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Magatte Wade, you have started several companies in Africa that sell their products worldwide. What was the biggest obstacle to success?
It’s a constellation of regulations. In any African country, starting and running a company basically means swimming through molasses to try and do business. The main problem is regulation – or to be more precise: overregulation.
What kind of regulations?
If I explained all the regulations in my home country of Senegal alone, I’d be talking for the next ten years. But to give you one example: Suppose I want to hire a lab technician. He has a PhD in German, but I don’t care about that, and because of his experience, I am convinced that he has the necessary skills for the job as lab technician. We agree on a salary and want to sign a contract. However, the state requires us to use a contract designed by the government. And since he has a PhD in German, they require me to pay him a salary five times my budget for this job. They also define the hours he can go to work, although we had agreed that he would work 40 hours in four days to have Friday off.
This sounds rather complicated …
That’s not the end of it. Once we have signed a contract fulfilling all these restrictions, we have to bring it to the labor inspection office, a government agency. There, some government official who doesn’t know anything about my company gets to decide if we can sign this contract. This can take two weeks, a month or even more, after which they might decide that the technician also needs to provide a medical certificate or some other document. Naturally, every time we need to provide or get a document, we need to physically travel to the capital city or the regional capital, which means two or three hours in my case, because these government agencies don’t respond to emails. And their attitude is always against employers, even though employers and employees sit in the same boat. That’s the problem with governments: They simply don’t understand how markets work.
How do you deal with these kinds of obstacles? What’s your advice for would-be entrepreneurs?
How did I overcome these obstacles? Simple, I happened to be very well connected. I won’t pay bribes. But the truth is that many will pay bribes. But I was able to go and see the head of customs and help myself that way. As to my advice for would-be entrepreneurs, I tell them not to start a business in Senegal or other African countries at the bottom of the World Bank’s Ease of Doing Business Index.
«That’s the problem with governments: They simply
don’t understand how markets work.»
Why did you do it, then?
Because I want people to understand the obstacles in our way to prosperity. I want them to know why poor nations stay poor. If you look around the world, you see that prosperity has been created in only one way: through entrepreneurial value creation. Other people call it capitalism. And for that you need free markets. It’s plain and simple. I am a natural entrepreneur: if I see a problem, I want to fix it. Entrepreneurs are those who criticize by creating. If we want to build prosperity in Africa, we need to create jobs, and entrepreneurs create these jobs. Ultimately, you’re poor because you don’t have enough money to take care of your basic needs. And where does money come from? For most of us, it comes with a job. Jobs come from the private sector, from small and medium-sized enterprises. So, it’s obvious that we ought to make it easy for entrepreneurs to do business.
How hard was it to set up a business?
With my first company, Adina World Beat, for two years, I operated more or less under the radar. We were doing what we had to do, paying our taxes and the like, but running the risk of being stopped in our tracks at any time. It’s a risk I took and now we’re on the other end of it. Some people in Senegal sometimes operate in gray areas until they’ve gained strength and stability. This is nothing new, by the way, even in the West. Many companies started like that. But while it works for me, this is not how you build an economy, because the playing field should be level.
What’s the solution to such dispiriting circumstances?
The problem is one of legal infrastructure. If we’re serious about Africa ever making it, we need to be honest about that. Otherwise, we’re just putting band aids on the problem, in which case only 10 percent of entrepreneurs will thrive and 90 percent fail. Unless we have many successful entrepreneurs, we cannot expect to ever see Africa standing on her own two feet. The reason I am so annoyed is because of this idea that we have to optimize our results within this inferior legal infrastructure. Of course, if you’re an entrepreneur, keep on struggling. But if we don’t talk about this suffocating regulatory framework, 100 years from now we will be sorry.
But isn’t the problem a more general one? In the 1960’s, Senegal’s real GDP per capita was about the same as South Korea’s. Today, South Korea is 15 times richer. What explains this discrepancy?
This is exactly what I’m talking about. The rise of the Asian Tigers, of which South Korea forms a part, along with Taiwan, Hong Kong and Singapore, is a consequence of deregulation and low taxes. Singapore’s first prime minister, Lee Kuan Yew, though maligned by many, did introduce such reforms that lead to an economic boom.
So do we just need better politicians?
It’s more about better institutions. It should be as easy for any entrepreneur anywhere in Sub-Saharan Africa to start and run a business as it is for anyone, for any entrepreneur in Scandinavia. All Scandinavian nations are more capitalist than almost any Sub-Saharan African nation. We could use them as a model. Out of dozens of Sub-Saharan African nations, only one is needed to be a leader to set companies free. Piecemeal legislation won’t do, we need wholesale reform.
You are the director of the Atlas Network’s African Center for Prosperity. Tell us what kind of work that involves.
I oversee all the free market think tanks that we invest in. Our partners work on various reforms to take down entry barriers for entrepreneurs in their respective nations. That’s a great thing. But the truth is, piecemeal legislation takes forever. By the time you’ve passed one reform, ten more laws have sprung up. Additionally, even if you’re trying to do the right thing, opposition parties or NGOs may get on your back. It may be easier to just allow an unoccupied land in Sub-Saharan Africa to be refashioned into a place like Singapore, to start with a blank slate, give it its own laws and governance, and see how successful it becomes.
Western NGOs will tell you that all Africa needs to develop is for the West to send more aid. Do you agree?
I disagree. Let’s make no mistake, the solution to poverty is not charity. The solution to poverty is prosperity, period. How do we build prosperity? Do we build it by just donating? No, it doesn’t work that way. I’m not talking about humanitarian aid when a crisis hits – that requires immediate international help, of course. But I object to aid becoming chronic, where aid becomes an industry that benefits itself for as long as the people remain poor. Aid can also get stuck in the pockets of a nation’s leaders, who then buy châteaus in the south of France, marry five wives and so on.
