American CEOs Should Stop Complaining About Uncertainty
This month, the chief executive officers of America's biggest companies went on a media blitz to decry the uncertainty caused by the fiscal cliff. In such uncertain times, they say, they are hesitant to invest in the US economy.
I departed Washington in the midst of these rumblings to attend a forum of Africa's leading CEOs. Here's a quick sample of the scheduled participants:
- Aliko Dangote, CEO of Dangote Cement. He's building a $2 billion fertilizer plant in his native Nigeria. He recently announced the next two growth markets for sizeable investment by his group are Iraq and Myanmar.
- Mo Ibrahim, founding CEO of Celtel. In 1998, Mo was running a highly profitable and stable engineering firm serving European mobile operators. He sold that company to do what no European operator would (though he begged them): Start an African cell phone company. Mo sold Celtel 10 years later for $3.4 billion.
- Issad Ribrab, CEO of Cevital. His Algeria-based steel and agro-processing business enjoys $3 billion in turnover. In 1995, Issad's corporate assets were nationalized by a government hostile to business, and to him personally. He had to flee the country for a year and start over. Ribrab has returned to Algeria to lead Cevital again and that government is now gone, replaced by a democratically elected one. In the last year he has launched Algeria's most significant cross-border investment initiatives in two countries: Ivory Coast and Rwanda.
Without comment on the perils of the fiscal cliff, I find it difficult to empathize with CEOs who gnash their teeth over uncertainty in the US.
The US economy has among the most fluid capital markets, the largest investment base, the most stable political system and the broadest base of consumers of any country in the world. As Jamie Dimon, CEO of JPMorgan Chase, said recently, anyone who is dealt the American economy is holding a straight flush.
In that context, US CEOs might take a lesson from frontier market business leaders like Dangote, Ibrahim and Ribrab. They distinguish short term political winds from long term growth trends, and are prepared to deploy capital based on that distinction. When founding Celtel, Mo Ibrahim knew that demand for connectivity and the ability to pay for it far outstripped demand across Africa. Dangote's gambit in Iraq and Mayanmar is based on growth demographics and logistical challenges reminiscent of home. Ribrab has navigated through turbulent waters before, as have his fellow Algerians. He knows Rwandans and Ivorians will not tolerate a prolonged return to instability now that they have seen sustained growth and food security are within reach.
The US economy has unquestionable long-term needs, including infrastructure, preventive care, and high skill vocational training, to name just three. To be sure, the rate of return of any specific investment is uncertain, and made more so because of government delay. However, deferring investment until that level of certainty is achieved seems the wrong posture for the times to come. The commercial landscape beyond the fiscal cliff is neither well-mapped nor static. Companies will need to base their strategic plans on long-term likelihoods while uncertainty in the short term prevails with one exception — that government will provide less of everything, including policy and certainty. It looks a lot like a frontier market.
For Ribrab, Dangote, Ibrahim and many other executives in frontier markets, uncertainty is not the inhibitor of opportunity. It is the condition in which opportunity arises. That is a reasonable perspective to look for in American CEOs as well.