Infotech's Mufuruki on African Entrepreneurship
Silicon Valley entrepreneurs may think they have it rough. But their biggest difficulties, even during a downturn, are trifles compared with the challenges faced by Ali A. Mufuruki when he launched an info-tech services business in his native Tanzania in 1989. The country was still in the grip of socialism and computers were officially banned.
Now Mufuruki is chief executive of Infotech Investment Group, a holding company for businesses that include the IT services company, an advertising agency, and subsidiaries focusing on real estate, strategy consulting, retailing, and private equity investing. Mufuruki is a strong advocate of the importance of improved leadership in both African governments and private industry. He answered via e-mail questions put to him by BusinessWeek Senior Writer Steve Hamm. An edited version of their exchange follows:
What were the main challenges you faced when you created Infotech Investments?
I decided to start a business in Tanzania in 1989, when my country was still officially a socialist state. The private sector had been all but run into the ground by a quarter-century of a Tanzanian brand of socialism.
Computers were officially banned by the state and here I was trying to set up an IT firm. I had to get a permit from a government agency for every PC I imported into the country and yet the government was my biggest—if not the only—customer at the time.
There was no private capital, no credit, no talent, no family support. And to make things worse, my training as a mechanical engineer with very little practical experience did not prepare me enough for what turned out to be a very difficult and unpredictable business environment.
Going into business was a risky move in many ways, but I had a strong sense that change was on the horizon and opportunities would eventually come.
What are the biggest challenges you face today?
Capital remains elusive even today, especially for startups. Bank credit is expensive and available only to well-established businesses with strong balance sheets. Talent for almost all professions remains in short supply and—despite the fact that the Tanzanian government has embraced capitalism for the past 15 years—doing business generally remains tough.
What are the principal barriers to entrepreneurship in sub-Saharan Africa?
The biggest barrier is access to capital. Alan Patricof, an American venture capital pioneer, once told me how shocked he was to find that Africa is probably the only place on earth where startups are funded by debt and at interest rates as high as 20%. And I was shocked that he was shocked because that is the only reality I know.
Having said that, things are slowly changing for the better. A solid foundation for a private sector-led economy is being built. The next generation of business leaders will have an easier time.
What needs to be done to overcome the barriers?
I can answer this question by looking back at how far we have come in the last two decades. Socialism is gone and almost forgotten. Tanzania is slowly but surely becoming an attractive investment destination. The policy environment has greatly improved and there are strong signs that things will get better, not worse.
This has come as a result of significant improvements in leadership. Understanding how a globalized world works helps and it is going to take strong, wise, and enlightened leadership to sustain the successes we have achieved as a country.
You have written about the crisis of leadership in Africa. What are the roots of the crisis and how can it best be dealt with?
The roots of this crisis lie in the tragic acceptance by successive generations of African leaders—and, sadly, by millions of ordinary Africans—of a notion that we are victims of a particularly traumatizing and dehumanizing experience of slavery and colonialism.
They believe that this experience has forever robbed us of our ability to be whole again, so we're deserving forever the sympathy and generosity of the rest of the world as a substitute for working to support our own development efforts.
I recognize the enormity of the physical and psychological scars that all Africans must bear as a result of these unfortunate events. I, however, do not accept that as a people we are not able to move on and build a better life for ourselves, using our own resources and labor.
The Chinese, the Indians, the Jews, the Vietnamese, and many more were enslaved, massacred, and colonized—some in ways infinitely more horrible than any African can claim. Yet their past sufferings have made them stronger. Africa's problems can be attributed almost exclusively to a lack or failure of leadership.
Dambisa Moyo recently published her book, Dead Aid, a critique of aid programs and government leadership in Africa. Do you agree with her that a deadline or cutoff of government-to-government aid is needed to force a transformation in governance and economic development in Africa?
I fully agree with Moyo and the timing of her book could not have been better, coming just as the global financial crisis was unfolding, forcing many people to reassess the future of the aid business.
I believe it is O.K. to go to the bank—or to a friendly government, for that matter—if what you are looking for is money. But you cannot turn to the bank or a friendly government for business ideas or strategies to develop a country.
Africa's poor development record can be explained in a large part by the fact that we allowed our bankers and donors to be at once the source of capital, our development ideas, and our development strategies. There is no way that can end well. Africa cannot and should not outsource its own development work.
When and why did you set up the Africa Leadership Initiative?
The Africa Leadership Initiative (ALI) was set up in 2001. It was a response to what we saw then—as we still do today—as the leadership crisis facing the African continent. ALI seeks to support the emergence of a new generation of African leaders who are effective, enlightened, ethical, values-based, and ready to lead in a globalized world.
What has the initiative accomplished?
In eight short years since its founding, ALI has produced more than 200 ALI Fellows in eight African countries [Tanzania, Kenya, Uganda, Rwanda, Mozambique, South Africa, Nigeria, Ghana, and Zimbabwe]. Most of our fellows are leading businesses in the private sector, but we also have some who are holding senior positions in the governments of their respective countries, bringing their newly acquired leadership skills and styles to bear on the events unfolding in their countries as we speak.
It has been the most rewarding experience of my life.