There may also be the self-interest of donors involved.
Yes. The money from aid basically goes straight back into the pockets of the countries that provided it, to their consultants. The only people I see being aided by aid are these consultants in the aid industry. They don’t pay taxes on their salaries, then they go back home at least once or twice a year, flying business class. All of this paid by aid. On top of that, many of them get also paid an extra amount for the alleged harshness of their lives abroad in places full of mosquitoes, pesky insects, and exotic diseases. And the leaders of these countries are also making a killing out of foreign aid.
What do you tell Western politicians or people who give to charity? What should they do instead?
Every time European politicians promote more aid, they’re actually condemning us to more poverty and suffering. Instead, they need to become monomaniacal about promoting prosperity. The biggest problem we have is that people have bought into the idea of poverty alleviation. It says that we Africans should be happy because we’ve gone from being dirt poor to simply being poor. Who would find happiness in that?! But that’s unfortunately what the world has decided for Africa. I say: Screw poverty alleviation! I want prosperity building.
Some European politicians who are fine with sending aid to Africa oppose opening their borders further to accommodate more Africans. What do you think about that?
Amongst European politicians, the extreme right and the extreme left are the only ones talking about this issue. Italy’s prime minister, Georgia Meloni, is asking Africans to stay home. On the other end of the political spectrum, the extreme left is saying that all Africans are welcome because they want to signal how virtuous they are, how big their heart is. But Africans do not want to be, if I may use a word European politicians use, swarming Europe. It takes something extraordinary for a group of people to decide from one day to the next to leave where they come from, to leave their families, their land, a community and everything that they know to migrate to another place. It takes extraordinary circumstances. This tells you that something is profoundly wrong. So those championing completely open borders have missed the point, as has Meloni. What we need to think about is why people want to leave their home countries in the first place. The reason why people cannot thrive back home is because Africa is one of the world’s most overregulated regions, making it almost impossible for entrepreneurs to build businesses there, which prevents the creation of jobs that provide the income that helps people to join the middle class. At present, both sides are using Africans for political gain.
«So those championing completely open borders have missed the point, as has Meloni. What we need to think about is why people want to leave their home countries in the first place.»
How can free trade help build prosperity?
It’s very simple: go back to basics. I am staunchly in favor of the free movement of people, goods, services and ideas. It is a bad idea to have all of these trade barriers on different products from many countries. Therefore, the African Growth Opportunity Act, passed by the US Congress in 2000 is an example of a positive piece of legislation. It allows for a wide class of goods to come to the US from Sub-Saharan Africa free of tariffs. Today, our products benefit from that. When I bring my finished products from Senegal to the US, we pay absolutely zero taxes, which helps us be competitive and compensates for all obstacles my country puts in my way. It helps Africa in many more ways. For instance, shea trees, from which shea butter is made, only grow in Africa. Hence, African producers of shea butter can export to the US with profit.
You moved to Europe when you were very young, you’ve lived in the US. What Western views of Africa did you encounter in the West, and how did they influence your own thinking?
Africa is talked about as if it were swiftly on the rise. But despite this image of Africa, things haven’t changed. If you open a newspaper, unless there’s something major like Ebola, a war or some other disaster happening, you read nothing about Africa. For most of the West, Africa doesn’t exist, it’s not on the map. The way we change that is by cleaning up our legal framework, to make it easier for entrepreneurs to start and build businesses, which will create the jobs that create income and prosperity. Then we’ll start to matter. If you’re economically insignificant, no one is going to care about you. I know that’s a harsh statement, but it is the way it is. So as long as we remain poor, no one is going to give a damn.
You have said that, as an entrepreneur, you want to impact and change your culture. What kind of culture do you want to cultivate?
The way the hierarchy of cultural or cultural values stands, the West is leading the way in terms of what’s cool and acceptable. African American youth culture is pretty much permeating the rest of the youth culture around the world. What is going on in America is what you find the rest of the world wanting to emulate and aspire to. Below America you have maybe some Western European nations and cultures that the rest of the world aspires to. The world is very much excited about whatever goes on in the Western world. And what is Africa known for? For the most part it’s war and diseases. There has been a little improvement, but not enough to change the stereotypes.
How do you want to change that?
What I’m trying to do through my enterprises is to tackle the economics, to achieve the generation of jobs, so that our people get to stay in their home country and make it thrive. At the same time, I always focus on products which give us a chance to showcase ourselves differently to the world, to show a different aspect of ourselves that goes against the grain of what people know of us. I’m trying to elevate African culture, starting with my own. My goal is to prosper and get other countries around the globe to emulate what we do. We win if we become a model worthy of the world’s aspiration, like America is today. When I started my first company, it was the only African brand started by an African based on African products sold in the US. I will never forget how my African friends who went to Harvard, Berkeley or Yale reacted. They told me I was wasting my education by selling flower juice. For them, the only use for fancy degrees and an excellent education is to work for big companies like McKinsey. It was a lonely field to begin with, and people made fun of entrepreneurs like me. I proved them wrong.
What are your plans for the future?
What I’m playing is a long game. I’m trying to be the first domino in a chain reaction. It’s going to take time. If you push the first domino, things will have changed big time 100 years down the line, because somebody long ago said that maybe we ought to start with this one domino. I propose myself as the first one or two dominoes to knock everything else down. People may be inspired by that. I’m just sitting out here trying to build a little island of excellence people will seek to recreate elsewhere. I’ve seen it work before, and it will work again.