Reflections from Rwanda

Country with the highest share of female parliamentarians in the world, at 61%.  Global Gender Gay 2017’s #1 place to be a woman in East Africa, and #4 globally.  These are some of the accolades proudly shared with us by the Rwanda Development Board.

“If you want to achieve middle income status, private sector growth needs to be the focus on all that you do”

…said the Rwanda Development Board (RDB)  Achieving a private-sector led economy is at the core of RDB’s vision and strategic plan.   One such way they are executing on this mission are Special Economic Zones, which are “one-stop-shops” for enterprises collocating industrial and commercial land, reliable energy sources, transportation links, market access, and administrative bodies.  Coupled with favorable private business incentives, such as accelerated depreciation to address capital-intensive starting periods without revenue, the SEZ aim to create skills in off-farm jobs and encourage knowledge transfer to boost Rwanda’s overall economic activities.

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Later that day, our group visited three different production facilities within the Special Economic Zone – C&H (garments), Sahashra (LED lights), and a paper products factory.  For example, we observed clothing assembly lines, bringing concepts that we learn in Prof. Singh’s Operations Strategy course to action, when individuals pass the same article of clothing down the line after performing the same task, such as sewing on a specific button on a construction vest.  Through specialization, workers learn skills while increasing productivity with the words “JOB CREATION, EXPORT GENERATION” hanging on a banner along the walls.  Speaking of which, businesses in Africa must still balance the tradeoffs between job creation and automation, and these priorities were not always crystal clear among the companies we visited.

In the evening, we enjoyed some of Kigali’s vibrant art scene at the Inema Arts Center, which is a collective of Rwanda creative artists started by brothers Emmanuel Nkuranga and Innocent Nkurunziza.  On Thursdays, they have a great happy hour event including cocktails, live DJ & music, and mingling with the artists themselves.  At the gallery, we noticed that Emmanuel is married to Lauren Russell Nkuranga, who visited our hotel this very morning to talk about the food distribution company that she founded in Rwanda, Get It.  Get It is a leading procurement and food distribution company, supplying many of the food safe fruits, vegetables, and dried goods to hotels, including the Marriot where we stayed! She shared how as a foreign business owner, she appreciates her opportunity to have conversations more easily.

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Our TA, Gladys, at Inema Arts Centre!

Perhaps one of my highlights of the trip was a trip next day to Sorwathe Tea Farm!  Producing approximately 12% of Rwanda’s tea, our group met the parents of one of my clustermates, Tim Stenovec, whose extended family still direct the farm.  We toured the factories and learned about the tea production process, from picking the tea leaves in the fields, to sorting, dehydrating, fermentation, chopping, drying, packing, and shipping – it was so fascinating! I learned that black tea, green tea, and white tea all can come from the same leaf, and it is through different processes such as fermentation that different varieties are created! In the sun, at the guesthouse, we enjoyed a lovely lunch (and some outdoor tennis!) hosted by the Stenovec family.

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Cluster E’18 with our clustermate’s family, the Stenovecs (thanks again for hosting!)
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Learning about the different grades of black tea

To wrap up the trip, many of us could not visit Rwanda without a trip to the Kigali Genocide Memorial Centre.  Before arriving in Rwanda, our Kenyan tour guide advised us not to bring up three topics in Rwanda: tribes, sports, or politics.  After a heavy yet informative self-guided experience at the Memorial detailing the tragic events, we walked away understanding our guide’s away.  It is clear that while many will always remember and grieve, they also move forward with the believe that they are unified ‘Rwandans’ who are progressing forward for peace and prosperity.

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We all observed a moment of silence at the mass burial sites, Kigali Genocide Memorial Centre

 

Kenya: Success Through Hard Work, Vision, Ingenuity, and Above All, Integrity

During our last two days in Nairobi, our group was grateful for the opportunity to have candid, in-depth conversations with C-level executives at a number of companies, including Dr. James Mwangi (Group MD and Group CEO at Equity Group Holdings Ltd/Equity Bank), Manu Chandaria (Chairman and CEO of the Comcraft Group, which owns Mabati Rolling Mills), and Reg Orgon (CTO of BRCK).

Kicking off our Tuesday with Dr. Mwangi of Equity Bank, he expressed excitement for his “belief in the convergence of academia and industry” – which was suiting for the 40%+ of our group heading into consulting after CBS! Equity Bank’s mission is to offer inclusive, customer-focused financial socially and economically empower their clients and stakeholders. He told the story of the last 15 years, and how Equity Bank progressed from its #66 of 66 position in market share (back in 1994) to #1/#2 by 2014. What were some of his key learnings and takeaways?

