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Alasdair King

Degree:

EMBA

By Alasdair King

Inclusive Business In Africa

One of the electives for my MBA at Oxford that I was most excited about was a [5] day immersive course in Cape Town, South Africa. The focus of the course was inclusive business in Africa, defined as business for social impact rather than for profit.

Cape Town was incredible, being a city of contrasts; it had a glamorous façade, hiding its ugly dangerous underbelly. Walking to the beach for a morning swim with seals in the icy Southern-Atlantic was an amazing start to the trip. I was thrilled to be experiencing this country and excited for the journey I was about to go on!

Sunday saw the start of class at the UCT Breakwater campus meeting for the first time Aunny Powell who organised our week. Aunny was from Michigan, working in investment banking before studying at Oxford and then into academia. Aunny was incredible, being deeply connected in the inclusive business field and involved with most of the impact investing that we reviewed during the course. Her expertise added impressive depth and knowledge to the course.

The module began with a history lesson of South Africa, a country with many narratives, and each period adds further complexity to make the country what it is today. Apartheid has left many scars on the nation, with the biggest scar being the fascination from the populace with race which still dominates rhetoric. These issues set the scene for an introduction to inclusive business taught by visiting lecturer Jess Schulshenk: what it is and how a business can be defined as inclusive. The key message was that in today’s age, business needs to contribute towards society’s future fitness through placing equal importance on ‘system value’ where business, society and the environment are equally valued. Business also needs to acknowledge context, being where a business acknowledges its socio-ecological thresholds and target outcomes to expand its sphere of influence. To do this a business needs to openly state and acknowledge what guides its decision making, then it evaluates key social and environmental megatrends and prioritises interests, it sets goals and establishes measurable targets to track.

For your business you may want to look at the Embedding project as it is a helpful tool in embedding sustainability https://www.embeddingproject.org/resources

The Townships are the South African version of slums, being communities with severe social and infrastructure problems, with about 2.5 million of Cape Town’s residents living within the townships. The next day we went deep into the Phillipi Township to visit The Phillip Village, an inclusive business hub trying to encourage business in the slums. This model has proven to be very successful with the value of land already doubling from this project, firming the old saying “build it and they will come”. Francois Bonnici from the UCT was the guest lecturer teaching on inclusive innovation, which was targeting the where and to whom within innovation. Francois argued that within every inclusive business there were 6 levels that defined its inclusive nature: intention, consumption, impact, process, structure and post-structure.

There is nothing more engaging than when someone loves what they do; and Andrew Canter was such a person. Andrew is the Chief Investment Officer of Futuregrowth an ethical asset manager, giving a talk on the corruption and what he was doing to expose it within the country. As a purchaser of large amounts of bonds to state owned companies, he was able to be an activist against corruption in the economy through public positions and media leaks which he talked through. Corruption is a huge issue within South Africa where it is estimated that Zuma and his cronies had stolen over 130 Billion Rand from the treasury. Andrew implored to us the importance of governance within state owned enterprises and will not invest in a bond without a comprehensive governance check, showing each layer of the organisation, including how people were elected and by whom into the organisation.

83% of global population growth over the next century will come from Africa with an additional 3.1 billion people. Technological innovation is rightfully seen as an amazing tool to solve current and future African problems with Cape Town being the leading tech hub in Africa. Martin Hall provided the class and in depth look into South Africa’s most successful technology Education Company called Get Smarter which sold for $103m USD started by two brothers in Cape Town. I would highly recommend watching a brilliant video produced by Martin on the company and values based leadership: https://vimeo.com/311075009. Through modern technology the business was able to challenge traditional education models through addressing inclusion, meaning that people globally had access to high quality post-graduate education from top universities.

Considering myself as a proponent to the efficiency of markets I am still sceptical to elements of inclusive business. Our visit to Zoona, a payments fintech, supported this scepticism driving inefficiencies through focusing on inclusion rather than adding real economic value. The business was your typical start up tech business with an amazing office filled with slogans, visions, ping-pong tables and bean bags. As we drilled into the business operations though a darker story emerged as we realised the business was in trouble and burning money quickly. They had no clear business strategy, with lofty goals that didn’t match their core business of facilitation of payments between people. The CEO said it best when he mentioned that they were having the most impact, when they weren’t focused on impact.

On Wednesday we had earned a well-deserved afternoon off and I popped down to Indaba, a mining conference attracting exhibitors the world over. A good family friend Basil from Hong Kong is the CEO of a mining company based near Johannesburg called Stibium which mines antimony and gold. It was fascinating seeing the conference exhibits and the “salesmanship” of each and the scale of the mining throughout Africa which is supplying a lot of raw materials for development around of the world. The afternoon was spent at the beach with my great Italian mate Adriano, where we watched the sun go down with a wine in hand which made me further appreciate all that Cape Town has to offer.

I was a bit slow on the Thursday as we spent the day listening to Aunny on the financing work she is doing, where she talked through some of the innovative financing structures within the inclusive financing community. Secondary markets and impact funds have acted as a valuable liquidity source for much of the capital in the market helping to spurn the growth in the marketplace. Listed bond vehicles have been forming, acting as wholesale money for smaller debt facilities with provision of obligations only occurring into specific industries, such as Green Bonds, social and sustainability bonds and how institutional investors are using these tools and seeing suitable returns with consciousness. The most interesting structure we saw was one where a charity provided the capital for the mezzanine tranche for an impact fund to solve the problem of fresh food access within a county in America that had what’s called a food desert. The mezzanine tranche bore all the risk so that institutional investors gained comfort about the level of return from the fund and were willing to invest.

On the final morning Aunny showed us into what real impact looks like, firstly looking at a community farm, run by locals using unwanted land to grow crops for the local community. What we saw was that through shared values the community had built a profitable business, using waste, labour and resources from the community to create a Marxian oasis. Another feel good story was our visit a café that would only hire deaf employees. We were taught basic sign language and educated on the deaf plight in South Africa which makes up about 5% of the population. In countries with disability support schemes that are inadequate, business needs to step up and this café was a shining light, where the disability was a point of difference that customers loved. I was reading a biography on Nelson Mandela prior to arriving and the trip was concluded with a moving visit to Robben Island, where Nelson Mandela had spent 20 years in prison. We were given a tour of his single cell by a former prisoner, giving us a real appreciation of the significant island which had been used as a prison and a Leper colony for nearly 400 years.

As a send-off to our cohort, our villa had organised a South African feast, prepared by local chefs, where we dined and toasted to the incredible module with each of us speaking about what we had learned and experienced during the once-in-a lifetime week. As a conclusion, we were all in agreement that the week was so well thought through, providing us with diverse experiences that deeply contributed to our personal and professional growth in truly unique ways.

All opinions expressed by the bloggers are their own and do not necessarily represent those of the Oxford Executive MBA or Saïd Business School.

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  • Abdel Bavegni

    Nicely written Al and a great summary for the trip!