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AFTER the announcement of Nigeria’s statistical triumph, I expected a chest-thumping, jubilant response in the country. Instead, news that Nigeria had become the biggest economy in Africa, with gross domestic product of an astonishing $510bn, was greeted with a sober, even dismissive, response by the media, professionals and ordinary people.

"It’s too soon to exhale," a banking professional last week. "We have too much to do. Our macroeconomic fundamentals are not in place. Things are just not where we need them to be. There is no reason for celebration."

Another said the statistics had, if anything, highlighted the lost opportunity. "Imagine how big we would be if our governments had invested oil profits in this economy since 1990," he said referring to the last time the economy was measured.

Having first visited Nigeria in the early 1990s and seen the differences in the country between then and now, I believe Nigeria does have a lot to celebrate, even if the road ahead is still a long and rocky one. In 1990, Nigeria was still dealing with the economic fallout of a series of military coups d’etat. Since its first post-independence election in 1964, Nigeria’s political condition has been more one of military than democratic rule, mostly by leaders with little interest in economic growth.

When the economy was last measured, Maj-Gen Ibrahim Babangida, who took power in 1985 from another coup leader, was in charge. He took over a state in crisis, a situation precipitated by distortions brought about by the country’s dependence on resources and worsened by the oil price crash of the 1980s.

He introduced a comprehensive economic "emergency" plan, setting in motion privatisation of state companies, financial sector reform, the revival of agriculture, and cut back imports. But he was also the architect, many Nigerians say, of patronage and corruption, despite being a proponent of fiscal prudence. Under his watch, foreign debt ballooned. And, by dragging out the promised return to democracy for eight years and annulling a presidential election held to facilitate this handover, he paved the way for another coup in 1993.

Sani Abacha, Nigeria’s last military ruler, presided over an economy hollowed out by grand corruption. He ran the oil business as his private fiefdom, dictating oil deals from his presidential villa. The central bank was in effect his piggy bank. State utilities in key areas such as telecoms and power were run into the ground through neglect and underinvestment.

Abacha died suddenly in late 1998, paving the way for the democratic era Nigeria has enjoyed since then.

There was talk of a rebasing exercise after the 1999 democratic elections but it is held that this was scuppered by the intention of the Obasanjo regime to secure debt relief from the multilateral lenders and the Paris Club, which would have not been possible if Nigeria had emerged, then, as a middle-income country. The decision paid off. And the economic trajectory, as is now common cause, has been strongly upward — even if the 7% growth rate now turns out to be lower as a result of the rebasing.

Nigeria has a long way to go. The gap between rich and poor is widening; it remains one of the poorest countries in the world and has a tiny tax base, despite a rapidly growing private sector. It is easy to look at the significant infrastructural development in cities such as Lagos and Abuja as being progress and forget the underdevelopment elsewhere in the country.

There are many reasons to criticise Nigeria’s progress and economic governance. But it is also easy to forget how far it has come since 1990.

The question now is whether the political leaders and technocrats use the country’s new status as the biggest economy in Africa as an excuse to continue to underperform or whether they will set it on a path towards its true potential, where Nigeria’s, rather than political interests, are primary.

• Games is CEO of consulting company Africa @ Work.

THE struggle in Zimbabwe’s ruling Zanu (PF) to inherit the mantle of power from President Robert Mugabe has spread from the political battleground to the state-owned media.

Publications such as The Herald and Sunday Mail once filled their pages with vitriol directed at the opposition Movement for Democratic Change (MDC. They attacked critics of the president, covering the government’s own shortcomings with thundering editorials about the threat of neocolonialism and other distractions.

The ruling party was out of bounds for journalists employed by the state.

Now it is open season.

There are different theories about why the ruling party is turning on itself. One is the succession battle between factions jockeying for their candidate to succeed Mugabe.

These factions are using the state media to discredit each other by selectively exposing corruption linked to their opponents.

Officials are trying to paint these disclosures as an attack on corruption in principle. But it is hard not to believe this is not being driven by political expedience, particularly as many of the scandals being aired are not new.

Bribes sought by ministers, the activities of the diamond mining companies that have been unaccountable to the nation for years, dodgy infrastructure projects and others are all in the spotlight.

