New breed of business leaders build on lessons of 1994

A decade ago overly-confident South African businesses learned some expensive lessons in Africa. Now AfriNet, a specialist company within the Alexander Forbes Group, is assisting a new breed of business leaders grow successful businesses on the continent.

In 1994 there was a lot of excitement about Africa. But South African business had been isolated for so long. It lacked international experience, and had even less experience in Africa. In addition there was an arrogant approach. This, even now, has left a legacy. In the end some organisations were burned. People became overwhelmed by the problems associated with doing business on the continent, and interest in Africa cooled.

"There is no doubt that Africa represents a diverse range of risks. There is also no doubt that these can be managed. And, over the last decade AfriNet has had the time to accumulate the critical experience to get it right", comments Michael Duncan, Chief Operating Officer of Alexander Forbes AfriNet Investments.
 
AfriNet is now directly invested in 11 countries in Africa, excluding South Africa, and has representation in over 20 other countries on the Continent through corresponding-broker relationships.

Given that many of the challenges remain the same, why do things look so different now compared with the late 1990's?

One argument is that, "Many industries in South Africa are in a mature business cycle. Growth is incremental and subject to competition whereas most African economies are in a completely different cycle. Increasingly South African companies are looking at Africa to re-invigorate their business cycles and deliver high margins". Another is that it is politically correct in South Africa to be paying at least lip-service to doing business in Africa.

Duncan believes that AfriNet's phenomenal growth in Africa over the last decade, has little to do with either domestic market cycles or vague philosophical commitments to Africa.

Instead, "AfriNet has followed a steady stream of clients drawn to real opportunities on the continent. AfriNet has gone where its clients have gone - tracking broader South African investment in Africa. Joint ventures, construction projects, mining and retail have been, and continue to be, significant sectors for South African business on the continent".

Duncan adds that, "since the insurance industry, along with other industries in many African countries, is only just emerging from a long period of nationalisation, the industry has not seen innovation for many years. As such, AfriNet is ideally placed to provide solutions to markets that are rapidly transforming".

For example, AfriNet has been especially good at understanding and responding to the complex needs of public-private partnerships.

"Many economies feeling their way out of nationalisation are not in a position to privatise rapidly. Working with governments in public-private partnerships is a way to develop trust as well as insurance solutions that work in rapidly changing business environments".

Duncan believes that another factor in AfriNet's success, as well as that of their clients in Africa, can be attributed to AfriNets ability to offer the operational skills and resources available in South Africa to clients in Africa - largely through very successfully structured local operations in African countries. In short, AfriNet has developed a business model in Africa that provides all the specialist services of the South African market to clients in Africa.

"Africa is our business, we are not the African division of a global company - we are an African risk and benefits company". Indeed, parent company Alexander Forbes is the only brokerage of its size globally that is headquartered in Africa.

Given the experience gained in managing African risk, the success of AfriNet's clients, and the continued expansion of South African investment further afield in Africa, Duncan is; "extremely bullish about future prospects for the continent, and the sub-continent in particular".