South African Pieter de Wet has been living in Lagos, Nigeria for the past nine months. He works for First Guarantee Pension Limited as research analyst focussing on Africa.
To learn about Africa, and in his case Nigeria, you have to be on the ground, says De Wet. “You can’t sit in Cape Town in your ivory tower and try and understand Africa. The first world is easy to analyse from there, but not Africa.”
“You have to get to know the culture,” he says. “For instance, most African companies pay their dividends out all the time. This is a very short term view and results in a vicious cycle. People don’t want to invest anymore if they don’t receive dividends, but this means there is nothing left to invest back into the company.”
“In 2004 the Nigerian pension industry was basically resurrected from the dead and a few licences were granted to Pension Fund Administrators (PFAs). The new legislation has done a lot for the industry, but they are still far behind South Africa with regards to the sophistication of the market,” he says.
Despite the opportunities in Africa, major obstacles remain to doing business on the continent. De Wet says that he will schedule meetings for the day, lasting only one or two hours, but then end up spending three hours in the traffic just getting there and back. “I have never seen anything like it in my life,” he says.
“Between entering the airport and getting on a plane I get bribed an average of three times. Everyone wants something, it has become ingrained. It is a big system and change is not going to happen overnight,” he says.
Another issue is power supply. “We get about 10 hours’ of power from the grid, the rest of the time we use generators. The pollution and noise are sometimes unbearable. About 45% of a company’s revenue is spent on power,” he says.
However, he remains positive about Africa. “Politically it is beginning to stabilise, which means it will draw more investors. For instance Shoprite can now build a shopping centre, without fear that it will be taken away,” he explains.
Generalising about Africa remains a big mistake. “People blindly think that Africa is the new China, but this is naïve. Africa is a continent, some parts are awesome and others are not.”
“We are now setting up a private equity fund, which will invest in shopping malls in Nigeria, worth around $75 million to $100 million. This is a revolutionary concept in Nigeria,” he says.
While De Wet says he misses fresh fruit and vegetables and dining out at a reasonable price, one thing he does not miss is South Africa’s pessimism.
“People do not realise how advanced South Africa’s infrastructure and systems are in comparison to the rest of Africa. Our media has made us a negative bunch that keeps thinking it is the end times and that South Africa will become Zimbabwe or Nigeria,” he says.
“The media in Nigeria is a lot more positive, maybe because the country has come from a more desperate place,” he says. “In South Africa the media is extremely negative, we hardly see any news about projects that are successful, somewhere something must be going right? I can almost understand the South African government’s animosity towards the media.”
“All the feel good stories are about nature or some silly funny story. The South African media is terrible in that regard. The afro-pessimism is apparent in almost everything they write. Everything is not as black and white as they make it out to be,” he explains.