Another theory is that the state is looking for scapegoats to blame for the poor condition of its finances.

It seems as if state-owned enterprises are the target in this regard.

Once protected by the ruling party despite the fact they were mismanaged, inefficient, and were a drain on an ailing fiscus during the darkest days of the economy, the state continued to support them.

They were a key source of patronage and control for Zanu (PF).

But now the gloves are off. Earlier this year, the state caused a furore by disclosing that managers of parastatals were earning obscene salaries.

In one case, the manager of the country’s biggest medical aid society was "found" to be earning $535,000 (R5.3m) a month, with benefits, while the organisation was in debt to service providers and in arrears with tax.

Those exposed include entities that have struggled to pay workers even while paying ridiculous salaries to managers. The saga has been dubbed "salarygate" by a furious public. The minister has now capped salaries of managers in state-owned enterprises and local authorities at R60,000.

But many believe the government is not acting to rein in graft because it is the right thing to do, but because it needs to find money to pay public servants’ salaries — an increasing concern. Public servants, estimated at 230,000 people, swallow up almost 75% of the state’s monthly revenues.

The government is already struggling to pay their salaries, and paid them several days late this month.

It is now under pressure to implement a significant pay hike promised by Mugabe during last year’s election campaign. The deadline for the new packages has been shifted from February to April. But it will take a miracle to meet this new deadline.

The lack of liquidity in Zimbabwe is not only the state’s problem.

I attended a number of results presentations last week at which a lack of liquidity was raised by companies as a significant issue affecting their performance and future planning.

The number of retrenchments is rising rapidly. Last year, more than 120 companies applied to the Retrenchment Board for permission to shed workers, and trade unions say nearly 10,000 were laid off. The trend has continued this year. Economists say Zimbabwe is operating at a third of its capacity. The government’s economic recovery programme has been widely panned as being unworkable, and investor confidence is low.

And while the government casts around for miracles, the public servants, a key plank of Zanu (PF)’s support base, are getting restive.

ARNOLD Ekpe, former CEO of West African banking group Ecobank, once said African-owned companies had an advantage in African markets, particularly the difficult and high-risk ones, because they came from risky markets and understood the challenges and knew how to meet them.

In an interview with me some years back, discussing the rise of African multinationals north of the Limpopo, he maintained these companies were also less daunted by the challenges than companies from outside Africa.

Certainly, the rapid expansion of Ecobank across Africa — in 35 countries to date — signals a large appetite for risk. By 2008, when I first interviewed Ekpe, the group was already in 24 countries and had launched a $2.5bn rights offer to fund further expansion. His dream was to create a truly pan-African bank that would dominate business in "middle Africa", the swathe of territory between the Sahara and South Africa.

But, along the way, analysts started asking whether the bank was driving expansion at the expense of internal governance. It started looking like a numbers game more than a strategic growth plan. It was only a matter of time before corporate governance issues came to the fore in this rush to conquer Africa. So it came as no surprise when dirty laundry was aired and corporate scalps taken along the way — as has happened recently, with the chairman and CEO leaving.

Potential weakness in the company was not only about the pace of expansion; it was also about tensions arising from old ways of doing business in West Africa rubbing up against modern corporate governance standards and practices, which are an integral part of the globalising business environment.

This tension was highlighted in the 2009 banking crisis in Nigeria, when a handful of banks were found to be acting in ways that had been considered normal among some elements but were anathema to the governance practices introduced by central bank reformers in the years before the crisis.

Concern about Ecobank is not just commercial. There is also a worry about what the collapse of an African corporate champion might have on the African psyche. Ecobank has become more than just a bank for Africans — it has become a source of pride, representing a dynamic new business model for people more familiar with foreign and South African-owned brands.

The new African multinationals, those with their roots north of the Limpopo, are raising the bar for business across the continent and, in the process, are giving Africans new respect for local institutions and conglomerates.

South African companies are seen differently. They are regarded more as outsiders, aligned in the consumer mind with foreign companies, given their size, scale and global integration.

The strong South African involvement in Ecobank has raised concern that, as a consequence of its present problems, this African corporate jewel may fall victim to South African "imperialism".

