DOING BUSINESS IN AFRICA – THE INFLUENCE OF CULTURE

As an African woman who was born and raised in a rural area, my first real experience of urban life only came after I earned my Bachelor’s Degree and started my career. My rural upbringing was my window on the world – I looked through it to see how other people lived, which influenced my view
of the world and how people relate to each other in it. It didn’t take me long to realize that the way people live in rural areas is very different to life in a big city. In the former, culture is largely responsible for guiding how people relate to one other; traditional norms and values are woven into people’s belief systems. On the other hand, the city is all about modern society, where even children have the right to do whatever they believe is right from their perspective, and discipline is a far cry from the corporal punishment that I grew up with.

A strong sense of culture in rural areas gives a sense of belonging. Culture refers to the cumulation of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies and religions. Hofstede (1980), a well-renowned researcher and author, referred to culture as “mental programming”, or the
“software of the mind”. This equates to one’s “basic assumptions and beliefs . . . that operate unconsciously”. Culture, therefore, refers to the accepted norms, values and rational behaviors of groups. It is about “how we do things!”. Countries, as well as groups of people within countries, may
operate differently according to their beliefs, values, norms, morals and attitudes.

The question, then, is how does culture influence the way people do business? Across the world, and Africa is no exception, specific values are associated with certain groups of people. In Africa, language and ethnicity play a major role in shaping people’s behavior. These may solely be the material or visible aspects of culture, such as food, clothing, housing, drumming, dancing, and art. Values and morals are abstract and invisible, such as respect, taboos, etc., however, they are always present, albeit in the background.

This backdrop of strong cultures in most African countries inspired my doctoral research on how South African companies are successfully expanding their businesses into other African countries. Africa is the second-largest continent after Asia in terms of population and area, thus it is very diverse in terms of culture. Africa is a land of diversity defined by multiple languages, a broad range of cultures, and colonial histories. Colonialisation resulted in the continent having four official languages – Arabic, English, French and Portuguese. Despite this attempt at uniformity, Africa is known as a melting pot for local cultures and languages, which are largely interlinked. Nigeria alone,
the most populous nation on the continent, has a population of 190 million who together speak over
500 languages, which has inevitably resulted in diverse cultural norms.

According to the World Bank, most of the 54 countries in Africa are classified as developing, with the majority of Africans living in rural areas. Even though urbanization is taking place, there is still a large informal economy due to low levels of economic development, a lack of infrastructure, and a
nascent regulatory landscape. The main challenges that companies face when investing in Africa include differences in cultures, poor governance, a multitude of languages, weak economic structures, and challenges accessing credit. Yet despite this, African countries still conduct business with each other. For example, the 2018 African Continental Free Trade Agreement was promulgated to create a single continental market for goods and services and the free movement of businesspeople and investments. This has promoted intra-regional trade with the aim of stimulating economic activity and growing local economies. Despite the developing nature of business on the continent, it is a hive of creativity. The continental agreement is expected to enhance the competitiveness of African industries and countries through the exploitation of opportunities for scale production, continental market access, and better reallocation of resources. What is key, however, is that companies can only participate and contribute towards the economic sustainability of the continent if they are familiar with the various cultures and understand how to adapt their business models to serve people in diverse cultural settings.

As firms expand beyond their national borders, they choose markets that are physically and culturally close to their home countries (Dunning, 1988). Corporates from developed nations, because they are used to utilizing developed infrastructure, functional institutions and stable economies, find it difficult to do business in some African countries where there are institutional gaps. Familiarising themselves with cultural dynamics requires more than just resources; what is needed are locals in senior management who can create a bridge between the western way of doing things and customising solutions to local tastes.

Companies from developing countries tend to have an innovative nature, which they use as a competitive advantage; they prefer to maintain control of their business as they venture across borders, rather than entering into partnerships. In this way they can control their innovations to match the changing tastes of their consumers as their business expands. It has also been found that there is a relationship between culture and corporate performance, as culture directly influences strategy subsequently influencing corporate culture.

My research clearly shows that in Africa, culture, amongst other factors, plays a major role in the structure and success of a business in a destination country. With South Africa having a dual economy that is both developed and developing, the country is in a good position to expand and
contribute towards the growth of the continent. I found that the realities in host countries across the continent includes that:

  • Each market has its own local cultural settings;
  • Cultural differences are significant;
  • There is clarity when it comes to the regulatory environment;
  • There are fierce local competitors;
  • A lack of infrastructure increases the cost of doing business;
  • There is a need to appoint local managers to run the business; and
  • The localization of solutions is important for local legitimacy.

There are many skilled Africans working outside their country of birth. South Africa, for example, has a large number of diaspora Africans who understand both the South African corporate culture and their home culture. They act as a bridge to ensure that as the corporate expands outside its national borders, it is able to set up a subsidiary that is localized to compete in the host market while retaining the hallmarks of the parent company. For South African companies to succeed in their chosen markets, consideration has to be given to their business models to ensure that they suit local customers’ tastes in line with their cultures.

The 2019 Forbes rich list is dominated by people from developed nations; the richest Africans on the list are founders of their own companies, as opposed to those individuals whose wealth was passed on from previous generations. This indicates that as Africans, we are creative and innovative and know how to make money in our own way. What is very clear is that despite the challenges on the continent, Africa abounds with opportunities.

Regardless of the African business world being deeply influenced by the western way of doing things, culture plays a very big role in how business is done on the continent. The years I have spent
in West Africa setting up a business taught me that as Africans, we have our own way of doing business, which works for us. For example, in Ghana, because of its strong Christian background, I have been to events where prayers were said before and after a presentation to clients. The African culture is also about sharing and giving, so there is an expectation to give monetary tips to drivers or someone who assisted you, however in western cultures this could be construed as bribery. Bargaining is also customary in some African countries, especially in flea markets where one rarely sees prices on goods and has to bargain for the best price. This culture of bargaining is very prevalent in how business is done in many African countries. What has become clear, largely due to my years of spending time in various African countries, is that as Africans, we are colorful – not just in the way we dress, but in our cultures and in how we do business. This is a huge contrast to the way business is done in developed nations, as most of how we conduct our business is influenced by our cultural beliefs and social values.

By Dr. Rufaro Mucheka

Business Developer/Strategist

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