Home > Articles > Business & Management > Global Business

Baking Bread in Zimbabwe: Opportunities in the Rise of Africa

  • Print
  • + Share This
Africa has more than 900 million consumers. Despite the challenges, every day they need to eat. They need clean water. They need shelter, clothing, and medicine. They want cell phones, bicycles, computers, automobiles, and education for their children. Businesses are already seizing these opportunities to build markets across Africa.
This chapter is from the book

The headlines from Zimbabwe when I visited in July 2006 were dismal. Inflation was above 1,000 percent. Unemployment was over 70 percent.1 Gas stations had not had official supplies of fuel for years, so people carried cans of gas in their trunks for long trips. Borrowing rates ran as high as 400 percent to 500 percent. A combination of the policies of President Robert Mugabe and Western sanctions had brought the nation to its knees.

When I arrived at the airport in Harare, it was a ghost town. Gift shops and car rentals were closed. One line snaked away from the exchange window where an ATM door was flung open, exposing its interior machinery. There used to be 20 flights a week here. Now there were three or four. Tourism revenues in Zimbabwe dropped from $340 million in 1999 to $98 million in 2005.2 An advertisement for cellular network operator Econet Wireless at the arrival doorway in the airport seemed jarringly out of place, with its bold letters proclaiming "Inspiration is all around you." There was little inspiration here.

Outside, half a dozen taxis sat by the curb. Their engines were off. Gasoline was scarce. The drivers leaned against the rail, even after the Kenya Airways flight discharged a few passengers from Nairobi. Idle taxis at an idle airport are the clearest indication of an economy that is collapsing upon itself.

Yet even here there were market opportunities. A few days later, in downtown Harare, I met an accountant for a company that makes fiberglass roofing. Kizito Ntoro was sitting in the late morning at a table in a food court on the ground floor of the shopping mall at 105 Robert Mugabe Road. He had just purchased a hamburger from the Steers restaurant, one of about a half dozen offerings at the row of stores along the wall in front of him. But his reason for stopping for fast food would be totally foreign to a restaurant manager in the developed world. He was here because his electricity was out the night before, so he and his family had no dinner. Their lights were out. They couldn't cook. They just went to bed without eating hot food. So he stopped at the restaurant before an 11 a.m. meeting. In a country where power is unreliable, a power outage is an occasion to eat out and an opportunity for entrepreneurs to build businesses (not to mention booming sales of generators and solar cells).

Innscor, which operates the Steers restaurant chain in Zimbabwe, got its start in the restaurant business with a small chicken restaurant in Harare in 1987. When Innscor built its first Chicken Inn, there was no fast food in the country. KFC (Kentucky Fried Chicken) had tried setting up shop but closed down. Most people thought it was a foolish idea. Chicken Inn started turning a profit in six months. Now Innscor has developed a full food court with a set of restaurants that cuts across demographic segments—from the daily bread of its basic Bakers Inn to Steers to Pizza Inn and the upscale Nandos chicken restaurants (see Exhibit 1 of the insert). Innscor replicated this concept in more than a dozen countries across Africa. The company has also moved into distribution for U.S., European, and local companies in Zimbabwe and other countries, manufacturing appliances and franchising grocery stores. It forged an alliance with ExxonMobil for its On the Run convenience stores. In 2005, the company posted revenue growth of 278 percent and profit growth of 246 percent. By 2007, it was the tenth largest company in southern Africa, excluding South Africa, with a market value of $203 million. (There is an active stock market in Zimbabwe.)3 All the news out of Zimbabwe was not bad.

Entrepreneurs have had to adapt to political and economic challenges. When Nigeria banned imports on cheese, Innscor spent nine years perfecting its own recipe to make mozzarella in Nigeria taste like European imports. In Zimbabwe, they have gone into businesses that most restaurant companies in developed countries would never have imagined, like crocodile farms. The need for foreign exchange in Zimbabwe's shaky financial system took Innscor first into the tourism business with its Shearwater Victoria Falls operation. When increasing economic uncertainty undermined tourism, Innscor moved into crocodile farms. The company whose core business is bread, chickens, and burgers was raising more than 50,000 crocodiles a year for global markets on Lake Kariba in Zimbabwe when I visited. Innscor became one of the biggest producers of crocodile meat and skins in the world and brought in much-needed foreign exchange. When the market changes, entrepreneurs adapt.

Innscor is just one of many entrepreneurial firms I have had the opportunity to study in diverse countries across Africa as I have sought to understand the African opportunity and how successful companies are capitalizing on it. These companies span industries from consumer goods to alcohol and soft drinks to metal roofing to airlines to retailers. These firms are challenging the view that Africa is a charity case. They are one of the driving forces of Africa's rise. If there are opportunities in a country such as Zimbabwe, where political mismanagement has led to a prolonged economic crisis, or Rwanda, Congo, and Southern Sudan, where new enterprises are springing from the ashes of horrific violence and genocide, imagine the opportunities to create wealth in more stable and well-managed countries in Africa. Successful companies across the continent have recognized the African opportunity that is sometimes buried in a flood of bad news that streams out of the continent.