The Public Investment Corporation in South Africa is a portfolio investor in Ecobank and Nedbank has an option to convert the $285m loan it made to Ecobank in 2011 into an equity holding before the end of this year.

While neither appears to have plans to take over the bank, the concerns, highlighted in an article in the Financial Times last week, are evidence of a broader antagonism about South Africa’s corporate dominance in Africa.

In a discussion last week, a group of African business analysts debated whether South African multinationals could be regarded as African as they operated at a very different level from their continental peers.

But it was pointed out that multinationals in Africa outside South Africa are growing rapidly and are changing this perception. Ecobank represents that change.

However, the reality is that these admirable up-and-comers still operate in a volatile, rapidly changing and often institutionally weak environment. Their institutional foundations might not be as solid as they need to be, as seen in the fact that a few individuals at the top can quickly destabilise a carefully built edifice.

The Ecobank saga is a stark reminder of this.

• Games is CEO of business advisory Africa @ Work.

ON A bridge linking two islands that are home to some of Nigeria’s richest people, a giant billboard advertises Moët & Chandon, the champagne that has become a favourite tipple of the country’s wealthy elite.

Last week, a UK newspaper reported that Shoprite’s seven stores in Lagos sold more of the high-end drink in 2013 than the chain’s 600 South African stores did.

While this highlights Nigerians’ desire for luxury products, it also indicates their preference for foreign goods, something much less prevalent in another large market, Kenya.

I travelled to Lagos and Nairobi over the past fortnight to find out from retailers, manufacturers and analysts whether the provenance of consumer goods affects buyers’ preferences. The research was for an upcoming book about Africans investing in Africa, being produced jointly by the Brenthurst Foundation in South Africa and the Tony Elumelu Foundation in Nigeria.

The simple answer is that the picture is complex, nuanced and hard to pin down.

A Ghanaian executive who has lived in Nairobi for several years said many products enjoyed by Kenyans would not gain much traction in his home country. Kenyans, he said, focused on value for money in choosing goods, while his countrymen emphasised image.

More grooming products are sold in Ghana than Kenya, even though the former has half the population.

There is another issue at play, and that is the origin of consumer goods.

In West Africa, foreign goods are perceived to be more valuable and attractive. The consumer mind-set is not particularly well disposed to locally made goods as they are perceived to be inferior and of low quality.

In Nigeria and Ghana, wealthy consumers fly to western markets to find the brands they prefer — not just luxury goods. A prohibition on many imports imposed by the Nigerian government means consumers have had to adapt to certain locally produced goods such as fruit juices, and have come to enjoy them, but a lingering desire for foreign brands remains.

In Kenya, the picture is slightly different. If you want to sell to Kenyans, it is better to flag goods as "Kenyan made" to tap into a strong sense of patriotism about local goods that is highlighted by brands such as the payment system M-Pesa, devised by cellphone company Safaricom. This is held up as a symbol of Kenyan pride but has not travelled that well to other African markets. But M-Pesa, and many other brands perceived to be local are actually owned by foreigners. Safaricom is majority owned by the UK’s Vodafone.

Goods that have been manufactured for many years in East Africa by foreign multinationals such as Unilever, Nestlé and GlaxoSmithKline are now viewed as local. Similarly, favoured beer brands perceived as local, such as Tusker, are owned by British brewer Diageo. But beer seems to buck the trend of favouring imported goods in Nigeria, where the best-selling beers, Star and Guinness, are regarded as local brands although they are produced by foreign-owned companies Heineken and Diageo.

Some South African brands have been adopted as local in countries where they are popular. A favoured tea brand, for example, is seen as a Botswana product in Gaborone and a Zambian product in Lusaka.

It is hard to unravel all these brand issues — there are many dimensions, nuances and complexities that companies doing business in Africa must consider when entering new markets. But what it clearly shows is the need for a differentiated strategy for countries that takes into account local, national and regional dimensions.

By now, this should be common cause, but there are still South African companies with Africa strategies that are, as a colleague of mine often says, an inch deep and a mile wide. Companies that fail to dig deep into the consumer psyche in African markets before making a move, and even adjusting the model in market, are bound to fail.

• Games is CEO of Africa advisory Africa @ Work.

