The next stage of corporate development, however, requires moving beyond the assumption that exposure to a growing economy automatically creates a successful company. It does not. Companies create value when they identify attractive opportunities, build differentiated capabilities, allocate capital intelligently and execute consistently enough to earn returns above the capital required to fund them.
Competitiveness is becoming more transparent
The second important change is the widening competitive reference point.
A Ugandan manufacturer is no longer benchmarking itself only against another Ugandan producer. Depending on the category, it may be competing against products manufactured in China, India, Turkey, Egypt, South Africa or elsewhere in the region.
The same increasingly applies to services. Technology has made some professional and digital services tradable across borders in ways that were considerably more difficult a decade ago.
I first learned the practical meaning of competitiveness through sales and route-to-market rather than through a strategy textbook. My early commercial career in dairy, followed by senior roles in beverages across Uganda, South Sudan and other regional markets, exposed me to an enduring reality: a strategy only becomes real when a customer chooses your product and somebody can deliver it profitably.
The boardroom may think in categories and market shares. The customer sees price, quality, availability, relevance and service. This changes the meaning of competitiveness.
Tariffs, non-tariff barriers, industrial policy and local-content requirements remain important features of the East African commercial environment. Regional integration has expanded the addressable market, although businesses still encounter practical friction through standards, border procedures, rules of origin, logistics costs and differences in national implementation.
For management teams, however, regulatory protection cannot be the principal source of long-term competitive advantage. It can create space for domestic industries to develop, but eventually the underlying business must compete on some combination of cost, quality, innovation, availability and service.
The pressure from Asian imports illustrates the point. Asian manufacturers often benefit from enormous production scale, dense supplier ecosystems, efficient manufacturing clusters and mature export infrastructure. Competing purely on factory-gate price can therefore be difficult for a relatively small East African producer.
But the appropriate response is not necessarily to replicate the Asian cost structure. Local businesses possess other potential advantages: shorter replenishment cycles, smaller minimum order quantities, faster customisation, lower local distribution lead times, market knowledge and proximity to customers.
The strategic task is to convert those advantages into economics that customers value. That requires relentless attention to manufacturing efficiency, procurement, energy consumption, waste, quality, capacity utilisation, packaging, inventory and distribution productivity.
My own exposure to industrial operations began at the bottom, as a factory worker during my S4 Vacation, long before I became an executive. It gave me an appreciation that I have carried throughout my career: productivity is ultimately created through thousands of apparently small operating decisions- yield, downtime, stock losses, maintenance, supervision, procurement, scheduling and quality- not through strategy presentations.
In many sectors, the most durable response to import competition will therefore be improved productivity, not protection alone.
Capital productivity deserves more attention
The difficulty of raising capital is a recurring theme in discussions about African enterprise. It is a genuine constraint, particularly for businesses requiring substantial working capital or long-term investment in productive assets.
But access to capital is only one side of the equation. The other is the productivity of the capital once obtained. My more recent work with private-capital investors has reinforced this distinction.
The conversation looks different from the investor side of the table. Management may see a factory, new market or acquisition as an exciting growth opportunity. The capital provider also sees downside risk, execution capacity, cash conversion, management quality, governance and the probability that the investment will ultimately produce an adequate return.
Neither perspective is inherently superior. Strong investment decisions emerge when the two are reconciled.
Consider a manufacturer contemplating a new production line. The conventional discussion may focus on the cost of the equipment and how to finance it. A more complete strategic discussion would examine expected utilisation, incremental gross margin, maintenance requirements, working-capital implications, foreign-exchange exposure, reliability of demand forecasts and the return on incremental capital invested.
It should also examine alternatives. Could spare capacity be leased? Could part of the process be outsourced? Could equipment be financed against the asset rather than through expensive equity? Could suppliers provide longer payment terms? Could the same growth be achieved by improving utilisation of existing assets?
Similar questions apply to regional expansion. Opening a new country operation may increase revenue, but it can also duplicate overhead, inventory, management and regulatory costs. The relevant question is not simply whether the new market is large. It is whether the company has a realistic route to attractive returns in that market.
Having operated across borders myself, including responsibility for South Sudan and export markets, I have learned to be cautious about the phrase“ regional expansion.” Countries that appear adjacent on a map can have very different channel
The next stage of corporate development, however, requires moving beyond the assumption that exposure to a growing economy automatically creates a successful company. It does not. Companies create value when they identify attractive opportunities, build differentiated capabilities, allocate capital intelligently and execute consistently enough to earn returns above the capital required to fund them.
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