  • Self-disruption: Look at what the customer wants (e.g. freedom of choice and increased control), then ask yourself, “How can we shape ourselves based on what the customer wants?” Then, re-engineer the business model – in their case, Equity bank recognized that disruption would not necessarily come from other banks, but rather from telecoms and fintech companies looking to better reach consumers.
  • Differentiation through human capital strategies: “We can train for skills, but we cannot train for attitude.” Equity Bank has clearly defined its core value system, and even from its hiring “fit test” phase, it will screen if employees believe in the mission and exhibit the attitudes necessary to deliver on those values. While career progression and advance of titles is critical at some companies, Equity Bank also understood how to align incentives for its employees to maintain high levels of retention – in fact, some employees are “demoted” but are so willing to do so and serve the company in the long-run because Equity Bank offered them equity shares that appreciated in value and created wealth and financial security, which is considered highly important for many at the company.
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Equity Bank CEO, Dr. James Mwangi, shares its continuous journey of self-disruption

Similarly, Dr. Chandaria at Mabati Rolling Mills, which was the first company in Africa to produce coated steel using a patented Aluminum-Zinc alloy, mentioned that the secret to success is:

hard work + vision + ingenuity + integrity

And, without integrity, this recipe for building inner capacity, which starts with yourself, falls apart (“Anything multiplied by zero will equal zero.”).  He also spoke about the challenges facing Africa, including hunger, shifting demographics, government, and complex tradeoffs between job creating and technological innovations (including automation which replaces human tasks).  Other countries have significant agricultural resources, but not Kenya. To overcome these, MRM has undertaken multiple initiatives and investments, including its Mabati Technical Training Institute and Mabati Medical Centres, to acquire and apply skills that benefit both local communities and the country at-large. At the end, our group toured a production facility that manipulated coils of steel into preset shapes used in roof construction at difference thicknesses (and price points).

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Hard hat ready before our tour of the steel facilities at Mabati Rolling Mills
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Our TA Gladys Ndagire, ’19, thanks MRM Chairman Manu Chandaria

At the IBM Research Lab in Kenya, one of 12 labs employing 3,000 scientists around the globe, the tables were turned toward us when expert researchers across the finance, public government, epidemiology, healthcare, and AI/blockchain industries asked us, “So what business models/technologies do you hypothesize should be put in place to solve critical problems such as global trade administrative burdens, cancer outbreaks, or assessing credit risk on individuals who only have feature phones?” One example at the intersection of technology and research they shared was utilizing natural language processing (NLP) to consolidate public health reports on disease cases, which is still a complex process as some are written in only Swahili, only English, or a hybrid of the two. We felt that they got just as much value from the meeting than we did! IBM’s CEO Gini Rometty is dedicated to Africa and visits at least once a year. One of the lab panelist’s key insights:

“If you want to have impact, you need to be on the ground to understand the challenges and develop solutions.  The cut and paste model of taking Western solutions into developing areas will not work.”

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Lastly, we explored further about why internet is so bad in Africa from BRCK’s CTO, Reg Orgon. The fiber optic network is insufficient, and therefore, the physical infrastructure across the continent is unreliable. There is not expansive coverage of 4G. So, BRCK is trying to leapfrog these challenges with a full stack of engineering for products, such as the SupaBRCK, a self-powered router that provides open internet service and broadcasts a WiFi signal to mobile devices. And, they are trying to roll out free wifi, including at banks. Where kids often do not have reliable electricity, and are subject to other weather-related conditions, BRCK developed kits so that “students will not suffer with devices that don’t work.” The key challenge in reaching the next 800M-1B people is figuring out who will pay for connectivity. Therefore, BRCK is flipping the model through ad and “for good” social content that directs how to go online, especially through mobile devices. But, it also recognizes the risk of the obsolescence effect and difficulties in sourcing “high-end” engineering talent. Through partnerships with companies such as Facebook, however, the potential to empower lives with lower cost infrastructure services is gaining momentum.

In between, we made sure to check out some local spots, such as Alchemist Bar, and Brew Bistro and Lounge, to enjoy local craft beer, dance to Afrobeats/hip-hop/top 40, and celebrate one of our colleague’s birthdays!

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Group dinner at About Thyme Restaurant

Next up: Rwanda – stay tuned, friends!

-Ray Phua, ‘18

Transforming the lives of Kenyans

“Transform lives, give dignity, and expand opportunities for the socio-economic prosperity of the people of Africa.”

“Changing the arc of history is what motivates us.”

“Connecting the next 800 million to the internet.”

The above highlight some of the powerful statements we have heard from leaders during our first three days in Nairobi, Kenya.

Our group of 30 kicked off the East Africa Global Immersion program on Monday with our visit to Safaricom, a telecommunications company developed and rolled out M-PESA, the largest mobile money platform in Kenya with 90%+ market share of mobile money transactions. In 2005, Safaricom piloted M-PESA as a peer-to-peer platform, so many could send money back home to their families who sometimes only have access to SMS/feature phones. Back then, money had to be transported by bus to collection points, and it was often cumbersome for family members to schedule appointments and travel to these locations to retrieve money. Further, what issues do you think challenged this business model? Cash theft (both from the trucks in transit and in depots), fake currency, coin management, tedious manual reconciliation, and TIME, to name a few.