I DINED with a Nigerian elder last week, who told the story of how Nelson Mandela had lived in his Lagos home for several weeks in 1962 during a seven-month journey around Africa to raise support for the African National Congress’s (ANC) armed struggle.

Mbazulike Amaechi, an official in Nigeria’s first post-independence government, said he was asked by the leader at the time, Nnamdi Azikiwe, to host Mandela during his visit to Nigeria in May 1962. When Mandela visited Nigeria again in 1990 to acknowledge Nigeria’s support in ending apartheid, he personally sought out Amaechi and Azikiwe to thank them.

There has been a lot of talk about Mandela’s legacy at home but little about it fostering better relations with other African countries and their nationals living in South Africa, in particular the other pivotal African state — Nigeria. Despite the fact that the West African giant played a leading role in the anti-apartheid struggle — and was declared an honorary member of the Frontline States of Southern African nations — ordinary Nigerians feel their efforts have not been appreciated and that their welcome in democratic South Africa was not assured.

Nigeria chaired the United Nations (UN) Special Committee against Apartheid for 25 years until 1994 and, along with a number of other African countries, it offered shelter and support to the ANC. In 1976, it established a fund to provide assistance to apartheid refugees, with ordinary citizens contributing a percentage of their salaries to the cause. It offered passports, money and study opportunities to many South Africans.

Nigeria also used its political clout to harass supporters of the apartheid regime internationally.

Former president Thabo Mbeki lived in Nigeria in the late 1970s, when he befriended Olusegun Obasanjo, who was to become his presidential counterpart 20 years later.

The two men helped to shape a new thinking about Africa.

Two Nigerians were co-chairs of the Commonwealth Eminent Persons Group on South Africa, which investigated options to end apartheid.

One was Obasanjo. The other was former Commonwealth secretary-general Emeka Anyaoku.

He befriended Oliver Tambo while a junior official at the Nigerian embassy to the UN and visited Mandela in prison in 1986 as part of the Eminent Persons Group. Between 1991 and 1993, he helped to break deadlocks in South Africa’s negotiations. They became close friends and Mandela, who wrote the foreword to Anyaoku’s book, also afforded him the honour of addressing a joint sitting of the National Assembly in 1998.

Anyaoku shared some memories with me in Johannesburg last week, when he came to pay his respects. He recalled he had hosted a dinner for Mandela in London in 1990. Asked who he would like invited, Mandela had said he would like to see representatives of as many multinational companies doing business with South Africa as possible. He wanted to assure them their money would be safe if they invested in South Africa.

Anyaoku and fellow Nigerian diplomat Ibrahim Gambari have been awarded South Africa’s highest decoration for foreigners — the Companion of OR Tambo — while Mandela received Nigeria’s second-highest honour, Grand Commander of the Order of Nigeria.

But Nigeria was also the place that gave Mandela a sharp dose of African realpolitik when he became president in 1994. His Nigerian counterpart was the military dictator Sani Abacha, who was the antithesis of everything Mandela had fought for, and a tough political opponent.

Mandela had several difficult encounters with Abacha, who was unmoved by the political reputation of the famous leader. In 1994, he failed to secure the release of a prominent Nigerian politician jailed by Abacha for treason, despite visits by himself, Mbeki and Archbishop Desmond Tutu at the request of the man’s family.

In 1995, the men crossed swords again. Mandela joined the appeals for clemency for nine Niger Delta activists sentenced to death for agitating for more equitable distribution of Nigeria’s oil wealth. Abacha promised Mandela the men would not be executed but, shortly afterwards, hanged them.

Mandela, who heard the news at the Commonwealth heads of state conference in New Zealand was angered by Abacha’s betrayal and called for Nigeria’s expulsion from the organisation.

Although Nigeria was suspended for three years, Mandela found no support for his principled actions within Africa. His unilateral stand without recourse to the then Organisation for African Unity proved to be a greater sin than Abacha’s inhumanity. Mandela unwittingly helped to inform a view in Africa that newly democratic South Africa saw itself as an exception on the continent.

But Mandela never lost his early fondness for Nigeria. He liked to share his memories of visits there and occasionally used to pop over the road to visit the then Nigerian consul-general, his Houghton neighbour, to talk about African affairs over tea.

