HELPING BUSINESSES TO REALISE THEIR POTENTIAL
FROST & SULLIVAN AFRICA
Hendrik Malan and his team
FINANCE
Intelligent
GROWTH Strategy consulting and intelligence firm Frost & Sullivan helps businesses realise their growth potential and take advantage of the opportunities Africa has to offer Writer: Dani Redd | Project Manager: Sam Love
Africa is a big place. There are 54 countries, more than 1,500 languages and numerous religions. There are a lot of challenges operating across such a large, diverse continent – weak infrastructure being one of them. “People interested in business opportunities here often look at statistics concerning the entire continent, and don’t realise how challenging it is to take advantage of all the opportunities on offer.” This is where Frost & Sullivan comes in, the opening words being spoken by Hendrik Malan, its CEO for Africa. Founded in the 1960s with the goal of identifying, monitoring and analysing emerging technologies and markets, it is now a strategy consulting and marketing intelligence firm, combining an understanding of growth and innovation with sector-specific knowledge to help countries and governments develop and expand. Its clients are typically from the investment community, the public sector (trade agencies and economic development organisations) and the larger corporate market. The company gathers ongoing commercial and technical intelligence from across the
globe, which it uses to help its clients achieve the best possible outcomes for its expansion endeavours.
THE SCALPEL APPROACH Frost & Sullivan takes what Malan refers to as a ‘scalpel approach’ to
driving growth. “The scalpel approach is about evaluating each and every initiative in its own right and combining these initiatives in an understanding of what it might mean for the organisation,” the CEO explains.
CAREER SNAPSHOT
HENDRIK MALAN CEO OF FROST & SULLIVAN AFRICA “I was fortunate enough to land a fully paid scholarship to do my MBA at a Belgian business school. At the end of the engagement, I went on placement with a company and did a consulting project on digital disintermediation. After working with the Managing Director for two months and solving the challenge, I was completely hooked. The problem-solving aspect, interacting with senior leadership, the complexity of the engagement – everything just appealed to me and I decided that this was what I wanted to do with my career. “I joined Frost & Sullivan almost 15 years ago when they launched their first dedicated presence in Africa. I was working for Deloitte’s Innovation Division at the time, and the progression to Frost & Sullivan’s growthfocused consulting was a natural one. I took over operations from my predecessor in 2012 and have not looked back since. The quality of projects and stakeholders we get to work with is tough to beat! Every year delivers new challenges and new opportunities.”
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FROST & SULLIVAN AFRICA
CASE STUDY
34SOUTH – A SHIP RECYCLING FACILITY IN SOUTH AFRICA Growing environmental and labour concerns in the global shipbreaking industry present a desperate need for greencompliant ship recycling facilities. Shipbreaking yards in Southeast Asia and the Middle East demolish obsolete vessels under rudimentary conditions through a practice termed ‘beaching’, which inevitably pollutes the ocean and its surroundings and creates unsafe working conditions. Frost & Sullivan Africa recently completed a full commercial assessment for a proposed green facility on the west coast of South Africa. The planned ship recycling facility, 34South, offers a prime location for end-of-life vessels passing through the Cape of Good Hope to avoid the tolls of the Suez Canal. This is a great opportunity for South Africa to play an important role in industry reforms.
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“This is important because innovation can be quite a ‘fluffy’ space. By which I mean that although a critical measure in principle, as soon as you get into specifics it becomes very difficult to measure. We tend to steer away from innovation terminology and focus on growth, as it is more tangible – we can ask questions about whether the business is moving in the same direction as the market, the current technology and service models being used.” The company takes the scalpel approach to a client’s growth portfolio by unpacking the specific initiatives feeding into the overall growth strategy. This includes both inorganic growth – achieved through mergers and acquisitions – and organic growth, achieved through market expansion and putting out new products and services. Internal development and R&D also factor into growth. Frost & Sullivan takes all these components into account when evaluating whether a business’s growth strategy will deliver its aspirations, year on year. It is also necessary to ground these aspirations in the context of Africa’s operating environment, which Malan explains can often be very challenging, and which not all businesses are prepared for. “A practical example is that a lot of times people will look at the population size of Nigeria and think, ‘oh great, now we can access a massive market’. But our response would typically be, ‘but how are you going to get your product to them?’ It’s important to think about infrastructure – there is virtually no cold chain infrastructure here, even in the main urban centres.” With its in-depth knowledge of operating on the African continent, Frost & Sullivan can quantify risks and opportunities, making targeted recommendations on how to mitigate the former and take advantage of the latter. This local context is combined with a global perspective on risk, innovation and growth derived from a
team of over 1,200 analysts and consultants, who are based in 45 offices across the globe. As well as relying on the firm’s expertise, Frost & Sullivan Africa partners with engineering firms, finance firms, legal firms and even artificial intelligence companies to deliver its projects. “The days of developing projects in isolation are gone; so is being a ‘one stop shop,’ Malan says. ‘We need a broad range of specialised skills to ensure actionable recommendations.” To Malan, it is not just Frost & Sullivan’s expertise that distinguishes it from other growth consulting and market intelligence firms. He also believes the company’s core values of integrity, collaboration, excellence and curiosity stand it apart. “Our values are a critical part of our operations. We integrate them into our projects, discuss them weekly during our team meetings and let them direct our future focus. We constantly try to evaluate whether the values we push externally (through marketing) align with what we live internally,” the CEO says.