Whatever its challenges—and there are many, from diseases such as AIDS and malaria to corruption to all-out war—Africa contains more than 900 million consumers. Every day, they need their bread. In Harare, I watched the conveyor belts of the bread factories of Innscor's Bakers Inn churn out more than 50,000 loaves of bread daily as workers in white coats inspected the line. Workers mixed massive pots of yeasty-smelling dough and monitored brown loaves rising on a Ferris wheel and running through ovens on a conveyor belt. The bakery faced challenges of finding good wheat, fluctuating diesel supplies, and government-controlled pricing. The afternoon I visited, the line had to be shut down because of a lack of diesel. But more fuel was on its way, and they would run all night to meet demand. People lined up at the shops in the morning. These loaves of bread serve the lowest end of the consumer market. Costs are unpredictable. Prices are fixed by the government. Innscor has refined its business processes, used meticulous cash management, and harnessed the power of entrepreneurship to achieve better profit margins despite higher costs and lower effective prices. The most amazing thing is that their profit margins were better than they had ever been. As one manager said at the bakery, "We are not bakers; we are entrepreneurs."

Although it was hard to imagine the situation in Zimbabwe could get worse than when I visited in July 2006, it did. By early 2008, annual inflation was estimated at more than 8,000 percent (although unofficial estimates were as high as 25,000 percent). An estimated 4 million people, one-third of the population, had fled the country by mid-2007.4 To address widespread hunger, the government fixed prices for essentials products at a point where producers said they could no longer earn a profit. Executives were arrested for failing to implement the price controls. Entrepreneurs stepped up informal imports from neighboring South Africa. After President Robert Mugabe required all businesses to yield 51 percent of their ownership to black Zimbabweans (called "indigenization"), J. Heinz sold its interest in a Zimbabwe company in September 2007.5

Even so, companies were still investing billions of Zim dollars in building their brands. From banks to cellular companies to milk producers, companies were reworking their taglines and logos to redirect or reinvigorate their Zimbabwe businesses. Kingdom Bank, founded a dozen years earlier, proclaimed, "Kingdom's time has come!"6 An April 2007 ranking by African Business of the top 50 companies in southern Africa (excluding South Africa) included 19 Zimbabwean firms in areas from food to retail to seeds to reinsurance. In July 2007, large South African retailers, including Massmart (owner of Makro in Zimbabwe), Edgars, OK, and Pick 'n Pay affirmed their commitment to keeping their operations open in Zimbabwe.7 Even though squeezed by runaway inflation and government price controls, the retailers continued to express hope about the future of the country.

Most surprising, Zimbabwe is also attracting new investors. Despite worsening conditions, foreign direct investments rose from $4 million in 2003 to $103 million in 2005. With companies significantly underpriced and a belief that the country will ultimately turn around, many investors believed it was worth the risk. At the urging of investors, Imra Assets Management of South Africa, which categorized Zimbabwe as a "frontier" market, nonetheless launched a Zimbabwe-focused investment fund in March 2007. It had set a goal to raise $10 million by the end of the year, but had already brought in $11 million just a few months later. The fund is investing in a number of enterprises, including Innscor.8 These investors believe, that with plans and patience, Zimbabwe's prospects, like the bread in Innscor's bakeries, will continue to rise.

As this book was going to press, there were historic changes underway in Zimbabwe. In elections in March 2008, Robert Mugabe's party lost control of the house of Parliament for the first time since the country's independence from white rule in 1980. His loss to Morgan Tsvangirai marked the weakening of his control of the country. Although these changes increased the threat of violence, they also signaled the most dramatic political change in the nation's recent history.

African Wealth: The Tenth Largest Economy in the World

Africa is a continent full of surprises. The fact that people were baking and buying bread in a country that was in economic free fall is just one snapshot of the continent's hidden opportunities. Looking at the bigger picture of Africa also reveals some surprises. If Africa were a single country, according to World Bank data, it would have had $978 billion total gross national income (GNI) in 2006. This places it ahead of India as a total market. Africa would show up as the tenth largest economy in the world (see Table 1-1). In fact, this places Africa ahead of every one of the vaunted BRIC economies (Brazil, Russia, India, and China) except for China. Of course, Africa is not one country, as we consider in the next chapter, but it is richer than you think.

Table 1-1. Africa Is the Tenth Largest Economy in the World

1

United States

$13.4 trillion

2

Japan

$4.9 trillion

3

Germany

$3.0 trillion

4

China

$2.6 trillion

5

United Kingdom

$2.4 trillion

6

France

$2.3 trillion

7

Italy

$1.9 trillion

8

Spain

$1.2 trillion

9

Canada

$1.2 trillion

10

Africa

$978.3 billion

11

India

$906.5 billion

12

Brazil

$892.8 billion

13

Republic of Korea

$856.6 billion

14

Russian Federation

$822.4 billion

15

Mexico

$820.3 billion

Source: Gross National Income, 2006, World Bank, http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNI.pdf

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020