Given the long and rich history, a lot more could be done by nationals of both countries to realise the potential of this important relationship. It would be a fitting tribute to Mandela.

• Games is CEO of Africa @ Work, an advisory and consulting company, and honorary CEO of the South Africa-Nigeria Chamber of Commerce.

THE traffic jams in Lagos are legendary. In the hours spent on the city’s roads, there is plenty of time to view the array of cars of every imaginable make and age that clutter the roads.

Nigeria is crammed with imported cars from every region of the world. The government has estimated the import bill to be more than R30bn a year. Unlike in South Africa, nationals are allowed to import used cars that are up to 15 years old, contributing to the congestion that is a hallmark of Nigerian cities, not just Lagos. But despite the huge market and obvious demand, there are few automotive manufacturing or assembly operations.

In the 1970s, the government tried to build a car industry. It formed partnerships with companies including Peugeot, Volkswagen, Fiat and Daimler-Benz. By the 1980s, most of the companies had stopped operating because of poor domestic patronage, low capacity utilisation, a high-cost environment and a failure to implement the automotive policy of the time. Only two survive, running at a fraction of capacity.

Nigerians then turned to imports, including used cars. Spare parts companies went out of business because of high costs and competition from smuggled imports.

Dunlop and Michelin had plants in Nigeria. They, too, are gone.

Now Nigeria wants to reignite its motor industry and get the sector to underpin a new industrial era. There is undoubtedly a market and the government claims it has identified the pitfalls of past attempts and will address them. The 10-year automotive policy launched a few weeks ago includes a phased ban on used cars and high tariffs to discourage imports.

Many of Nigeria’s rich and powerful have built good businesses on the failed car industry and Nigerians’ reliance on imports. They have, unsurprisingly, strongly objected to the new policy. Emerging indigenous car companies are already enjoying government patronage.

The failure to break the business cartels that import everything from generators (a $1bn industry) to foodstuffs has been a brake on economic reform and industrialisation. But Trade Minister Olusegun Aganga hopes to change all that through direct policy intervention, starting with the motor industry. He has drawn on the experiences of India and Brazil and also South Africa in devising the policy.

During the Nigerian state visit to South Africa in May, a memorandum of understanding was signed to secure South Africa’s input into the policy, including technical assistance and sharing information about South Africa’s own policies.

Aganga has also approached global car manufacturers, including South African-based Nissan and Toyota, to persuade them to set up in Nigeria, a country to which they export vehicles at present. Nissan, in its alliance with France’s Renault, has already pronounced its interest in starting vehicle assembly of semi-knocked-down kits with its exclusive Nigerian distributor and, in time, using its first-mover advantage to make the country an automotive African hub.

But the issue of government picking winners for economic development is controversial. In Nigeria, where industries targeted by previous governments for intervention have been costly failures, there is reason for caution. It will be a while before a critical mass of "made in Nigeria" cars is reached. Meanwhile, the price of imported cars will soar as the onerous tariff regime kicks in. There may also be negative unintended consequences in other areas of the economy.

There are many reasons industrialisation has not taken off in Nigeria. The biggest of these is the lack of political will to make deep structural changes to remove the inherited dysfunction embedded in the economy.

A more competitive operating environment, coupled with the size of Nigeria’s — and West Africa’s — underserved markets, should be enough incentive to get investment in industrial enterprises.

• Games is CE of Africa @ Work, a consulting and advisory company.

IS THE much-heralded East African Community (EAC) heading for troubled waters? Reports of Tanzania’s isolation from regional summits suggest something is afoot in this bloc that has been so praised for its success in breaking down trade and investment barriers.

The ascent of Uhuru Kenyatta as the president of the bloc’s most powerful member appears to have changed the dynamics of the region.

Under scrutiny because of his tussle with the International Criminal Court, Kenyatta seems determined to get things done in a hurry. Part of this is the fast-tracking of EAC commitments on a range of issues from infrastructure to trade barriers.

In the process, foot-dragging Tanzania and economically weak Burundi are getting left behind. Kenyatta, along with his Rwandan and Ugandan counterparts, has been holding regional summits without the presidents of the other bloc leaders. South Sudan, which has applied to join the EAC, is aligned to the Kenyatta triumvirate.

