In conversation with
Mr. Peter Olyott
CEO | Allied Africa Broker Network
FDI Spotlight: What is the vision and value proposition of Allied Africa Broker Network (AAB)?
Peter Olyott: The theory behind the creation of AAB was that if we have more successful business partners in a particular country, they will naturally want to do more business with Indwe Risk Services. Indwe Risk Services is the driver and principal broker responsible for setting up AAB’s transaction platform and coordinating the client base hosted by the Network. One of the primary objectives of AAB is to make our partners more successful, even if it did not benefit Indwe Risk Services.
We wanted to do something different to what our competitors were doing; we did not want to recolonise Africa through buying companies out. So, we partnered with independent local businesses who have been successful in their respective countries. Every country has its cultural nuances and approach to conducting business. To survive and thrive in any market, you need to understand it and understand the country itself. By remaining independent, we did not have to export our corporate governance or managerial procedures.
How effective is your strategy and AAB for risk management in Africa, given the view that Africa is the next global emerging market?
Peter Olyott: We want the quickest and lowest cost entry into a market. Should a market become untenable and have to withdraw, we want the least reputational risks. This is the fourth year of the Network, and it has been very successful for our African partners. Indwe Risk Services sees it as a medium to long term investment.
Doing business in Africa is different to other countries. Be friends with the people first, which can take up to three years. In South Africa, for example, you do business with someone first, and then you become friends.
The model we use has allowed us to stay in Africa and a specific market longer. While we inject a significant amount of money into the Network each year, not on the same scale as investing into an R10 billion project that needs to be successful in the short term. So the risk of loss is not that significant.
Doing business and investing in Africa is risky. If you do not do your risk assessment and management correctly, it is an expensive market to get out of. Yes, it is the next global investment hub and the next emerging market; but, there are many factors to take into account.
In your opinion, what is the role of the risk and insurance sector as a growth enabler in Africa?
Peter Olyott: Nothing can happen without this sector. No one wants to invest in an African country without political risk cover, credit cover or risk insurance.
Risk management is perceived as a defence mechanism. But, looking at risk management in its broader function, there are four types of risk you have to look at. There is the speculative risk, which are those factors CEOs or boards use to decide whether to invest. Any business decisions made fall into this category and is still a speculative risk management decision. Therefore you still have to go through the process of risk management identification, evaluation, and treatment or mitigation.
You also have to consider the intermediate risk, which includes factors such as currency and foreign exchange rates. These are the things you cannot control, but you have to manage. The third category is a fundamental risk, which includes AIDS or drought, and the fourth is a pure risk, which is the insurance risk.
We promote the indivisibility of risk when the decision has been to invest; the fact is that you cannot decide in isolation. You cannot make a business decision and not take the pure or intermediate risk into account. There is a litany of people who have not taken this into account, and it caught up with them at some point, with some negative after effects.
If you manage risk, you can take advantage of opportunities others may have missed out on due to not following the process. Taking a business or investment decision that seems strange off the bat eventually is sensible or smart, just because the risk management process was followed.
Therefore we try to inculcate the decision-making process of risk into only decision making.
One of our objectives, when we created the Network, was that we wanted to encourage intra-Africa trade with and through our partners. A Chinese company is building a bridge between Zimbabwe, Zambia and Botswana, which will allow three of our partners to trade with each other.
Part of our job has been to educate our advisors on is done locally as opposed to outsourcing. We encourage them to lobby on behalf of their governments and remind them that their big international partners who can help. While it has been tough getting some of the partners into that mindset, the education and encouragement are taking effect. It is extremely beneficial because if up to 30% of any lucrative project can be run locally, more of the country’s citizens can be employed.
Do you think the education system in South Africa is preparing students for the future of business, such as the Fourth Industrial Revolution and other major impactful factors?
Peter Olyott: Business is done based on relationships. It is crucial that students learn how to do business. We see it quite a lot with new graduates who join the company: they have the knowledge and are very intelligent, however, they cannot do business.
I believe that starting and maintaining relationships within the business are skills that need to be taught alongside every other subject in schools and universities. Companies themselves should likewise invest in the time to teach new employees, especially fresh graduates, how the company works. This should include every aspect of the business, even if it is not directly applicable to an employee. Once an employee understands the business in its entirety, the understanding can be married with their degree.
There is a gap that needs to be filled for translating theory into practice. This is where technology can be useful because it speeds up the process of training people.
How confident are you about the future of South Africa and Africa?
Peter Olyott: That I am still on the continent is proof that I believe in it. Africa is difficult and surviving in business is not easy. However, it can be done. The positive regarding what Africa offers far outweigh the negatives.
I believe that the trick – if there is one – to remain as upbeat as possible is to look at the bigger picture, which is the potential of educating and up-skilling the population of many African countries. If you can teach ten people the skills to be a plumber, you can teach 100 people the same skills. We need to break the poverty cycle in Africa; one way to do that is educating the kids currently stuck in the cycle. We need to increase the number of people who break out of the cycle from one or two to 10 or 20. The impact of that is exponential, which is how we can not only grow Africa but be excited and positive about the continent.