Saturday, 31 December 2011

New Year’s Eve Thoughts: Part 2

International Entrepreneurship: NICO leading the way

International entrepreneurship is the study of cross-border entrepreneurial behaviour focusing on how actors discover, enact, analyze and exploit opportunities in the creation of new goods or services.

I have always been impressed by leadership of one Felix Mlusu (MD of NICO Holdings), who I understand is preparing to hand-over the baton to my friend Vizenge Kumwenda. Vizenge was one year ahead of me at Chichiri Secondary School and I have always known him as a smart, intelligent and hard-working lad. I am not surprised where he is now. Soon he will be leading one of the most innovative companies in Malawi. NICO is a very dynamic and visionary company and this boils down to leadership and international entrepreneurship.

McDougall and Oviatt’s (2000, p. 903) defines international entrepreneurship as a “ combination of innovative, proactive and risk seeking behaviour that crosses national borders and is intended to create value in organizations”. A modification of McDougall and Oviatt’s (1994) definition of entrepreneurship is given by Stevenson and Jarillo (1990, p. 23), for them entrepreneurship is “a courageous managerial value creation process through which an individual engages innovative, proactive, calculated risk-taking behaviour designed to prosecute foreign business opportunities presented by multinational market successes and imperfections for financial and non-financial rewards”. Firms always strive to achieve growth and make more profits; one way of doing so is to expand the market for their products or services by going into international markets. The reasons for planning to internationalize seem to be the same for all the firms (i.e. profit, expansion, market opportunity)

I believe NICO has shown that international entrepreneurship after realising that Malawi is a small market and they can only increase value for their company by investing abroad. If I am not wrong NICO is now operating in Uganda, Zambia and Tanzania and Zimbabwe. A couple of months ago I sat with Vizenge over breakfast in AVENIDA hotel in Maputo. His mission was to explore further investment in Mozambique. I know they will do it.

This is what our leadership should be promoting. I would be surprised if Malawi Government or its leadership has ever taken any interest to ask NICO how they can support them to grow their international operations. My bet is using Zero Deficit Budget Government has been seeking ways to tax NICO.

What does a country gain in internationalisation? Exactly what our dear President is accusing Game Stores and Shoprite. You repatriate the profits and dividends. You create a market for your goods and services. You create employment and learning experience for your highly skilled citizens. Take for example Peoples (formerly PTC). Operating outside Malawi means you have outlets for your Malawians raw and processed goods. If you open operations in a highly sophisticated market, it means your home producers improve on quality to meet market requirements. It means your dividends and profits will be a forex inflow for the country.

It is high time Government takes interest and sits down on the table with companies like Press Corporation, National Bank, NBS, Mulli Brothers, MTL, and the little that we are left with to strategise and help grow these companies out of Malawi.

Let 2012 be a year of smart thinking Malawians and we will not achieve this if we look inward. Let us look outward. The world is too busy to wait for Malawi. We are irrelevant and a destruction with our strange ideas.

Happy New Year from Chihoro Castle

New Year’s Eve Thoughts: Part 1

The Malawi leadership first needs to understand its own current trade and investment strategy and how its policies are affecting the strategy. Both domestic and foreign investors make decisions on the basis of prevailing policies and the policies have to convince them that they will make a profit. For foreign investors, policies also have to allow them to repatriate their profits back home. For leadership to make public demand to know location of investors’ bank accounts and accuse retailers like Game stores and Shoprite of stealing Malawi’s forex is sad.

Let’s start from the beginning. Government had a choice to either accept or deny Game stores and Shoprite opening up shops. I assume when they were allowed, Government understood how the retailers operate. Since capital account is closed, Government monitors any repatriation of profits and dividends. The two stores operate in 10-15 countries in Africa and have a defined business model that provides for re-stocking products from South African, local suppliers and other supply countries. What is required is to know their supply chain management and try to make a breakthrough in getting a bigger share.

Obviously the retailers are not saints but they should be treated as partners because they are partners. Their contribution to the economy is huge which Government on their own cannot provide. They have created employment, pay taxes, procure services on local market, have local bank accounts, pay electricity, telephone and water bills, buy Malawi fuel(when available) etc. Game Stores (Zambia) is the most profitable Game stores in Africa. Maybe it’s not a good yardstick but as the article states, 60% of its employees drive to work. It tells a story of the kind of employees Game has employed. Shoprite has 16 shops in Zambia (has 2 in Malawi). The two retailers are productive investors in SADC and it is up to each country to maximise the benefits that they bring.

Why then Mr President the outburst? In trying not to accept responsibility, our leadership is everyday scratching for blame targets. Blame the British; blame NGOs; blame gays; blame IMF; blame Americans; blame opposition; blame tobacco and cotton buyers; now blame foreign retailers! Please don’t make us a laughing stock! Malawian people are smarter than what you are portraying. We all know that Malawi’s tragic fall has fingers pointing in one direction: Bad and misguided policies! These (too many to reproduce) have led to lack of foreign exchange and low prices of our crops which has had ripple effects in the whole economy. Now we don’t have fuel, drugs, electricity, water, and decency. The fact that Game and Shoprite repatriate their dividends and profits is not a reason for our lacking forex as they have always repatriated since they opened operations. You could do justice to the people that employed you (Malawians) by giving us in figures the contribution of Game and Shoprite to our economy against the forex they repatriate. This should include the PAYE; Corporate tax, VAT; utilities; employment etc. Then you can go back on the public platform and make more accusation as to why foreign retailers should fund our Zero Deficit Budget.

Where does Malawi go from here? I discuss this in Part 2 of my New Year’s Eve Thoughts

Happy New Year from Chihoro Castle