The original EAC, founded in 1976, failed after 10 years. It was a difficult time for the region, with Idi Amin in power in Uganda, Tanzania still in the grip of its socialist experiment and Kenya flexing its economic muscle in the strongly capitalist country. This time, the region is more cohesive with not just countries, but companies, thinking and acting regionally.

Kenya, Uganda and Rwanda, keen to fast-track integration, have spearheaded the formation of what they call the "coalition of the willing". Burundi and Tanzania have been left out of recent meetings at which a regional customs agreement was signed and at which talks about a new railway to link Kenya, Uganda and Rwanda took place. Tanzania and Burundi have also been excluded from agreement on a common tourist visa in East Africa.

Tanzania, in particular, is under fire for slowing down the pace of regional integration. It has often pleaded for longer integration timetables, and critics believe it is paying lip service to the EAC.

There also discontent with Tanzania’s cross-cutting membership of the Southern African Development Community (Sadc). This has long been seen as a loophole for South African goods to enter the EAC market at preferential tariffs. EAC leaders also took a dim view of Tanzania’s support for Sadc’s backing of the Congolese army’s recent military offensive against the rebels in eastern Democratic Republic of Congo.

Uganda and Rwanda were against military confrontation. They said it would escalate tension, with potential spillover into their territories.

Tanzania has since said it would not recognise any EAC agreements made by the other states from which it was excluded. But it has a lot to lose by a fallout with the region, given the historical interlocking of the economies.

It also has big infrastructure plans that need brisk regional trade to support their viability.

The EAC secretariat, based in Tanzania, has expressed concern about the rising hostility and is expected to address the problem at the next heads of state summit next week.

Tanzania may be eventually pushed to do something it has been under pressure to do for a long time — make a choice. If it is to be included in the ambitious plans of EAC countries, it needs to keep up and not be distracted by its obligations to Sadc. Or, it needs to throw in its lot with Sadc, which may mean losing out on the benefits of increasing co-operation in the EAC.

There is a bigger issue here. If the EAC, with its relatively small membership and regional interconnectedness, cannot bring all parties on board, what chance of success does the much larger tripartite free-trade plan — incorporating Sadc, the EAC and the Common Market for Eastern and Southern Africa — have?

The EAC is a microcosm of the politicians’ ambitious dream of economic union from Cape to Cairo.

It is a dream that is likely to be a long time coming.

• Games is CEO of Africa @ Work, an advisory and consulting company.

THE day Woolworths announced it was pulling out of Nigeria, I met a Nigerian colleague at a coffee shop in Sandton City, within sight of the chain’s shop there.

A former resident of South Africa, he knows the brand well and planned to shop there after our meeting to buy clothes for his children back in Lagos. He said he had never visited either of the two Woolworths outlets in his home town, despite the fact one was not far from his house.

A banking executive, he represents the middle class in the rest of Africa that South African retailers are relying on to boost their sales. But he said Woolworths’s marketing was poor in Lagos, despite being a new and unfamiliar brand to most Nigerians, and he had simply forgotten they were there. Because South Africa’s retailers are household names at home, there seems to be an expectation that Africans elsewhere will be familiar with the brands. This is not the case.

Wealthy Nigerians travel extensively, but their favoured shopping haunts are in the UK and US. As a result, they are more familiar with the down-market Woolworths brand in the UK that went out of business a few years ago than with the more up-market brand so beloved of South Africans.

I have also been told that the layout and ambience of Woolworths shops, well accepted at home, led Nigerians to believe the goods would be expensive. Cost is an issue with this much-trumpeted new emerging middle class, the bulk of which is at the more unstable end of the definition.

Although incomes are expected to grow over the next decade, many consumers are battling with high personal debt, rising electricity and transport prices and chronic unemployment.

Nigerian consumers are brand savvy. If they are going to pay higher prices for goods, they want global brands they recognise; brands that tap into their aspirations. Woolworths, and some of our other clothing retailers, simply do not fit into that category. That makes their marketing job more difficult — but not impossible.

A challenge for retailers is the lack of critical mass of malls. There are less than a dozen malls trading in Nigeria at present. This is not enough to change the mass of peoples’ entrenched shopping habits, particularly as these retail developments are far apart and inaccessible to many, particularly in the highly congested megacity of Lagos, where South African retailers are concentrated.

