Currents:Book Review—Contrasting Indiaand Africa: Entrepreneurial Experiencesand Prospects GILL IAN RICE

Nath, Kamal. India’s Century. McGraw-Hill, 2008.230 pp.ISBN: 978-0-07-149729-9 (hardcover) $27.95.

Sardanis, Andrew. A Venture in Africa: The Chal-lenges of African Business. I. B. Tauris & Co. Ltd.,2007. 320 pp.ISBN: 978-1-84-511288-2 (hardcover) $45.00

Tata Motors, in January 2008, unveiled the world’scheapest automobile, the Tata Nano, which will sellfor 100,000 rupees, or $2,500. Described by Tata’schairman, Ratan Tata, as a safe, affordable and all-weather form of transport, the car is intended to be“a people’s car,” designed to meet all safety stan-dards and emissions laws and accessible to all. Per-haps the Tata Nano is a symbol of jugaad, a Hinduword with pan-Indian usage, impossible to trans-late, but which Kamal Nath explains is the abilityto manage creatively, and to make do with quick-fixsolutions. While jugaad can refer to the way trucktires beyond retreading were used on the wheels ofbullock carts, and then became the raw material forrubber sandals, jugaad is also at the heart of India’sentrepreneurial spirit, its innovativeness, and itsability to assimilate ideas and technologies. As Indiacontinues on a growth trajectory, global companieslike GM and Renault-Nissan need to monitor care-fully the progress of competitors like Tata Motors inthe emerging economies. GM is examining opportu-nities for car production in Africa; Renault-Nissan iscooperating with Bajaj, the Indian motorcycle man-ufacturer, to develop a car that would compete with

the Nano and also has a joint venture with Mahin-dra to manufacture the low-cost Logan car in India.

India is now the fourth-largest economy in pur-chasing power parity terms, after the United States,Japan, and China. What contributes to India’s eco-nomic success and what does this mean for globalexecutives? Contrast India’s progress with most ofsub-Saharan Africa’s struggles. What can be learnedfrom such a comparison? Kamal Nath, a long-timemember of India’s Congress Party and India’s Min-ister of Commerce and Industry, examines his coun-try’s economic and political history over his lifetimein the book, India’s Century. Over a similar timeperiod, in A Venture in Africa, Andrew Sardanis—a Cyprus-born immigrant to Zambia and long-timeAfrican resident and business leader—gives a per-spective of Africa based on his business travel ex-periences, close relationships with African leaders,and the gradual demise of his enterprise. Both au-thors point to the value of democracy for economicprogress.

Nath observes that India is one of the very few newlyindependent postwar colonies to have remaineddemocratic. There is simply no other way, he argues,of keeping such a vast, diverse, and enormously var-ied nation together. Although there is sometimes tur-bulence in the society, he says there is a sense oftrust and credibility associated with “Brand India.”And, he adds, one cannot comprehend India’sgrowth without linking its economic achievementto its democracy and pluralism. Democracy makes

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Indians of all colors, castes, religious affiliations, ed-ucational backgrounds, and income profiles, equalin at least one respect. In 1997, India elected a Dalit(someone from the traditionally dispossessed castegroups), as president. K. R. Narayanan was borninto a humble family, studied on scholarships, androse to become an academic and diplomat throughsheer merit. Mahatma Gandhi and JawaharlalNehru developed a unique interpretation of secular-ism. In the West, secularism is generally perceivedto be anti-religion. In India, secularism is interpretedas equal respect, and complete freedom, for all reli-gions. When discussing the personality of his coun-try, Nath suggests that other nations tend to trusta country that does not tell its people what to do,what to read, where to invest, and how to live andwork. Indians have a relaxed sense of self, whichis reflected in the country’s “brand.” Most of thetime, the word “India” does not evoke instinctivehostility, fear, anger, or misgivings.

The rise of India did not stem from any outsideaid. As Nath notes, several countries, particularly inAfrica, that have been among the largest recipientsof aid from the West, are still struggling economi-cally. The tone of Andrew Sardanis’s book is bitter.He writes: “Everyone has been meddling in Africa.And everybody has a formula for salvation. In theold days salvation was the promised ‘protection’ ofone European empire or another and the Christiangospel. Nowadays it is more of the same, but forEuropean empires read ‘Western democracies’ andfor the Christian gospel, read free markets.” Foreigninvestment should ideally be a complement to localenterprise. In this way, since 1991, India has suc-cessfully improved its international competitiveness.Both Boeing and Airbus have recently moved somecritical functions to India: the designing of next-generation cockpits and systems to prevent midaircollisions. GE has employees in India working in di-verse fields, from health care, consumer finance, andmedia to airplane engines. Microsoft launched itsthird research center in India in 2005. The twenty-first century, Nath argues, is destined to be India’s.

