Winning as one. Why Powertech consolidated its African operations
How we made it in Africa talks to Powertech Africa’s CEO Ronnie Krüger about why the company decided to consolidate its various divisions into one offering.
Powertech is a South African-based supplier of electronic and electrical equipment with a number of individual divisions under its wing. While many of these subsidiaries have been operating in Africa for some time, Powertech recognised the need to consolidate its operations on the continent. This, according to Ronnie Krüger, the CEO of Powertech Africa, has been one of the most significant things the company has done to grow its business in Africa over the past year.
“We used to have 17 companies going into Africa on their own, without one talking to the other. In other words Aberdare Cables would go in and then [Powertech] Transformers would go in and they were selling their individual products. Now the opportunity in Africa is that there are a lot of solution opportunities, for example building entire substations. We are now going in to sell the cables, the transformers, the switchgear, and we design substations and we implement it,” said Krüger. “It’s the consolidation of the product and putting the service together as a total offering.”
The Powertech Africa division, which opened in March 2012, trades in Africa on behalf of the other Powertech companies. Last week, Krüger told How we made it in Africa a bit about the African markets that Powertech is excelling in, with Mozambique and Ghana standing out because of the relationships the company has within these countries. “We have a very good agent in Ghana. We have a very good relationship with ECG, which is the utility there, and we are hoping to be awarded a fairly substantial contract there. Touch wood.”
The company’s very nature requires it to enter into business partnerships. According to Krüger, the most important things one needs to consider in Africa when partnering with an outsider is the company’s reputation; their credibility in the country; their ability to give you business; and their integrity. “The integrity part is huge in Africa,” he added. “So somebody that you can trust and somebody that has a reputation that is credible.”
Like other companies operating on the continent, Powertech faces various risks and challenges in their African operations. These troubles include a shortage of skills, finding the right partners, and corruption. However, while Krüger has had to deal with a “few political issues” in the past, he believes the experience has given him a better understanding into doing business on the continent.
“One of the things that I have learnt in Africa is that deals don’t get done on handshakes. You really have to do your paperwork properly,” he advised. “You need to make sure the deal is what the deal is and you just have to cross the t’s and dot the i’s.”
Since taking on the position a year ago, Krüger has most enjoyed travelling to various African countries and meeting different people and experiencing diverse cultures. “Probably the most interesting place that I travelled to was Tunisia, because it’s a combination of Africa and the Middle East. So that’s certainly been the most interesting.”
Krüger joined Powertech at the beginning of 2008 as the group executive for supply chain management after about 25 years in mainly the pharmaceutical and FMCG sectors. Now, in his current position, Krüger believes that all CEOs require integrity, the ability to develop people, and vision to survive in Africa. He also highlighted the importance of strategic thinking when looking at Africa.“You can’t decide to do the shotgun approach. One has to kind of strategise.”
His business experience in Africa over the past ten years has altered some of his perceptions of the continent. “The perception that Africans don’t know what they are doing, and they are backward, and that it’s, you know, third world – that’s changed. Mozambique is a prime example of a country that I think has a good chance of being the place to be in the next five years. Nigeria, without a doubt, will overtake South Africa as the leading country in Africa, because they work hard at it and they’ve got over their political issues. So for me that has been an eye-opener.”
“Coming from South Africa and having dealt with Africa in the past, I think Africa has changed over the last ten years. So before, when I was in the pharmaceutical industry, and now – it’s a very different Africa,” he added. “Mozambique has come a long way; Nigeria has come a long way; whereas ten years ago those were countries that you wouldn’t particularly want to go do business in.”
Krüger said he is well aware of the opportunities to succeed on the continent and admires supermarket group Shoprite’s success in Africa, which he admits was a bit of a surprise for him. “I went to the first store opening of Shoprite in Lusaka, many years ago, and I really didn’t think they would make it. And they have certainly proved me wrong.”