Shopping is done mostly in covered and uncovered outdoor markets, ad hoc stalls along the streets and small two-or three-storey shopping centres with a multiplicity of small shops, commonly known as plazas.

As the number of malls increases (there are about a dozen under development), more people will patronise them and their popularity will increase.

Nigeria is a tough operating environment and it is necessary to learn to work within its challenges in order to succeed. Despite significant reform over the past decade, it is still structurally inefficient and that is unlikely to change soon.

Companies investing there have to understand the minutiae not just of the risks and challenges but of the market, the culture and the consumers. Models have to be constantly fine-tuned and adapted.

There are myriad other challenges in Nigeria and the government has been slow to tackle key issues affecting investors.

But it is glib to blame a country for a company’s failure to make an investment work rather than the firm’s own strategies, unsuitable models, poor choice of partners and so on.

Woolworths’s withdrawal from Nigeria, and that of Nando’s, Telkom and others, should not be interpreted as a story only about Nigeria’s challenges but also about specific problems created by the choices the firms themselves made.

Shoprite has "paid its school fees" but it has also enjoyed some of its highest turnover in Africa in its Nigerian stores. Mr Price reported its second-best opening turnover in the company’s history when it launched in the Ikeja City Mall in Lagos (down the concourse from Woolworths). The MTN story in Nigeria is legendary.

Other South African retailers are coming into the market, such as Edcon, with food franchises right behind them. Despite the slow growth of formal retail in Nigeria, South African brands still have early-mover advantage as the international chains explore low-hanging fruit in other regions. The trick is to have the patience and deep pockets to make that work for them.

• Games is CEO of consulting company Africa @ Work.

IN MY early days of trawling Africa for information many years ago, I spoke to a wise old hand — an international bureaucrat who had travelled Africa while working for the World Bank — about why it was proving to be so difficult to improve the business environment.

It took only political will, not money, I argued, to change regulations to make it much easier to do business. He laughed at my naivety and said political will was a much bigger problem than money would ever be. Any change to business regulations, or the removal of other impediments to business, usually meant someone had to give up some power, thereby reducing their relevance in the system.

Change in a bureaucracy, he said, was viewed as a zero-sum game. To make it happen, someone would win and someone would lose. Those who thought they might be the losers did everything in their power to ensure the change did not happen. For example, however busy and unavailable they might be, senior officials are unlikely to delegate their signing powers to a lower level, which means nothing can move forward until the relevant official has time to sign things off.

A lack of vision by political leaders meant the status quo remained.

Looking at changes to the African rankings in the World Bank’s Doing Business index over the years, it is remarkable how few changes have actually been made in Africa, with regard to the 10 indicators the index tracks. This is especially noticeable in the poorest countries, which most need to improve their regulatory and operating environments.

The bank’s press releases hail nations for making even one regulatory reform in the period under review. But given the scale of the problem, in so many African countries making just one reform a year is better than none, but it is a feeble and inadequate response to significant challenges.

The index tracks 10 indicator sets: starting a business; dealing with construction permits; getting electricity; registering property; paying taxes; trading across borders; getting credit; protecting investors; enforcing contracts; and resolving insolvency.

The 11th Doing Business report, which came out last week, said 66% of African countries enacted at least one reform last year with regard to the indicator sets — double the number that did so in 2005 (33%). This does show a definite trend of reform.

It is easy to be cynical about the proliferation of indices that have emerged in recent years. Those at the bottom of such lists do not seem to care about their shameful rankings.

But these indices do nevertheless provide some indicator of performance against benchmarks and countries can use them to assess their relative performance and to guide them in making reforms.

This is the route chosen by Rwanda. It has been the best performer on the index in Africa since 2005. Last year, it implemented the most reforms in the region — in eight of the 10 areas tracked. It is no coincidence that it is also one of the top emerging market destinations for investor interest today, despite its small economy and landlocked position.

