even the “one China principle”.  But then again the reunification of Taiwan and China is foreseeable given that more than 2.2 million Chinese tourists visited Taiwan in 2013 and the two-way trade has passed the 100$ billion per year.  What this trend depicts is that the ideological and political can and will be trampled in pursuit of the economical gain.

The neo-colonial perception of Africa as a source of raw material replenishes itself as China turns to Africa to sustain its energy needs away from the unstable Middle East. The “New Energy Frontier” of East Africa shows sizable natural gas and oil reserves that could potentially compete with West Africa in the near future.

The viewpoint that East African countries need to have is one drawn away from corrupt practices. One gauged from the observation of lost billions that have lined the pockets of despot leaders in countries like Angola, Nigeria, South Sudan and Equitorial Guinea while millions of their citizens languish in abject poverty.

While it is very clear that China will continue to stick to a policy of neutrality even to the detriment of a nation’s populace. Like in the case of Sudan where it sold small arms to the government, which allowed the Janjaweed to commit atrocities against innocent civilians in Darfur. It is also true that they will oppose those who view them negatively like Michal Sata, the incumbent president in Zambia, before he came into power. Nowadays Sata sings along to a Chinese tune of cooperation.

East Africans have to take a long-term view of their regulatory framework and ensure that they earn more from oil, gas and mining, which can collectively benefit their countries. They also need to ensure that their economies don’t end up being dependent on these resources.

Every dollar earned from natural resources can never be retracted, if used badly, thus it is imperative that wisdom reigns to make East African states middle-income countries in the next 20 years. With proper planning and zero tolerance to corruption, the vision can be achieved.

There is also the need to realize that China will make certain investments with long-term goals, for example the TAZARA railway although considered an oddity when constructed in the 1970’s potentially opened up Tanzania to Chinese investment.
  
Having said this the citizenry also needs to voice their concerns when they feel they are not benefactors of the resources mined from their land. This oversight can be regulatory or a knee jack reaction to Chinese exploitation likes what is observed in Zambia and Congo.

In the final analysis more African countries are beginning to comprehend the short-term availability of natural resources and the subsequent long-term destruction that resource exploitation brings to their land, thus they are collectively demanding more transparency and accrued benefits from their governments and the foreign companies investing in their land. This trend has recently been witnessed in Mtwara, Tanzania and in Turkana, Kenya.

Wednesday, 14 May 2014

The Future of Executive Education


A lot has happened since Fredrick Winslow Taylor stated in his monograph The Principle of Scientific Management , “the principal object of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity for each employee”. For one, we have had two world wars, which essentially polarized the world into the divergent East-West dichotomy during which millions died protecting either viewpoint.

Capitalism is no longer what it used to be in the days of Andrew Carnegie. It softened, gained integrity and its pure state became offensive.  More so, corporate leaders nowadays defend and agitate for green initiatives despite the fact that they rarely have a foreseeable return on investment.  

While Taylorism failed when it was tried and tested in various companies, in the early 20th Century, due to its utopian expectations, it successfully became the precursor to a universe of current management theories whose epicenter is powered by the need to increase efficiency, reduce wastage and get more out of less.

Current management theories are no longer allowed to be theoretical, and have been pressured to empower businesses tackle 21st century business challenges.
From competitive pressures, to corporate governance concerns that stem from closer government scrutiny a clear leadership vacuum has arisen. Not because of lack of trying but because change has become fundamental to how we live in this new century.  Truth be told, change doesn't come naturally to humanity.

Executive Education is a vehicle that has essentially been used over the last half century, to articulate management theories to business executives. With the changes in the business environment, executive education has been seen to stumble along, and tried different approaches to remain relevant. While some programs by some acclaimed universities have discovered the true need of their clientele and are offering customized, highly specific programs that are strategic, collaborative and long-term in nature, we still find other executive programs that are driven by a one-size fits-all approach, not realizing that companies can really benefit from the research-based academically rigorous knowledge-building approach of universities in solving business challenges and concerns.

The reality is business leaders are expected to have relevant awareness and understanding on how to tackle the complexity of their businesses today. They need tools to empower them to systematically lead and deliver tangible business results.  

The executive education program of the future will be expected to be rooted in the very fabric of the businesses of the people it trains. It will be expected to be a consulting entity, in that it will go to the root cause of issues in the business, research on it collaboratively, and give recommendations that are implementable and measurable, then empower the business through awareness and rigorous training, that is practical and action based which will allow the participants to immediately apply what they have learned to real business problems.

And remember this has to be done in such a manner that reduces the cycle between one starting a program and one implementing the practical tools bestowed upon the participants. 

