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October28

Corporate values sans frontières

A values-driven pull-out

SOON after pulling the retailer out of Nigeria in 2013, Woolworths CEO Ian Moir told the Sunday Times that “for a values-driven business, Nigeria is a hard place to operate in”. This simple, yet profound, and far-reaching declaration was hidden in a long piece written by the Sunday paper’s Adele Shevel, whose interview touched on several aspects of Woolworths’ decision to stage a second pull-out from Nigeria.

A man walks past a MTN notice board in Lagos, on October 27, 2015.  Nigeria's telecommunications regulator has fined South African mobile giant MTN $5.2 billion for missing a deadline to disconnect unregistered SIM cards, the company announced on Monday. The penalty saw shares in Africa's largest telecommunications company crash more than 12 percent to 167 rand on the Johannesburg Stock Exchange, the biggest fall the firm has suffered in a day since November 1998. AFP PHOTO/PIUS UTOMI EKPEI

A man walks past a MTN notice board in Lagos, on October 27, 2015. Nigeria’s telecommunications regulator has fined South African mobile giant MTN $5.2 billion for missing a deadline to disconnect unregistered SIM cards, the company announced on Monday. The penalty saw shares in Africa’s largest telecommunications company crash more than 12 percent to 167 rand on the Johannesburg Stock Exchange, the biggest fall the firm has suffered in a day since November 1998. AFP PHOTO/PIUS UTOMI EKPEI

But many people seem to have missed that one telling sentence appearing towards the end of Shevel’s article. Much of the brouhaha that followed the retailer’s withdrawal from what some describe as Africa’s biggest economy was emotional because some still considered that country a sine qua non (an indispensable condition) for anyone doing business in Africa.

The critics lambasted the retailer of not knowing how to navigate African markets – as if Nigeria represented all of Africa – and of having failed to plan properly before entering this populous country where others had made it.

Scant attention was paid to Woolworths’ concerns about costs and operating conditions in Nigeria. Like it or hate it, Woolworths takes its corporate values very seriously. It invests millions every year in ensuring that its employees and entire value chain adhere to them, as these values underpin reputation, stakeholder trust and, by extension, share value.

 

Nigeria can be tough

Contrasting this to another experience, a few years earlier, I had accompanied a major French construction company I was consulting to on a visit to Lagos and Abuja, Nigeria, where we had been invited to negotiate a facilities management contract for some recently completed public infrastructure. It was made clear to our team that 12% of the contract value would be paid into a stipulated bank account to facilitate discussions.

Upon sitting down to commence the discussions, our host promptly announced that the 12% would, in fact, be 14%, but that separate banking details would be provided for the transfer of the additional 2%; neither of us had seen this coming.

While we were all looking around the room in total amazement, no, in total shock, with question marks on the faces of all six of us, the host proceeded by stretching out his arms and suggesting that we hold hands and pray that everything goes right!

Needless to say, our team leader felt too cornered to protest. After a little discussion amongst ourselves, in French, we resolved that we had come a long way, literally and figuratively, to jeopardise the process at that stage. On top of that, our principals expected us to return to Johannesburg and Paris, respectively, with a signed contract, and that is what we did.

Upon arrival at OR Tambo International a few days later, still thinking about what happened back in that negotiating room and, later in a market place when we sought to exchange American dollars for local currency – a discussion for another column – I knelt down and kissed the ground, thankful that I was from this country.

 

The scram for Africa should not be devoid of values

We live in an era of digital and social media, where online is invasive and increasingly personal. It follows us from boardroom to bedroom to bathroom and to wherever else we find ourselves.

Having taken advantage of opportunities to create presence in markets beyond the Limpopo River since the dawn of our democracy, South African businesses need to note that the values they preach in South Africa, where stakeholder vigilance is generally more robust, have to be replicated in other African markets.

Whatever of their corporate conduct gets covered in foreign media will make it into South African media in no time.

 

MTN in trouble

Having failed to adhere to Nigeria’s equivalent of the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA), despite other service providers having done so as required, MTN finds itself on the wrong side of the law in Nigeria.

That country’s Communications Commission (NCC) is now breathing into its neck, the share price has already shed more than 10% of its value, and the network provider faces up to $5.2bn (R70.56bn) in fines.

With Nigeria being MTN’s biggest profit contributor, generating a third of the group’s total revenue, and despite Nigeria being the market that it is, MTN has to ask itself if failure to operate within the confines of the law is a risk worth taking or not; irrespective of whether the failure was an administrative failure on its part or a deliberate intend to maximise profits at whatever costs.

  • Posted by donvalley
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