Nine other African countries are among the top 20 most improved in terms of business regulations since 2009: Benin, Burundi, Côte d’Ivoire, Ghana, Guinea-Bissau, Liberia, Sierra Leone and Togo. Most are postconflict states. But the countries that linger at the bottom of the index — Chad, the Central African Republic, Republic of Congo, Eritrea and the Democratic Republic of Congo — are among the least-developed countries in the world and they do not seem to mind being there, if their minor attempts at reform are an indicator.

Bureaucrats and officials in these and many other countries ensure that getting things done is more difficult than it needs to be, not easier. Their need to keep control of their official patch is ultimately much more important than improving the lives of their citizens.

• Games is CEO of Africa @ Work, an advisory and consulting company.

ANY move to improve air connections in Africa is to be welcomed. But it might be wise for South African Airways (SAA) to revisit the history books before it makes a decision about a proposed West African hub and engagement with the Nigerian government to build capacity for a yet-to-be-launched national carrier.

In the case of Nigeria, our national carrier has entered into one joint venture, which ended badly, and nearly entered a second partnership that was scuppered at the last minute.

In 2001, a one-year code-share arrangement was concluded between SAA and Nigeria Airways to operate the ailing Nigerian flag carrier’s routes from Lagos to New York, which it no longer had the capacity to service. Nigeria Airways received a block of seats on each flight, with SAA providing the aircraft and sharing passenger loads and marketing.

But just a few months into the deal, SAA pulled out, saying the arrangement was not working.

This not only meant the collapse of flights between Nigeria and the US, but one less flight between Lagos and Johannesburg. This reduced SAA’s weekly flights between Johannesburg and Lagos from three to two (the Nigerian carrier was unable to operate its South African slots but would not let SAA use them).

At the time of the New York deal, SAA, then headed by Coleman Andrews, an American, had an eye on a stake in Nigeria Airways. The Nigerian carrier was in intensive care with just two functional aircraft. But he believed SAA could capitalise on Nigeria’s lucrative — and mostly dormant — international routes.

However, just two years later, Nigeria Airways was liquidated.

Despite the acrimony around its premature withdrawal from the New York deal, in 2004, SAA was named the only bidder to become the technical partner for and 30% stakeholder in a new Nigerian national airline, Nigeria Eagle.

Nigerians strongly objected to the proposal, citing SAA’s inability to manage its own operation profitably and the fact it was government-owned.

They said it was tantamount to Nigeria ceding its aviation sovereignty to another nation — with particular unease about the fact that the other government involved was South Africa’s, given the perception that South African companies were trying to colonise the Nigerian economy.

The negotiations deadlocked over SAA’s refusal to guarantee Nigeria an option to buy a 10% stake in SAA if it was privatised. SAA was accused of being arrogant and exploitative.

The issue was divisive in an already difficult relationship.

At the 11th hour, Virgin Atlantic stepped in and won the bid to become a 49% partner in the new airline, renamed Virgin Nigeria.

Virgin exited the deal a few years later, accusing the Nigerian government of violating its contract.

Until a few months ago, there was no more talk of another Nigerian national airline. Arik Air, a privately owned Nigerian airline that bought Nigeria Airways’s assets for a song, took up the bilateral slots on the Johannesburg route, which it flies to this day.

Now, Nigeria’s aviation minister is said to be considering floating another national carrier — Nigeria One. The government has a dismal record, not just of running airlines but of even regulating the country’s private airlines. SAA’s involvement in a new state-run venture in the West African country may be a big success — but given the history, it would be wise to be cautious.

SAA has also had difficulties in other African initiatives. In 1995, it became the majority stakeholder in a new regional airline, Alliance Air, with the governments of Uganda and Tanzania. The two East African countries cited multiple disagreements with SAA and pulled out. By 2000, the airline no longer existed.

In the same year, SAA failed in its bid for a 49% stake in Uganda Airlines but was successful in its later bid for a similar stake in Air Tanzania, in 2002. The South Africans hoped to position Dar es Salaam as a regional hub. But the privatised airline lost money and there were disagreements about strategy. In 2006, Tanzania bought back SAA’s stake.

SAA needs to think carefully about its African strategy.

West Africa, in particular, is a tough operating environment. It is littered with failed airlines, most of them state-owned. Naivety in this regard could be costly for an airline with a lot to lose.

• Games is CEO of Africa @ Work, an advisory and consulting company.