The programs have to allow people from across the world with different backgrounds to interact in order to enrich the educational experience.
This calls for better use of the Internet and cutting edge collaborative tools to enhance the learning experience.

For East Africa to move ahead, there is no doubt that universities have to step out of their comfort zone. They are called upon to be the drivers of research in commerce. Not to ape and regurgitate but to give solutions that will see African companies expand and compete with the multinationals of this world.

It’s my hope that in the near future we will have research centers in East Africa that easily rival the Harvards, INSEADs and Whartons of this world, that are driven to bring change, push for change and implement relevant change in business. 

I would like to see them embrace technology in such a way as to allow for better collaboration between companies in different countries through cost efficient participation in the learning process.

A time will eventually come when the world will look at the management theories developed in East Africa and aspire to adopt them. 


Published by Management Magazine

DO WE REALLY HAVE SACCOS IN AFRICA?
















The 17th century was a watershed period for North America as European immigrants boarded ships and crossed the Atlantic Ocean in order to escape the servitude, abject poverty and hunger that was prevalent in Europe at that time.  A principle that travelled these many miles was one borne out of the need to bring the working classes together while dragging them out of poverty through commerce.



More than 200 years later, with many unsuccessful attempts and subsequently the unearthing of the “Rochdale Principles” the cooperative movement is firmly entrenched around the world.

There is nowhere this movement has found such success as in North America, with more than 45% penetration and figures exceeding 1 trillion dollars in savings and shares. It almost seems like the cooperative was invented in America and not in the Scottish City of Aberdeen.

Why so much success in North America and where does Africa sit with all this?

According to the 2012 statistical report by World Council of Credit Unions (WOCCU), Africa holds the second largest number of SACCOs in the world only after Asia.  While this is the case the membership of the African SACCOs are a distant fourth behind North America, Latin America and Asia. Additionally, Africa only has a 6% penetration and close to 5 billion dollars under savings, which is a miniscule 0.4 % of the world’s total.

It is imperative to note that the cooperatives in the developed world had two centuries to contend with industrialization, two world wars, and an empowered middle class. Through this time they were able to wade through mistakes and discover an approach that has brought great success and influence to the cooperative movement. In UK for example, the Co-operative party fields MPs through the Labour Party and holds extensive stake in Agriculture and Retail.

In many ways a cooperative system has to be protected by the policy and legislative framework within a country for it to be a success, similar to what business enterprises call “an environment conducive for business”.

The barometer that we use for measuring SACCOs in Africa and ultimately whether they are well governed or failing on various fronts needs to heavily borrow from the International Co-operative Alliance (ICA) principles, which are based on the Rochdale Principles originally set forth in 1844. These principles form the cornerstone of how a successful SACCO should operate, proven and tested over time.

According to the principles,” a co-operative should be a voluntary organization, open to all people of the public, who are willing to accept and uphold the responsibility of membership”. In Africa, in a rush to alleviate abject poverty governments and donor agencies set up or supported co-operative themed federations, which were preferentially treated. They were neither self-driven, or market oriented. The end result is that many of these failed in the 1990s.

This observation points to another principle, “co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions”. While this is a good aspiration most credit unions in Africa are regulated by a ministry in government, or by a governmental authority. The move to regulate was driven by the need to protect the millions of low-income earners who depend on SACCOs for financial services. What this does in the long run is take away the participatory ability of most members demoting them to observers in their own SACCOs.

This then takes us to another principle of importance,  “a co-operative is also required to provide training for its membership and engage the general public in order for them to effectively contribute to the development of their co-operative”. In Africa, most SACCO members are not educated on their responsibilities and their rights this creates fertile ground for corrupt board members who want to manipulate SACCO’s resources to do so. To counter this, governments set up policy and legislation to institute and protect members’ rights, but unfortunately training and education still needs to be a crucial requirement for SACCOs around Africa.   

There was a time in the 1990s when cooperatives in Africa were dependent on state patronage and acted as state agents or clients of the state. This behavior directly contradicted the principle of autonomy and independence, which requires cooperatives to be autonomous, self-help organizations controlled fully by their members. They are to only enter into agreements with government and other institutions while ensuring they are democratically controlled by their members and show co-operative autonomy.

The truth is that very few SACCOs in Africa have adopted the ICA principles to the letter, and while many publications state that the models being taken up in Africa are innovative and allow for financial inclusion. Innovation does not trounce good governance, education and sound theory.  

So while we celebrate the benefits SACCOs have brought countries like Kenya. We have to charge all stakeholders to go back to the drawing board and adopt a model that will still enact the ICA principles, while bringing about development through financial inclusion for the millions in Africa who need to become self –reliant economically, as set out by the UN in the Millennium Development Goal #1 of eradicating extreme poverty and hunger.

Article written for Management Magazine