How did you ’learn to love Africa’, Pat? Did you not love it in the beginning?

Pat: I have certainly loved Africa since the very beginning, so what the title of my book really means is that I grew to appreciate Africa more, after living there, and as a professional trying to help the continent achieve economic development. In the process, I have come to realise that the African people face unbelievable difficulties, sometimes caused by natural disasters, but more frequently by failures of their own governments and other obstacles to economic progress.

The fact that they persevere, in the face of such incredible difficulties, and with such dignity, is really something to be admired. Particularly for people like me who are fortunate to live in a country in which there are so many advantages and opportunities to improve our way life —education, healthcare, political stability — which are so often taken for granted. I also have grown to admire the civility of the African people, how much they care about one another and look after each other, and also their incredible optimism. All of these things, as well as Africa's physical beauty, make it irresistible.

What gave you the idea to write about your entrepreneurial experiences, and what can managers and other business professionals learn from your story?

Pat: I wrote about my business experience partly because It helped me to understand everything I’d experienced while I was there. When you live through seven years from a start-up to a growing company, there are a lot of experiences that you don’t really have time to think about and to learn from because everything moves so quickly. In assessing what happened to Fhakawi, I realised that there were many lessons to be learned, both from things that went well and the things that went badly. Even today, four years after we liquidated the company, I’m still learning and applying those lessons to my current business projects.

Also, I have always found it to be very useful to learn from other people's successes and failures, which is why I felt that those planning to open a similar business, whether in a developing country or a developed one, would find it useful to read my story. It’s as much a universal entrepreneurial story as it is an African entrepreneurial story.

I think that the most important lesson that other business professionals can learn from my experience is the importance of persistence and perseverance, even when faced by incredible difficulties. There were many times when it would have just been easy for my management team and me just give up and go back to the UK, but we learned that by simply hanging on for another day we could often change things dramatically. Of course, you have a plan, but the unpredictability of working in Africa makes it so exciting.

Why did you decide to start operations in Tanzania?

Pat: Well actually Tanzania was, and still is, one of the most stable countries in all of Africa. This was a major factor in its selection as our first country of operations. In addition, we needed to identify a country with a tremendous market need for agricultural equipment. Tanzania, with about 26 million people at the time, had the need for the equipment we wanted to market. The government's agricultural ministry, the monopoly operator at the time, could not keep up with the demand; so we knew that there was an immediate need for what we had to offer: reliable and affordable crop sprayers.

You encountered various management issues early on such as limited resources and low morale. How would you advise others in similar situations who are new to management?

Pat: First of all I would tell those who go to business school to listen when the lecturer tells them that human resource management will be the most challenging aspect of managing a business. Even though we were dealing in a developing market, the personnel issues that we had to deal with were easily the most difficult.

In a start-up, especially where financial resources are limited, there is not much room for error and personnel mistakes can be the most costly. Every new employee can affect the dynamic of the team in a positive or negative way. Therefore, it is extremely important that these people brought into the company in the beginning not only have technical and business skills, but people skills as well, and the character and personality to deal with the uncertainty of a start-up. It isn’t a job for everyone. In a start-up environment anything can happen and often the employee has to tell the boss what to do in order to keep things moving. Similarly, the superior has to be ready to do the work of an employee if that is what is necessary.

We had the additional challenge of dealing with a very international workforce. Each nationality had his or her fixed ideas of what it should be like to be managed. Not everyone is in favour of being included when it comes to decision making. Some people just want to be told what to do. They expect you, as president of the company, to know what is best. It is more of a parental relationship. If the parents look lost or ask the children what to do, there is confusion and uncertainty. A good manager has to understand this, and make the necessary adjustments in his or her management style.

You describe the ineffectiveness of organizations such as the World Bank and the United Nations. Do you recommend any strategies for companies to deal with governmental and nongovernmental bureaucracies?

Pat: When working in developing countries, particularly in Africa, it is very difficult to avoid government and nongovernmental bureaucracies. Unfortunately, many of them still do not understand that the private sector, not public bureaucracy, is the engine of economic growth.

I would advise any private company working with these agencies to limit contact with bureaucracies to only that which is absolutely essential. Governments should be concerned with creating the type of investment climate (rule of law, healthy and well-educated people, good physical infrastructure, favourable tax structure, respect for private property, and so on), that leads to private investment.

Organizations such as the World Bank and the United Nations should limit their activities to assisting governments in this area, rather than attempt to become economic players themselves.

What do you see as the greatest challenges managers face in pursuing business ventures in developing economies, in particular, Africa?

