Unilever CEO Paul Polman was recently on an Africa tour during which he sought to understand firsthand the challenges and opportunities of doing business on the continent.
NTV’s Laban Cliff Onserio had a chat with him on a wide range of issues during his stop-over in Nairobi.
You have recently visited South Africa before coming to East Africa and on your way to West Africa. What brings you to Africa?
Africa has obviously become a very important continent for us. Unilever came to Africa in the 1890s, meaning we have been here for more than 100 years, starting from South Africa. Most recently we went into Ethiopia and have been there for about two years.
You mention Ethiopia. There is an effort to have African countries collaborate under forums such as the East African Community.
The free trade zones developing first in East Africa, and hopefully in the longer term West of Africa, make a lot of sense. It offers African economy an incredible opportunity to be unlocked.
Some of the fastest growing economies in the world are here in Africa, making it an attractive opportunity.
But initially there is need to leverage available skills as well as diversity to become competitive, first on the continent, then globally.
Creating these trading zones and doing away with the boundaries that cost money and give inefficiencies to business makes a lot of sense. Then there are many issues now that are global issues such as financial markets function, climate change, security issues that must be dealt with.
Kenyan companies and their African counterparts are grappling with the possible effects of Brexit. What do you foresee could be the major impact of Brexit on Africa?
In the short term it is difficult to see any, other than the uncertainties and volatilities. Europe is next to Africa and I think Africa will be well served by a stronger Europe and Europe will be best served by an increasingly stronger Africa.
Europe understands as well that for its own good and Africa’s development, it has to play an active role. So Africa will be benefiting from a strong Europe that has always shown an interest in investing in Africa and the stronger Europe is over time, the better it is for Africa.
We understand your company Unilever is also keen on corporate social responsibility (CSR) — such as your collaboration with the [Kenyan] First Lady on the Lifebuoy Handwash Campaign. Why this focus on CSR?
Well, it is very clear, that there is no business case in undoing poverty. What you see as some of the issues and people drifting apart, is simply because a lot of people feel they are not participating in the economic system or don’t get fair returns from the economic system.
Some African countries, for instance, have extremely high levels of youth unemployment at 50 per cent or more. What you get from such a system is economic uncertainty, political instability, and often it is the economy that suffers.
For business, it is very important that economies function. In Africa, 60 per cent of the GDP, 80 per cent of the financial flows, 90 per cent of job creation comes from the private sector.
So the private sector needs to play an active part in the development agenda, which is actually a huge opportunity.
The issues of food security, where over 800 million people go to bed hungry portends a huge opportunity for business to get involved. Then there are issues of water, hygiene and sanitation, such as the WASH programme we have launched that are good for business to participate in.
Even climate change and decarbonising the economy and going to green energy is a huge opportunity for business. Increasingly, this development agenda, what we call the Sustainable Development Goals, is a good road map for business as well.
How then do businesses achieve the balance between profitability and corporate social responsibility?
There is no doubt that businesses need to be profitable to be in business in the long term. To be in business long term you need a sustainable business model, which also means sustainability of planet earth.
Climate change, for example, and the volatility of food prices that comes with it does not only push many people into poverty but also wipes out profits for businesses.
Climate change, which might affect people’s health and well-being as well as air pollution affect profitability of companies.
We have always done that in Africa where we have anti-Aids programmes, nutrition programmes, financial inclusion programmes.
Our position is that if our consumers or communities where we live and work are better off then we as business are also better off. So the agenda of a profitable sustainable business goes hand in hand with a sustainable society.
As an investor, how has your experience been in Africa and what would you tell a foreign investor with plans to set up shop here?
A piece of advice to businesses in Africa is, if a country or a region is still in development, you need to have a long-term view.
Sometimes you have two steps forward one step backwards, and again a step forward, but that is the nature of the developing markets, we see that everywhere in the world.
This means that in Africa you have to have a little bit of stamina and you have to be very creative, sometimes things do not actually work the way you want them to be.
For companies, if you continue to invest in people, work on a longer term view, work on the infrastructure so that you can reach people and reach them competitively, invest in education, (which is very important, there is still a big skills gap). We will see a lot of companies willing to walk the journey.
What are some of your pain points in doing business in Africa?
Well in any country in development you know that there are some things you need to deal with. What I look for is improvement. There is often the bureaucracy, difficulties on infrastructure that takes us way too long to ship products between countries.
There are also issues of delayed clearance in the ports, corruption that is heavily prevalent in this part of the world. But equally people in other parts of the world should take notice of that because they are partly responsible for it.
Any system or government that isn’t operating transparently in the interest of its people, will ultimately be rejected. Overall, the direction of the content is positive.
What do you see in the global trends and their impact on Africa?
What you see here, especially since the 2008 economic crisis is that our economic system is challenged. We have some forces coming together.
There are forces of technology, the planetary boundaries because of over-consumption — climate change being an example of that — and frankly also the shifting power fields that may weaken the existing global governance structures.
All this coming together makes it very unsettling. It is a VUCA (volatile, uncertain, complex and ambiguous) world, as I often say.
In that world, the business community needs to step up, to help the politicians de-risk the political process. To come up with business models that leave positive footprints in society. Not leaving a negative footprint or being less bad is just not good enough any more.
We have discovered in the crisis of 2007/8, which started in the US and then Europe, that a system we have created of high-level government and private sector debt, high-level overconsumption in a limited world is not sustainable and frankly leaving too many people behind is not a system that is in equilibrium.
Any system that is not in equilibrium will ultimately be rejected. You see it here with rising tension, poverty, exclusion and terrorism.
Europe is going through a difficult time right now as a result of that as well. We do need to develop economic systems that are more inclusive and it is in the interest of business that we do so.