CHAPTER TWO – STRATEGIC MANAGEMENT IN THE AFRICAN CONTEXT

Learning outcomes for this chapter:

1. Identify the key issues that define strategy making in the African and Southern African
contexts.
2. Explain how the identified key issues will impact on the strategic management process.
3. Give examples of how businesses are dealing with the complexity of strategy in the African
context.
4. Compare strategy making in the African context to that in the developed world.

There are common challenges which African countries are faced with, namely:
1. Lack of infrastructure – roads, harbours, electricity, railways and ICT networks; for
example, rural Africa has 34 % road access in comparison to 90 % in the rest of the world
2. Lack of industrial development – the AU needs to improve manufacturing capabilities in
Africa, most African countries mine or harvest primary resources and export them for
secondary or tertiary processing
3. Political instability – unpredictable government decisions that lead to economic
volatility and/or armed conflict
4. High levels of poverty - significant portion of the population in African countries fall into
the ‘bottom of the pyramid’ which survives on less than $2 per day (the poverty line) SA
is significantly better than its African counterparts on this figure however there is serious
disparity between the earnings of different types of people
5. Corruption – it has been recorded that corruption in African countries is hampering
business development and provision of basic business services, African countries are
regarded as the most corrupt in the world
6. Inefficient public sector – the lack of economic growth and the lack of efficient
strategies for poverty alleviation in Africa are attributed to inefficient public sectors
7. Lack of skills – African markets are often characterised by an oversupply of semi and un-
skilled workers which creates a skills gap

Important to note that African countries have been cooperating to develop joint economic and
development strategies (in the form of the African Union – AU – 54 countries – and the SADC –
South African Development Community – 15 countries)

AFRICAN UNION

All UN member states based in Africa and African waters are or have been members of the
AU or OAU, as is the Sahrawi Arab Democratic Republic, whose status is disputed. Morocco
unilaterally withdrew from the Organisation of African Unity, the AU's predecessor, in 1984,
but announced in July 2016 that it wished to rejoin the organization.[6] Spain, primarily a
European country, maintains sovereignty over Ceuta and Melilla on the African mainland and
the Canary Islands, and is accredited to the African Union.[11]

  Algeria   Egypt   Malawi   Seychelles

  Angola   Equatorial   Mali   Sierra

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  Benin Guinea   Mauritania Leone
  Botswana   Eritrea   Mauritius   Somalia
  Burkina   Ethiopia   Mozambiqu   South
Faso   Gabon e Africa
  Burundi   Gambia   Namibia   South
  Cabo   Ghana   Niger Sudan
Verde   Guinea   Nigeria   Sudan
  Cameroon   Guinea-   Republic of   Swaziland
  Central Bissau Congo   Tanzania
African   Kenya   Rwanda   Togo
Republic   Lesotho   Sahrawi   Tunisia
  Chad   Liberia Arab   Uganda
  Comoros   Libya Democratic   Zambia
  Côte   Madagasca Republic   Zimbabwe
d'Ivoire r (disputed state)
  Democrati   São Tomé
c Republic of and Príncipe
Congo   Senegal
  Djibouti

The African Union identified the following key SWOT elements in its 2009 – 2012 strategic
plan:
Strengths
 Mandate and goodwill of 53 African states
 High global profile
 Linkage to the 8 regional economic communities
 Capacity to call agenda-setting meetings

Weaknesses
 Weak processes, systems and IT
 Management problems
 Admin problems
 Inadequate physical infrastructure

Opportunities
 Speak in one voice from Africa
 Develop new financial architecture
 New strategic partnerships for Africa
 Shift in manufacturing from West to East

Threats
 Pandemics
 Conflicts (in Africa and globally)
 High unemployment
 Exclusion from emerging financial and global order

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AU strategic objectives include the following:

1. Reduce conflict to achieve continental security and stability

2. Achieve the necessary security and stability for Africa to be developed and to integrate
3. Promote sustainable economic development
4. Promote sustainable social and human development
5. Formulate frameworks for developing and sharing Africa’s statistics and research and
development capacities
6. Enhance continental integration
7. Build and foster continental and global cooperation
8. Promote good governance, democracy and human rights
9. Strengthen the Africa-wide humanitarian response and action
10. Promote inter-Africa solidarity
11. Promote African Cultural Renaissance and the protection of Africa’s cultural heritage
12. Promote the active participation and contribution of segments of all African society in
Africa’s development and integration
13. Promote the ratification and entry into force of all outstanding legal instruments adopted by
the Assembly of the Union
14. Promote gender equality
15. Strengthen capacity and enhance operational efficiency and effectiveness of the AU
commission
16. Promote synergies, linkages, and good working relations with all AU organs
17. Promote effective cooperation and collaboration with member states
18. Promote strategic partnerships for leveraging sustainable sources of funding and
comparative advantages

SADC

SADC has 15 member states:

  Angola
  Botswana
  Democratic Republic of the Congo – since 8 September 1997
  Lesotho
  Madagascar – membership reinstated on 30 January 2014 [1] after an imposed
suspension in 2009
  Malawi
  Mauritius – since 28 August 1995
  Mozambique
  Namibia – since 21 March 1990 (since independence)
  Seychelles – also previously a member of SADC from 8 September 1997 until 1
July 2004 then joined again in 2008.
  South Africa – since 30 August 1994
  Swaziland
  Tanzania
  Zambia
  Zimbabwe

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Mainstream agenda items of the SADC include:

 Sustainable economic growth, poverty alleviation, education, higher quality of life

 Promote common political values, systems and shared values
 Achieve and maintain democracy and peace
 Promote self-sustaining development
 Achieve complementarity between national and regional strategies and programmes
 Promote and maximise productive employment and utilisation of resources for each region
 Achieve sustainable use of natural resources and effective protection of the environment
 Strengthen and consolidate the long-standing historical, social and cultural affinities and
links among people of the region
 Combat HIV and AIDs as well as other diseases
 Ensure that poverty eradication is addressed
 Mainstream gender in the process of building the community

SA has addressed the concerns of the AU and SADC in its National Development Plan (NDP)

Often the poorest consumers or those at ‘the bottom of the pyramid’ are ignored and the following
assumptions are made about them:

 The poor cannot afford any products or services

 The poor do not have use for products sold in more developed countries
 Only developed countries will pay and appreciate technological innovations
 Poor people cannot help a company to grow and remain vital
 High quality individuals (intellectual capital) can only be recruited from developed
economies

However, it cannot be ignored that those organisations serving customers at the bottom of the
pyramid have the following challenges to contend with now and in the future:

o Capital intensity
o Sustainable development
o Price performance through innovation

Further to the previously discussed section, investors have additional aspects to consider before
investing in Africa, namely;

 Local customs and customer preferences

 Legislation
 Political considerations
 Creative supply chain management
 Invest heavily in talent