Pat: The biggest challenges are the deficiencies in the economic or competitive context. Businesses prefer to invest in countries with solid and reliable human resources, capital resources, physical resources, administrative, information, and scientific and technological infrastructure etc. It’s also important for legal elements, such as rule of law, property protection, open competition, absence of corruption to be in place and enforced. Businesses also need related and supporting industries (i.e., suppliers for their products and services).

If some, or all, of the above are missing, this creates a huge disincentive to private investment. In developed economies, all of these factors are typically present, as well as the market, so the best companies will grow and others will be drop out through competition. In developing countries, by contrast, often there are many distortions and deliberate government interventions interfering with the market or competition essential to capitalism. Unfortunately, under these circumstances it’s not necessarily the effective, well-run companies that survive, but those that know the right people.

What structural changes do you think would have the most impact in eliminating these obstacles?

Pat: The adoption and enforcement of the right reforms and investment policies can go a long way towards improving the investment climate in developing countries. There are successful examples all over the world that have proven this already, and the most successful cases have been in democratic countries where governments can be voted for, based on their performance.

In Africa there are encouraging signs that African governments are ready to take action in this area. An example of this is the New Partnership for Africa's Development (NEPAD), launched by a number of African Heads of State in 2001. NEPAD is a commitment to the African people and the international community to help Africa grow through a combination of good economic, political, and corporate governance.

What do you think are the greatest opportunities that firms have to enter markets in Africa and affect positive change?

Pat: I believe that there is a lot of potential for companies to make money by serving those customers at the bottom of the economic pyramid. By this, I mean the hundreds of millions of people in Africa and throughout the developing world who live on less than two dollars per day. These people have basic consumer needs and collectively they have a tremendous amount of disposable income. Those companies that can find the means to service these markets in innovative and profitable ways will not only have the opportunity to make money for their shareholders, but they will also be in a position to help these customers move up the economic pyramid, expanding further the market for their products and services.

For a long time it has been my belief that global corporations and very poor consumers have far more in common than poor consumers and development aid agencies. This is because global corporations have a interest in their consumers becoming wealthier so that their purchasing power and market sophistication is increased.

For this to work, however, requires good governance as well as good policies. My company, Fhakawi, was targeting this lower income market segment and demand for its our agricultural products was tremendous; however, the Tanzanian government's policies toward Fhakawi and other private investors were not favourable. As a result, we could not see the economic justification, nor the value of expanding the company's operations across the country.

Finally, African governments must encourage entrepreneurship and bring it out of the official economic market into the mainstream. It is private businesses, both local and foreign, that generate the jobs that will lead to higher standards of living in these markets. Foreign corporations that have partnerships with local entrepreneurs to expand their market penetration are in the best position to take advantage of such reforms.

Tell us about a few of your biggest surprises, disappointments, and lessons.

Pat: My biggest surprise was learning that having a captive market for one's products and services is not enough if the other factors of the economic context are not present. In business school, we take a number of factors for granted, including the rule of law, the efficiency of the market, and the physical and institutional infrastructure that makes capitalism function smoothly. In launching a start-up in a developing country, I learned, much to my surprise, that no matter how much demand there is for a particular product or service, if the conditions to invest are not favourable, those products and services will not be able to reach the consumer, or if they do, the cost of getting it to them is too risky, no matter how happy the consumer is to pay.

Realizing that the technology exists to solve many of the Third World's problems, but that the infrastructure and policy framework for resolving them are often missing, is particularly disappointing, especially in the twenty-first century. The cost in terms of missed opportunities and, in the worst cases, extreme human suffering, is prohibitive. Therefore, one major lesson that I have learned is to only target those markets where governments have made a serious commitment to enforce the rule of law, to ensure fair and honest competition, and to invest in their people (e.g., health and education) to create an attractive workforce.

What are your current business interests and future goals?

Pat: I am currently attempting to bring together a number of major global corporations from a variety of industries to formulate, fund, and implement a business development that will allow us to target a wide range of consumer products and services to middle and lower income segments of the African population.
The lower income segment alone is about 600 million people strong in Africa with a combined annual purchasing power of $219 billion, much of which is channelled today in the unofficial or parallel economy, outside the official economic system, another reason why the official per capita income figures on the continent are so low and do not tell us the real story of the market potential of the population.

The initiative is called the Global Private Sector Initiative for Africa (GPSIA). And GPSIA's goal is to enable participating global corporations to make money in Africa, but to do so in a way that supports local entrepreneurs, expands the markets for their products and services, and enables local consumers to move from the bottom to the middle of the economic pyramid. This would allow the economy to grow and the beneficiaries to become key contributors to a society that is built and sustained by the middle class, and more effectively integrated into the global economy.