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Jumping the hurdles of entrepreneurship

Updated Thursday 21st February 2013

Andrew Rugasira, CEO of the Ugandan coffee company Good African Coffee, discusses entrepreneurship in Africa.

Talking to Dr Roshan Boojihawon, Andrew Rugasira discusses becoming an entrepreneur in Africa:

  • Drawing on your own experiences, can you tell us how easy or difficult it was for you to start up your own business ventures in Uganda?
  • You did not seem to have taken long to internationalise your brand. How did you ensure your brand was ready for the UK market and what hurdles did you overcome on the way?
  • You felt you had to change some innovations into the ways farmers of the Rwenzori Mountains were using to process coffee. Do you think African enterprises are capable of harnessing the kinds of technology and innovation that might be needed to compete globally?
  • You bring an almost humanistic style to managing your business. To what extent do you think that this is a distinctly African management trait compared to what you might read in most western management textbooks?
  • How do you see the role and impact of foreign interests like China, India and, until recently, Brazil in Africa?

Video

Andrew Rugasira and Roshan Boojihawon were talking after a recording of The Bottom Line.

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Roshan: Andrew, I've read fascinating things about you so far, in all the interviews you’ve given, and the question I had for you is, which was unclear to me so far, is about African entrepreneurs. I mean you’ve told this story that the problems and the hurdles for African entrepreneurs are no different than those in the West. I was wondering if you could take us a little bit back in terms of drawing from your own experience about what was it like for you setting up businesses in the Ugandan context?

Andrew Rugasira: Thanks for having me here, Roshan. Starting a business is difficult anywhere. The journey of an entrepreneur is always going to be fraught with all sorts of difficulties, you know, access to capital, access to technology, access to markets, knowledge of those markets. It’s even more difficult if you're looking at the export market and not just the domestic economy. Entrepreneurship in Africa has some structural constraints, you know. If it is looking at doing business on the continent, in the country, there are issues to do with infrastructure. There are issues to do with energy, electricity, the issues to do with the cost of doing business and getting goods and services across borders. There are issues to do with bureaucracy and kind of institutional pressures, and so that’s a big issue.

If you're looking to export, then obviously getting into the markets where you want to sell your goods and products is also very difficult. Those markets are really controlled. They have either tariff or non-tariff barriers. The access to the markets are also really challenging in terms of knowledge of how to get into the networks, the environment, and obviously the capital, you know, I mean being able to be able access capital at affordable rates to be able to compete. So you kind of have these challenges at a local regional level, and then at an export level. And at the end of the day, at the export level, you have to compete with well-funded and well-established firms, so those are some of the structural constraints that entrepreneurs face on the continent.

Roshan: But how is it, I mean I acknowledge all these hurdles, but then how do you imagine that a small African entrepreneur, you know, from the local village or from the bush basically trying to overcome these hurdles, what’s the way through?

Andrew Rugasira: It’s very difficult, and I mean 95% of small to medium businesses just collapse in the first year or operation. Why, because the entrepreneurs just give. But you'll find that statistic is as relevant in the Northern Atlantic countries as it is in Africa. The entrepreneurs just need to persevere, and the only way you overcome a hurdle is if you go over it, you know, so you really need to persevere, you need to go over it. I came here, my own experience was I couldn’t get access to the capital I needed, it took me two and half years to try and convince supermarkets to take my coffee, and so I realised the biggest kind of equity that I had was persistence. I mean to keep coming and keep coming and keep coming, it was costing, I put everything on the line, but I just had to keep persevering. And somehow when people see you commit to a great extent, that plays into your favour, that shows a commitment, that shows a reliability in a sense, and that shows that you're going to stay through to the end of it, so people are willing to take a risk on you. So perseverance I think is a universal asset that entrepreneurs really need.

Roshan: Particularly in the African context, yeah.

Andrew Rugasira: I think everywhere. I mean Richard Branson for example’s a very successful entrepreneur in this country. I mean if you read his books he talks about not giving up, he talks about perseverance. I think everywhere in the world, you know, entrepreneurs are faced with different degrees in terms of constraints. I mean the African entrepreneur has other issues. You know, he has issues where public goods are not delivered in a good way, the enabling environment is not really there, but they still face the same challenges. You know, how do I get my vision to become a reality, how do I convince the institutions that I'm seeking to get support, either banks, either government agencies, you name it, to believe in me.

Roshan: There’s no doubt about one fact that together with these infrastructural challenges you also need to think about the way you're doing the business. And you bring great sort of ideas and innovation where you farm at the Rwenzori mountains. I mean do you think African entrepreneurs are open to innovation and they are ready to embrace this kind of innovations and technologies?

Andrew Rugasira: I mean I think you just need to look at any capital city in Africa and look at how innovative the entrepreneurs are. You know, they’ll not afford a stall, they’ll not afford a shop, but they’ll bring their wares to your car. They’ll sell you anything on the phone, on the street, at your home, in your office. I don’t think the issue is about how innovative entrepreneurs are; I just think the African entrepreneur needs to just be unlocked, his potential needs to be unlocked by the infrastructure and the enabling environment.

I think the issue of entrepreneurs, I think when people talk about oh, you know, the private sector is the engine for growth, yes, but what’s that engine room looking like. And secondly what are they saying are the real issues? I don’t think the issue is that we don’t have enough entrepreneurs; I think the real issue is what can, what’s constraining those entrepreneurs and what can unlock that potential. And I think entrepreneurs are not getting a fair deal in terms of the infrastructure and the enabling environment that they need, but they're there. I mean to live on $1.50 a day, I mean that takes some real entrepreneurship. People talk about it but can you imagine living on $1 a day?

