Entrepreneur Herman Chinery-Hesse has built up one of Africa’s largest software companies. And it is enterprise, not aid, that the continent is crying out for, he tells Stephen Pritchard.
Herman Chinery-Hesse is no fan of aid agencies, or for that matter, of governments. Especially governments in the West.
All too often, the Ghananian software entrepreneur says, key public sector contracts go not to local African companies, but to first-world suppliers recommended by development agencies or their Western government backers. Even African governments are turning their back on local firms, in favour of the established multinationals, he says. And the results are stifling African enterprise.
SOFTtribe is West Africa’s largest software firm. Chinery-Hesse, its founder, is a serial entrepreneur. He has been called Africa’s Bill Gates, and ranks 62 in Foreign Policy magazine’s list of the most influential thinkers, ahead of Desmond Tutu – and Boris Johnson. Educated in Europe and the US, he set up and ran engineering businesses in Ghana before moving into software. Now he runs a number of concerns – SOFTtribe is the largest. And his business model is providing Africa with software that suits Africa’s needs.
This is not a fashionable, social media business. SOFTtribe’s wares are workaday tools. Point of sale systems. Payroll. Software for travel agents and mobile phone operators. Enterprise resource planning, and human capital management. The type of applications that first-world companies take for granted, and that emerging market businesses need if they are to compete.
SOFTtribe has done well out of these markets over the last 15 years, Chinery-Hesse says. It has done less well, when the customer is a government. African governments are, he suggests, more likely to place technology contracts with firms in Germany, France, the UK or the US, than with one in Accra.
Chinery-Hesse has personal experience of deals that, as he puts it, take African money out of Africa. He may have a more suitable product, a proven track record and a lower priced bid. “Has one dollar of Western-backed aid bought technology from Ghanaian company?” he asks. “We have 200 to 300 clients but need to win the bigger contracts. But as soon as we started talking to governments, we had problems. The governments said ‘we take aid, and the aid organisations say we can’t place a contract with a local company.’” The money is there, he says; the need is there. “But it’s not for my black face.”
The result has been multi-million dollar contracts placed with large, mostly Western, software companies and consultancies. Shutting out local companies from those contracts deprives local businesses of an important source of both revenues, and also, credibility. Without the Ghanaian government as a customer, Chinery-Hesse says that it is hard to gain contracts with other governments in the region. But, he alleges, government officials refuse to endorse SOFTtribe, and instead, use imported software.
And this would not be as bad, Chinery-Hesse claims, if Western software actually did the job. Chinery-Hesse is not an opponent of developed-world technology per se. SOFTtribe works with Microsoft, and Oracle. The problem is that, out of the box, much Western technology, including software, is not really suitable to Africa.
Rolls Royces and Land Rovers
The large vendors’ software is often too fragile, or too expensive to run, Chinery-Hesse suggests; often it requires complex infrastructure that might not suit African businesses. Software designed for a multinational company is not always the right choice for African firms, which are mostly SMEs. Sometimes the difference is very simple. Large Western companies run their software on servers. African SMEs might only have desktop PCs.
“Our area of expertise is Land Rovers, not the Rolls Royce,” he says. “We make Third World stuff, and most people don’t know how to do that,” he says. “The [aid] organisations keep getting our governments to buy Rolls Royces, but they are not suited to our environment. They are vulnerable to our environment. I’m not saying that Africans are sharper than anyone else, but we know our market.”
But being shut out of local deals with governments is only one part of the problem for Chinery-Hesse. Local African companies are also losing contracts they held with the local operations of multi-nationals, as those companies try to consolidate their software around global standards. These companies often waste their money, Chinery-Hesse argues, on trying to install complex software on top of more basic African infrastructure – trying to drive the Rolls Royce down a dirt road. They would be better off integrating local software with their global back-office systems, or using a version of international software customised to environments where bandwidth, and sometimes power, are uncertain commodities.
And the situation is worse for young entrepreneurs setting up businesses in Africa now, than it was for his generation, Chinery-Hesse says.
The internet, that great enabler for start-ups in mature markets, is actually driving business away from African firms. “We had a rough time, but the people behind us will have an even rougher time,” he warns. “At least in our time, we had a small window where there was no internet, so everybody had to talk to a local company. It is more difficult for the kids coming up now. Something has to be done.”
Doing something has turned Chinery-Hesse from entrepreneur to an advocate of African business. He goes further than espousing trade, not aid: Chinery-Hesse’s slogan is “enterprise, not aid”. And it has propelled him on to the international lecture circuit: recent speaking engagements include a TEDx conference on Africa, as well as at a recent conference in London organised by the conservative Acton Institute.
Enterprise not aid
It is frustration — as he sees it borne out of entrenched attitudes, complacency, favouritism and even racism — that has pushed Chinery-Hesse to become something of a spokesperson for entrepreneurial Africa, and an outspoken critic of development economics. He does not go as far as saying that aid agencies are dishonest “maybe it is arrogance and racism,” he suggests. And he certainly believes that aid agencies and donor organisations are too comfortable with the status quo, reluctant to take risks, and reluctant to bring about change.
“Large companies around the world, in conjunction with the aid agencies, are creating debt,” he says. “They are selling us stuff they can’t sell in Europe… it stifles local industry.”
And, whilst initiatives such as micro-finance are helping some entrepreneurs in Africa, Chinery-Hesse says that they favour localised, physical goods and services that do not face competition over the internet. Printing is one example he cites. But Africa has the education, the culture and, yes, the local demand to support a nascent software industry. It is vested interests, rather than a lack of skills, talent or initiative that is holding the continent back.
Chinery-Hesse is not asking for handouts. He is not asking for aid. He wants to be able to compete for government and large private sector contracts, and to foster opportunities for younger technologists and business people to build up companies, with their local markets as a springboard. Above all, he wants a level playing field.
“I want transparency. It is a better way of doing business… but that is not how the world has worked,” he says. But he leaves behind the strong impression that he will do what he can, to make that change.