In African countries, the challenge is that local en-terprise has not developed sufficiently to generatesuch projects and has not expanded enough in or-der to attract the right kind of foreign investment.Rather, Sardanis argues that, in Africa, foreign in-vestment will continue to pursue its own goals onits own terms and will continue to delay the emer-gence of local enterprise. Sardanis’s book docu-ments the rise and fall of an African conglomer-ate he founded in 1971 and led for 25 years. Hisindustrial and banking divisions (the ITM groupand Meridien BIAO, respectively) conducted busi-ness in some 30 countries. His goal was, and re-mains, to pioneer the development of African enter-prise, as he believes that indigenous enterprise mustbecome a major factor in African economies beforereal progress can be made in emancipation, bothpolitical and economic. Sardanis stressed local man-agement in Liberia, Cameroon, Malawi, Zambia,and other countries where he invested, in order toachieve widespread penetration of each market andgreater efficiency. His local banks focused on themass African market—local businesspeople, smallcontractors, those who had never had bank accountsbefore—potential customers who were ignored bythe “colonial banks” (his expression for banks suchas Barclays and Standard Chartered), which servedthe multinational companies and the settler busi-ness sector. In Zambia, the Meridien BIAO bankgained market share to become the second bank,ahead of Barclays Bank, through numerous inno-vations for the local market; one in particular wasan electronic smart card, referred to by The Timesof London as “the smart card that is leaping aheadof western banking.” Another innovation was a di-rect payments system within Africa, eliminating theneed for traders to go through London or Paris. Sar-danis maintains that for African private enterpriseto develop, it is necessary to have an African net-work that understands Africa’s needs and is ready totake risks on the indigenous people of Africa, some-thing the major international banks that operate inAfrica do not do and will not be prepared to do foryears to come, as they are geared instead toward

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multinational enterprise. Because Sardanis’s bank-ing operations resisted the banking norms in Africanmarkets, he details how the banks that controlled themarket used their power and governmental connec-tions to hasten the failure of Meridien BIAO.

According to Sardanis, large multinationals dictatetheir own terms—such as the mining companies inZambia, where the biggest casualty is the local laborforce. For example, Sardanis relates how, in orderto avoid paying for benefit accumulation, compa-nies dismiss workers every six months and re-employthem the next day in the same job. There have beenprotests and strikes pertaining to this issue, but withso much unemployment they have been ineffective.The government usually sides with the investors.

Significantly, in the context of a comparison be-tween Africa and India, Sardanis observes that inthe African development process, donors and mul-tilateral institutions concentrate on the economicfront, and their ideas revolve around central pol-icy issues and macroeconomic policies; these poli-cies ignore the people. Some decisions taken in theinterests of macroeconomic stability have disastrousshort-term and long-term effects on people’s lives.Sardanis gives detail about the privatization of themining industry in Zambia in support of his view.Having natural resources does not necessarily makea nation entrepreneurial. As Nath explains, havinga “resource surfeit” can result in misery for largesegments of the population, as Africans have ex-perienced. While big powers cornered their assets,writes Nath, most of the population remained miredin poverty. Even in South Africa, one of the moresuccessful African economies, Sardanis writes thatthe business scene is still overwhelmingly white, notonly in ownership but in executive and middle-levelemployment. As of 2005, blacks still formed lessthan 10 percent of senior management.

Sardanis’s business interests included various vehi-cle franchises; Caterpillar dealerships; and indus-trial chemicals, engineering, pharmaceuticals, toi-

letries, and textiles firms. Different chapters of hisbook deal with different countries such as Angola,Sierra Leone, Zimbabwe, and Equatorial Guinea.Sardanis’s tales of business dealings entangled withcorruption, rampant inflation and currency deval-uation, civil strife, and war, and his meetings withnumerous dictators make for fascinating reading. Heprovides careful detail of the offices, surroundings,people, and their often-colorful attire. Even thoughhis pan-African enterprise folded in the late 1990s,there is much to learn from his experience. Corrup-tion is often cited as the reason for slow economicprogress in Africa; yet, as Sardanis points out, cor-ruption is equally rampant in Southeast Asia, whereeconomies are thriving. For just one piece of evi-dence that civil strife continues and provides politi-cal risks for business, one need look no further thanrecent events in Kenya. Sardanis details the businesslosses resulting from political risks such as coupsand civil wars. In the period covered by his book,political problems in some countries, like Malawi,brought the economies to a standstill.

