MAL 74 October 2026 | Page 120

ships, telephone calls and a small leadership team eventually requires forecasting, credit controls, structured performance reviews, stronger finance, better procurement, organisational clarity and more reliable management information.

Complexity compounds. More products create forecasting challenges. More customers increase credit exposure. More countries create regulatory complexity. More employees require formal management systems. Larger procurement volumes increase control risks. At this stage, professional management becomes an economic requirement rather than an administrative preference.

The issue is not simply whether the company has a CFO, commercial director, HR director or supply-chain manager. It is whether the people occupying those positions possess the capability required by the scale and complexity of the business.

A modern CFO needs to understand cash, treasury, capital allocation and scenario modelling as well as financial reporting. A commercial executive needs to understand channel economics, segmentation, pricing and revenue-growth management, not simply sales volumes. Supply-chain leadership increasingly requires competence in planning, risk, working capital and supplier strategy.

The quality of management therefore affects ROIC just as surely as the quality of machinery does. Companies should think more deliberately about what might be called management density: the concentration of capable people who can make high-quality decisions without continually escalating them to the chief executive or founder.

The founder-to-institution transition

This issue is particularly important for family-owned and founder-led businesses.

East Africa ' s first generation of major indigenous entrepreneurs-built companies under conditions that often-demanded extraordinary personal involvement. Their relationships, judgement and appetite for risk became important competitive assets.

Working with founders as a CEO, consultant, board advisor and investor-facing executive has given me considerable respect for what it takes to build a business from very little. Founder instinct should not be casually dismissed by professional managers or consultants. Some of the strongest commercial judgement I have encountered

118 MAL74 / 26 ISSUE resides in entrepreneurs who know their markets with extraordinary intimacy. The difficulty arises when that knowledge and authority remain permanently concentrated in one individual.

If major procurement decisions, customer relationships, senior appointments and investment approvals all revolve around the founder, growth eventually encounters an organisational constraint. Professionalisation should therefore not be understood as displacing the founder. Done well, it preserves the founder ' s economic achievement by reducing the company ' s dependence on the founder ' s daily presence.

My experience on boards and in private-capital environments has made this particularly clear. A profitable company whose earnings depend overwhelmingly on one individual represents a fundamentally different proposition from an institution with comparable earnings, strong governance and management depth.

Succession is therefore not simply an HR matter. It can materially affect enterprise value.

Consumer pressure is changing the sources of advantage

The East African consumer also deserves a more nuanced reading. Periods of inflation and pressure on real household incomes do not necessarily cause consumption to disappear. They change the way consumers allocate scarce cash.

Households may move to smaller packs, switch brands, postpone purchases, reduce frequency or become more responsive to promotions. In some categories, consumers trade down; in others, they protect products they regard as essential and economise elsewhere.

Years spent in beverages, dairy, FMCG and distribution taught me the importance of observing these changes in the market rather than relying entirely on aggregate economic indicators.

A consumer who cannot afford a larger pack may still want the brand. A retailer facing cash constraints may prefer faster-moving inventory even where the percentage margin is lower. A distributor may appear profitable until financing costs and inventory days are included. These distinctions are often invisible in a monthly sales report.

For companies, blanket price increases can therefore be a crude response to cost inflation. More sophisticated businesses will invest in understanding price elasticity, pack-price architecture, channel-specific economics, customer segmentation and promotion effectiveness. They will distinguish between consumers who cannot afford the existing price point and those who are unwilling to pay it. This is one reason revenue-growth management is becoming increasingly important in African consumer markets.

The company with the lowest price will not necessarily win. The stronger proposition may be the one that delivers the best combination of quality, trust, convenience and quantity at the cash outlay the consumer can manage.

Global volatility should inform strategy, not define it

Geopolitical instability and supply-chain disruption remain unavoidable features of the current environment. Recent disruption to global energy and shipping markets has again demonstrated the speed with which events far outside Africa can affect fuel, freight, foreign exchange and input costs within the region.

Companies should certainly plan for these risks. Supplier concentration, foreign-exchange exposure, critical inventory, logistics options and energy intensity deserve board-level attention.

But there is an important distinction between managing volatility and organising the entire corporate strategy around it.

A shock is often most useful as a diagnostic. If a relatively modest currency depreciation eliminates a company ' s margin, that reveals something about its pricing power or sourcing model. If one supplier disruption stops production, it reveals concentration risk. If a fuel-price increase renders distribution uneconomic, the route-to-market architecture may require redesign.

Having managed businesses through periods of currency pressure, supply constraints, market disruption and difficult turnarounds, I have found that stressful periods frequently expose weaknesses that were already present. The shock did not necessarily create the problem; it made the problem impossible to ignore.