Fast forward to today, M-PESA processes 10M+ daily transactions, controlling 45% of the country’s GDP. Safaricom has evolved beyond peer-to-peer and are evolving models in Business-to-Business, Consumer-to-Business, Business-to-Business, and Platform-As-A-Service.  M-PESA is now fully integrated with all 43 of 43 banks operating in Kenya, progressing its well-distributed agent network model. And, they are dedicated to increasing financial inclusion. Some of their key challenges involve regulatory issues, such as pressure for interoperability (outside of the Safaricom ecosystem) and limitations on transaction volumes and amounts. However, I believe that some of the key lessons that they shared can be widely applicable to our MBA business leaders:

  • Product SIMPLICITY: no matter how much awareness a product has, users will not adopt it if it is not simple enough to use.
  • Focus on real customer NEED: in today’s world, we quickly default to “make a smartphone app;” but, Safaricom recognized the need for security and the behaviors of local consumers to recognize that SDK/SIM technology was a critical path
  • Customer INPUT is key to the development of products and processes: sit with your customer and ask, “What do you want? How do you want it to work?”
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Our group with Safaricom’s George Gacheche

Next, we visited with John Logan, Kenya Country Director for Technoserve, which works with the developing world to build competitive farms, businesses, and industries. John mentioned that a lot of Technoserve’s project work is aligned toward a growing trend for sustainable development. For example, they are helping a coffee enterprise achieve 100% sustainable sources by 2020. At the same time, they developed drone technology solutions to quickly surveil coffee farmlands for pest control issues before sending people for manual interventions, saving operating expense, detecting issues earlier, and doubling the output of coffee seeds! Another initiative of interest in their “Smart Dukas” program, where they are enabling small shopkeepers (as 80% of consumer goods are purchased through these smaller retailers rather than supermarkets/grocery stores/larger markets) through capacity building, digital innovations, and access to finance.

How do they think about prioritizing potential projects? They determine whether they will learn something that will provides benefits in a strategic way, such as scaling successes tested in Kenya to neighboring countries in the region.

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These are highlights from just two companies that we visited on Monday! I’ll return with more insights and interesting conversations from Equity Bank, IBM Kenya, BRCK, and Mabati Rolling Mills!

But, as promised, I want to share some of the FUN that the broader group has had in-country, including pics of animals across safari adventures, visits to animal orphanages, and the Giraffe Center!

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Photobombed by our friend at the Giraffe Center (taken by Joy Kang, ’18)

Lastly, CBS alumna Varsheeni Raghupathy graciously hosted us at her family’s home on Monday evening. We learned the story of her husband’s family business, Alpharama, which is the largest modern leather tanner in Kenya, exporting leather to Italy for high-fashion brands including Louis Vuitton and Prada. We asked them, as a company led by foreigners, how have they been perceived, particularly by employees who are native Kenyans? They admitted there can be a certain negative image of those who aren’t native, not denying historical mistreatments from foreign leaders of the past. However, to overcome this, they have prioritized training and ensuring that native Kenyans are placed in positions for growth, promotions, and increments.

Ultimately, they are building a collective awareness and culture where their business is everyone’s business. Our group also reflected on some of our pleasant surprises experience even in our short time in Kenya, including the sense of pride, warmth, and welcoming nature of Kenyans, the level of security especially for foreign travelers (x-ray machines and metal detectors in all our company building visits and hotels), and prevalence of technology (e.g. mobile money, Uber).

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Stay tuned for a wrap up of Kenya and more adventures in Rwanda!

Jambo from Kenya!

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On our tour through the Nairobi National Park, located only 7 km from the city center

Greetings from Nairobi, Kenya — the country’s capital also nicknamed the Silicon Savannah due to its “concentration of innovation spaces, incubation centers, accelerators, and maker labs…”! I am excited to join ~30 other colleagues tomorrow, along with Professor of Economics Jonas Hjort, as we meet with business leaders and policymakers across a diverse range of both private and public sectors to explore key topics, including:

  • How to operate efficiently and profitably in environments characterized by weak institutions
  • “Making the rules” in the private sector through discussions with policymakers
  • Opportunities for investment, including growth from foreign investors and multinationals
  • How MBAs interested in Africa can add value!

Over the last couple of months, our group has met weekly to learn more about the successes and challenges faced by the East Africa region as it achieved high economic growth rates over the last decade.  For example, East Africa is expected to record the highest economic growth rate in Africa in 2018, driven by strong domestic demand and high public infrastructure spending (which makes sense, traffic in Nairobi can be quite awful even across short distances!).  And, Africa will contribute 25% of the global workforce by 2050 (up from 16% in 2016), when the population of Nigeria will surpass that of the United States.

We also worked in small groups to facilitate discussions around relevant business topics, such as China’s influence on East Africa (i.e. China is Africa’s #1 trade partner, #1 infrastructure financier, and operates 10k+ Chinese firms in Africa) and the acceleration of the Africa-China partnership.

I invite you to follow along with us (#cbschazen) and return back here over the next week to discover what we learned from our exciting list of company visits:

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Our schedule is packed with an exciting range of company visits!

I promise to come back with more cute photos of animals (baby elephants! giraffes!) collected from my classmates, many of whom are wrapping up safaris across Kenya!

Asante-sana!

-Ray Phua ’18