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

 

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