Roshan: Well, yeah, I can tell you my views about that certainly. The other question I have which was very interesting about your company and your approach to doing business is that you almost, you bring almost a humanistic flavour to your business, to your style of management. How do you think that this is a distinctive African trade compared to what you might read in a Western management textbook for example?

Andrew Rugasira: Well I think on the continent the whole issue of sharing and community is still very strong. We all have members of family or members of our community that we look after, that we support. It’s something that everybody does. It’s part of a kind of extended welfare kind of structure. And we've lost a lot of people through either HIV AIDS or people have lost family members, are taken in, the children are taken in. That support infrastructure is part of the community and is part of our culture; helping one another is part of our culture. And what I really wanted to do in my business was to kind of put in a value system, a value infrastructure that wouldn’t just pursue my own interests and profit, but actually work with the community in a kind of quadruple bottom line.

You know, whereby the beneficiaries are not just the shareholders, but the beneficiaries are the community, the farmers we work with, the employees, and in that way create a kind of value based social enterprise. And I did it because that was a life choice I made, and I wanted to do business a different way. I wanted to contribute more to my community, because that was not only good business but it was also fulfilling for me and my family, and really it was something I was very keen to do, to set up this social enterprise and support the community as well.

Roshan: It’s remarkable that you do have this insight into this value based system when we are talking in this era of companies like Barclays who are now thinking of the need to align their values better with their performance as businesses. But do you think this is a profitable approach therefore? Do you think it’s all about profit or do you think it’s about committing to those values all the way through? You know, where do you draw the balance?

Andrew Rugasira: Roshan, that’s a big question, because at the end of the day you need to be very clear what it is that you're pursuing. You know, I really, if I'm to think about it, I'm pursuing profit, but I'm pursuing impact - profit sustains the business, but I'm more keen on impact. What impact can I have on the community of farmers that I work with, what impact can I have on other entrepreneurs, you talked about a book I've written, I mean that really is supposed to encourage other young entrepreneurs just to keep pursuing, and I've shared that testimony not with the contingency of time, you know, where twenty years from now I'm successful and I'm sitting back and reflecting, but actually when I'm in the struggle, and celebrating more the journey, because they have journeys to celebrate as well. And in a sense impact is, I would put impact above profits. I need a sustainable business, so I need to pursue the profit motive as well, but I think impact is also key. So I think the choices people have to make is: is it pure profit, is it impact? If you can combine the two, which I think you can, and I think that’s a more, that’s a worthwhile pursuit.

Roshan: The other question I have is, again, I mean you have this very interesting view is about the problem with aid in Africa, and recently we have this influx of interest and investments from the likes of China, India, and now certainly Brazil, interest in the region. I mean what’s your view around what’s their role and impact in that region?

Andrew Rugasira: Well, in terms of my view on China, I really am very curious as to why that’s even a debate. I mean for decades countries in Europe and America have been coming to Africa, you know, engaged in all sorts of business, extractive industry, oil and gas, you name it, no one has ever kind of complained about it. And today China comes and they say oh China’s coming to take over Africa. I mean the real question is: are African governments and African businesses set up to negotiate good deals with the Chinese when they come? To me that’s a bigger question.

The bigger question is not what are the motives of the Chinese, because then I'd have to question the motives right back to the colonial era, and we know about those motives, but we need to just say when the Chinese come, and they have capital, are we negotiating the best possible deals? Can we do it better? Can we negotiate as a community, an economic community? Can we do it as a regional block, you know, and be able to get more benefit out of the negotiation? Do we find we’re weaker if we negotiate on a country/country basis? You know, how many of our young children are we sending to learn Chinese, to go to school in China, to understand the culture, to understand the things that equip us to be able to negotiate better and be able to establish commercial relationships that can work? That to me is the bigger question.

The issue of aid is a big issue. No nation has ever developed through handouts. You know, it creates dependency, it undermines dignity. It causes problems of accountability. I mean governments become more accountable to the donors and to their citizens, and also you find a lot of the aid programmes are poorly structured, and when they're poorly structured it means that they don’t really have the intended consequences they said they were going to have, and ultimately I think government need to develop on their own terms, without the conditionalities, but to do that they need financial independence, and financial independence comes from home grown solutions to development.

Roshan: The final question is what vision do you have to see Africa doing business in its own terms? I think, from all that you have mentioned, I think there are some very interesting complex hurdles, complex obstacles to how Africa can emerge as a player on its own, but what’s your own view of where do you see Africa from here onwards?

Andrew Rugasira: I'm very hopeful, and I'm a father, I've got five children, when I look at my own future I look at my future through my own children as well, and I'm very hopeful because Africa has a huge young generation. In 2015 I think over 70% of the population will be under 25 - for me that’s huge potential. Secondly, they're not shackled with a lot of the history, you know, the political history that has shackled a lot of our fathers’ generation. They couldn’t quite get over the kind of colonial experience, even the post-colonial experience and all that they’ve gone through in their countries.

The younger generation are impatient. You know, they want services, they want services now. They want jobs, they want jobs now. They want an enabling environment, they want that enabling environment now. They want capital, they want capital today. No excuses, not about the kind of political posturing or relationships with the West, they want it now. And that’s exciting because it means a conversation goes up one other level. You know, people come in and say that’s fine, our parents paid the price, they went through all that, when are we getting jobs? When are we building roads, when are we having electricity, when are we having water, when are we getting housing? Why aren’t we getting the opportunities to set up businesses?

That’s going to create I think more accountability with the policy and bureaucrats, and I think that will create an environment where policies will be created to empower and create a kind of enterprise development, which is what Africa needs, and that’s where the key to prosperity really is.

Roshan: So Africa more than ever is ready to go, and on that note, thank you very much Andrew, it’s been a pleasure talking to you.

Andrew Rugasira: Thank you Roshan, good to be here.

 

 

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