From New York to Africa: Lessons Learned

by David S. Levin* 0

I’ve worked with African companies for over a decade and a half now. I’ve raised money for them, invested in them, and provided advisory services to their management. I’ve worked in sectors as diverse as transportation, agriculture, financial services, manufacturing and energy. You name it.

I’m an advocate for Africa. I’m one of its cheerleaders. And most importantly, I’m a friend.

But I’ve also learned some painfully exacting lessons along the way. Lessons that, when combined, provided me with an education that you simply could not get elsewhere.

Unfortunately though, most of the curriculum was taught at the African chapter of the School of Hard Knocks. And suffice it to say, I graduated with an advanced degree.

I think it’s fair to assert that doing business in the U.S. is antithetical to doing business in countries like Ethiopia or Tanzania. It’s just different. It’s like comparing a Boeing 747 to a Cessna Skyhawk. They’re both planes but one will run out of fuel and fall out of the sky after only a few hundred miles.

When I first started operating in Africa it reminded me of one of those chaotic Salvador Dali paintings where everything was warping and melting into each other. The turmoil there wasn’t entirely unexpected though. I had, of course, read all of the negative press over the years; rampant government corruption, alarming levels of poverty, widespread hunger and the multiple, hyper-aggressive tumours that in time would metastasize into al-Shabaab, Boko Haram and Al-Qaeda.

To my naïve American eye, Africa looked like a giant, dirty mud puddle at the bus stop … you didn’t want to stand in front of it. 

And even as someone who grew up in New York, doing business there scared the hell out of me.

But the allure was just too great. In New York’s finance circles, Africa was categorized as an “exotic” market. Erratic and unpredictable with a severely disproportionate risk/reward ratio.

You could win really big if you were smart. And lose even bigger if you were unprepared. 

And that was the opportunity.

Nairobi - Wikipedia

In those days, most emerging markets bankers in New York would only look at transactions in some of the more popular countries like Brazil or China. They were the flavours of the day. The “BRIC” countries, as so aptly named by Goldman Sachs, were all the rage.

But exotic markets like Mozambique or Ethiopia? Botswana or Rwanda? Not a chance. Too precarious. Too unfamiliar. And if Goldman and the other banks on Wall Street didn’t bless them in their morning analyst notes, you didn’t dare deviate for fear of being ridiculed by your colleagues.

“Why would you do a deal in Nigeria when you could’ve invested in India? Are you crazy?”

The reality was that most of the folks on Wall Street could barely name five countries in Africa much less ever envision doing business there. Asking them to find Djibouti on a map was like asking them to find the hair they had on their head 20 years earlier. 

The bottom line was that very few investors in the U.S. were paying any attention to Africa at all.

That’s when I realized that operating there would differentiate me from everyone else in the herd. And the herd, as herds tend to do, all ran in one direction.

Surely, I thought to myself, if I could operate in New York I could easily do business in countries like Kenya or South Africa. Right?


In the early days, we just couldn’t get it right. To begin with, we were culturally blind toward Africa. We didn’t have a clue. We didn’t understand the way people from Cameroon viewed contracts or accounting standards. Or how Nigerian’s approached negotiations with foreigners. Or how meticulous South Africans were with respect to process and formality.

And because of this, we were about to be blindsided by what was coming our way. Almost every one of our early deals collapsed. Every conversation was misread. Everything we thought would happen, didn’t. And getting paid by anybody was about as easy as trying to tie your shoes with your teeth.

Basically, we were the Wall Street equivalent of roadkill lying dead on the side of the road.

As time went on though, we gradually began to make progress on some of our transactions. We congratulated ourselves that we had finally started to figure out the “science” of doing business in Africa. We had convinced ourselves that we had arrived.

But we hadn’t. And things continued to drag on. Deals weren’t closing and new debt and equity transactions were nearly impossible to come by. We still had no credibility in the market and continued to struggle to earn our way into the proverbial club. It was clear that we had only just begun to pay our dues.

Then the epiphany occurred.

What finally dawned on us was that doing business in Africa was not a science at all but was, in fact, an art. It was a specialty filled with abstractions and contradictions. It was nearly impossible to methodically frame an investment thesis and structure an investment or capital raise like we did in New York. Projecting cash flows and ROI’s was literally like shooting at a moving target. And in many of the countries there, a company’s financials had as many versions as a schizophrenic has personalities.

Essentially, what you saw was never what you got.

So the hard-wired, technical rules of investing and doing deals that we brought with us from New York simply didn’t apply there. What became very real – very fast – was that if you wanted to do business in Africa it was more about the people there than the actual business or transaction.

It was about the relationships. It was about trust.

And that was the turning point.

So, as in sailing, we tacked hard left.  We changed course. We started to adapt our thinking so we were seeing things through the correct lens. An African lens. Not an American one.

The lesson was simple. When in Rome, as they say, do as the Romans do. So that’s what we did, except we did it in Africa. And that’s when things began to change. Though it may sound counter intuitive, my African education didn’t come from looking at income statements or balance sheets of oil & gas companies in Nigeria. And it didn’t come from conducting due diligence on acquisition targets in South Africa.

In actuality, it really didn’t come from “doing business” there at all. It came from dealing with the people there – one on one – and one at a time. But not as corporate executives or managers or board members.

Just as people.

It came from learning their way of doing things. Learning how each of their distinct cultures shaped their personas. Learning their interpretations of right and wrong and good and bad. Learning where their pain came from. Understanding what they had – and what they didn’t have. What they lost and to whom. How they saw the world and their place in it. What scared them and what gave them hope.

And most importantly, I learned how to build a lasting trust with them – as people. And it was only when I began to understand them as human beings – and not as business transactions – that was I able to begin to effectively do business there.

But you obviously can’t paint all Africans with a single brush any more than you can paint all Americans or Asians with one. A farmer in Senegal is completely different than a gold miner in South Africa. Ghanaians have little, if anything, in common with Namibians. And Nigerians and Kenyans are about as far apart culturally as the 3400 kilometres that separate them geographically.

So if you are looking to do business on any level in Africa, I urge you to take note of a few of the truths that I have Iearned over the years.

  • Understand that in Africa things move slowly. Very slowly. Actually, very, very slowly.
  • Recognize that nothing is ever what it seems. Discount everything and then adjust as you go.
  • Be ready to negotiate, negotiate again, agree and then negotiate again.
  • Understand that relationships matter more than contracts. Contracts count but who you are counts even more.
  • Recognize that you are a foreigner and are in their house. The world you come from and how you do things doesn’t matter.
  • Respect their abundant and diverse cultures. Don’t judge or compare. Embrace.
  • And understand that trust is everything. Full stop (read that one again).

Africa is a deeply complex and bewildering continent that is filled with idiosyncrasies most westerners could never begin to understand. But should you be bold enough to bring your business there, whether an engineering firm, investment fund, or a food manufacturer, and if you adopt some of the lessons that I had to learn the hard way, remember this one, very essential lesson;

When in Africa, do as the Africans do…

*David S. Levin is a Managing Partner at Nexus Capital Markets, LLC, micro-Blogging on all things Africa. A New York investor’s view of Africa and other emerging economies. Nexus Capital Markets is a leading Pan-African/U.S. investment bank located in NY and JHB.