There are no “do” and “don’t” formulas, based onSardanis’s experience. Rather, executives should bewatchful and informed, have their wits about them,take a long-term view, and should listen to localswhose understanding of events will always be bet-ter. Local people have an intuitive knowledge oftheir marketplace, which foreigners need decades toabsorb, because of their different cultural lives andbecause expatriates tend to be insulated from localrealities. One of the reasons for the failure of hisfinancial services business, Sardanis indicates, wasthat he relied on Western involvement and thoughthe needed Western support and Western capital.With hindsight, because Western capital is alwayswary of Africa, he believes he should have kept hisbanking business purely African. He is convincedthat the best way for African societies to grow isfrom the bottom up. Based on Nath’s experience,this is the way that India is developing. It is theless well off rather than the rich who are now dic-tating the terms of business. In every industry and

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service, the growth impetus is coming from below.Just as with small cars and the Tata Nano, one chal-lenge the entrepreneur faces is how to penetrate alarge market of first-time users. There are additionalchallenges. India is not without problems and evena politician writing about his country’s success mustacknowledge these. Among the largest in the world,India’s gross fiscal deficit for the central and stategovernments combined, was 6.4 percent of the GDPin 2006–2007. The price a nation pays for highdeficits is a high cost of capital, which then im-pedes growth. India still needs to eradicate substan-tial poverty and to improve its infrastructure: roads,energy, and access to public health and clean water.

Sardanis shares considerable detail about the growthand subsequent demise of the African conglomeratehe ran. It is obvious that because he was subject tosome bad press during his African venture, he writesto document his own detailed version of events, sup-ported by anecdotal information and the extracts ofletters, e-mails, and minutes of meetings. Neverthe-less, his book is an important record of an Africanbusiness career, significant for executives seeking tosucceed in Africa, and especially for those who, feel-ing a sense of social responsibility, sincerely wish tocontribute to economic growth and development ofthe continent, as well as to improve their companies’profitability.

Global executives need to ask: how well do foreignbusiness models fit the emerging economies in coun-tries like India or regions like Africa? Nath sharesthe example of retailers like Wal-Mart and Tesco.The mobile vegetable seller and grocer is their chiefcompetition. Nath writes: “He knows his neighbor-hood or business territory. He takes orders on thephone and he has a delivery boy who will cycle downwith a bag of potatoes or a pot of yogurt. The Indianconcept of home delivery has been established for al-most all essentials, which are available on call. Newentrants may try to emulate this current system,

which includes home delivery and credit even forsmall value purchases. This will certainly challengethe sales paradigm of a giant Wal-Mart, with itsunending store shelves and relatively long distancebetween the outlet and the customer’s residence.”As always, local understanding and the willingnessto adapt, as shown historically by companies likeHindustan Lever, are paramount. Global-level effi-ciency is not the only path to success. Foreign exec-utives should never make decisions from a distance.Visit first, concludes Sardanis, and, he writes, “evenas you are getting out of the plane, there will be anadded dimension to the issue that you had not takeninto account in your faraway headquarters.”

The love of both authors for their respective coun-tries is very evident, and both books make a con-tribution to the knowledge that is essential forglobal executives to succeed in emerging economies.Sardanis is sanguine about Africa. Following thedemise of his conglomerate, he did not retreat toEurope, but returned to his adopted country ofZambia, where, with his son, he runs ChaminukaNature Reserve as a tourist and conference cen-ter. Notably, this employs hundreds of locals anda mixture of all the tribes representative of Zam-bia. And Nath’s unbridled optimism, in spite ofIndia’s challenges, veritably leaps off the pagesof India’s Century. Confident of his people’s en-trepreneurial skills and patience, he writes to encour-age foreign investors to share in India’s continuedachievements.

Gillian Rice teaches marketing and marketing research atArizona State University. She was a Fulbright Senior Scholarat the University of Bahrain in 1996–1997 and is professoremeritus at the Thunderbird School of Global Management.She holds a PhD from the University of Bradford. Dr. Rice’sresearch interests include environmentally related consumerbehavior, the fair trade movement, and models of employeecreativity and organizational innovation. She can be con-tacted at Gillian.Rice@asu.edu.

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