Retailers take on educational role in Africa
Genuine commitment and understanding at the very highest levels of government is a work in progress. “We need governments that are keen to generate revenues from retailers and that have a sustainable model to refer to, Part of that is to have both arrivals and departure stores; without the two complementary elements you will lose revenue,” he remarked.
Komani is all too familiar with this scenario, with the company’s Gebr, Heinemann partnered departures operation at Murtula Muhammed International Airport in Lagos, Nigeria one half of what was originally signed off on as an arrivals and departures offering.
“We went into Nigeria two or three years ago and it was difficult. We couldn’t understand why, when regulations were supposedly in place, why our interpretation was different from that of the authorities. We were ready to open our 65 sqm arrivals store and then customs and a number of other agencies said that we couldn’t proceed.
“It turned out that there was no law that allowed the operation of an arrivals store despite the fact that the landlord had given us the space and approved our plans.”
He acknowledges that the responsibility to educate government on the economic benefits that duty free brings to the local landscape is huge, but that the obvious disconnect between the various authorities is untenable if Africa truly wants to move forward with sustainable economic development.
“We need to move away from assuming that the people you are dealing with are all on the same page and have the same level of understanding, and then you realise that it’s never been done before. Opening a duty-free store in Nigeria was a first for the country,” he said.
In this respect, Komani believes it is incumbent on retailers to take on the mantle of educators but to also convey the message, in crystal clear fashion, that they need to allow retailers to operate and generate revenues – without getting bogged down in a quagmire of endless delays and operational challenges.
He also points out that for any company considering Africa as an investment opportunity, there’s also the time investment and the need to look at the long play. “You need to have ‘patient capital’ to invest in these markets,” he remarked.
The other big challenge is an absence of policy certainty, which means that educating the decision makers is a moving target. Said Komani: “This means that you reach the stage where the person you are dealing with is finally getting it, then there is a sudden change of leadership and they’re gone.”
African nations that are on the right track according to Komani, include Ethiopia and Rwanda, as he explained: “Ethiopia has developed and committed to a clear strategy, which is to be the East African hub – and this comes from the very top.
“They have got the fleet, they are fixing the airport, and doing something about the visa regime because you need to be able to have connectivity and visa accessibility at the same time.”
Rwanda, meanwhile, is focusing on technology as a prime economic driver, and headline grabbing announcements such as the recent signing of a trio of Memoranda of Understanding between Rwandan President Paul Kagame and Alibaba Group Executive Chairman Jack Ma to establish an electronic world trade platform (eWTP) hub in the country is a prime example.
This has the goal of facilitating cross-border trade of Rwandan products to Chinese consumers, spurring tourism, and providing capacity building to empower the growth of Rwanda's digital economy.