LOOKING AHEAD As an intelligence firm, Frost & Sullivan is aware of the potential short- and long- term effects of COVID-19. According to its research, GDP in 2020 in Africa is expected to decline by 2.5 percent on average, although it will rebound in 2021 to approximately 2.5-3.0 percent (which is lower than pre-COVID levels). However, the pandemic has not deterred Frost & Sullivan from making ambitious plans for expansion and growth in the upcoming year. One of its key focus areas is in integrating AI into its delivery models, something that is not without its challenges. “The concern I have around artificial intelligence in Africa particularly is incomplete datasets. Any artificial system needs to have access to quite a significant amount of data and
FINANCE
Future of Gas Interview with Nosizwe Dlengezele, Regional Executive, GE Gas Power
CASE STUDY
BOTSWANA SEZ MASTER PLANNING Botswana is one of the most stable economies and democracies in Africa. The country’s economy is largely dependent on diamond exports, but a stagnating global market and ageing mines means Botswana needs to diversify. Development of specialised industrial parks or Special Economic Zones (SEZs) is the best way to circumvent issues such as bureaucracy and the lack of infrastructure. Frost & Sullivan developed the broader SEZ strategy for Botswana in 2019, and is now supporting the Special Economic Zone Authority (SEZA) with developing detailed masterplans for two of the zones – one in Gaborone focused on financial services, and the other in Francistown, focused on logistics. These projects are expected to provide the needed catalysts to develop other industries in Botswana, allowing businesses to take advantage of the opportunities the country has to offer.
information to make intelligent decisions,” the CEO explains. Another potential issue is that in Africa there is a reluctance to consider AI technology because of a lack of information and on the ground knowledge about it. This is a view Malan does not subscribe to, although he does believe that any data inputted into AI needs to be verified by human knowledge and experience. “For Africa I think there is a role to be played by artificial intelligence, especially in consumer markets. The African consumer is not particularly well understood, as until quite recently there was a distinct lack of retail infrastructure, but it is now evolving
Africa has gone through a significant energy revolution in the recent years. What is your impression? There is need for power in the region, and the fuel is available due to recent natural gas discoveries. In GE, we have the technology and know-how. The next step is to accelerate the collaboration with power plant operators, EPCs, financiers, investors and governments to scale up reliable, affordable and sustainable power. This will not happen overnight, but in sequential improvements. That’s why GE has a 30 MW simple cycle power plant that can be transported easily and generate power in a matter of weeks, but also the world’s largest and most efficient heavyduty gas turbine which today produces more than 21.5GWs of power. Natural gas is transforming the way power is generated across the world. How do we bridge the gap between discovering the gas and converting it to electricity? The International Energy Agency (IEA) estimates that gas demand in Africa will double in 2040, and there is interest across the region through the new gas pipelines that are completed and underway. We also have increased LNG port developments which is a suitable alternative as natural gas is developed. In South Africa, for example, the gas discoveries, including Total’s Brulpadda, will provide supply in the long-term, while local and regional gas resources, including LNG, can be utilized for the immediate need. Ultimately, the accessibility of natural gas to fuel Africa’s growth will be dependent on the availability of gas, a stable and resilient grid, energy demand and the price at which gas becomes available. Companies across the globe are looking for ways to reduce emissions and meet increasingly strict CO2 regulations. What is the role of gas in the energy future? The importance and criticality of decarbonization cannot be over-emphasized today and gas power is an excellent complement to intermittent renewable energy. Gas power technologies not only offer the flexibility to ramp power production to meet potential gaps in energy supply from variable renewable sources and stabilize the grid, but gas also presents the cleanest means to generate electricity from traditional fossil fuels. Today, we can also adapt gas turbines to burn clean resources such as hydrogen and GE is an industry leader in the use of hydrogen for power generation. Need more details? Reach out to GE Gas Power on GEPowerSSA.Comms@ge.com Learn more on https://www.ge.com/power/gas
quickly,” he says. This year, Frost & Sullivan ran a couple of trials with an AI partner, with the goal of becoming comfortable with applying artificial intelligence. “What I learned is that a lot of what artificial intelligence can give you is sentiment. Sentiment towards a particular industry or a particular government – there’s a lot you can pick up through social media chatter, which you can then use to gain an understanding of where the market might be moving towards, or the level of political dissent,” Malan says. Over the next year, Frost & Sullivan is looking to use AI to learn more about consumer sentiment and political stability in high-risk countries. It is also looking to mature its implementation capabilities, helping
international companies to begin doing business in Africa. “The majority of western managers find Africa to be quite an attack on the senses – the noise and traffic can be a shock for someone who isn’t used to travelling in developing areas. We want to help facilitate that introduction; to help foreign businesses find their ‘Africa legs’ by showing them around and guiding them through certain aspects of starting a business here,” Malan explains. With its in-depth knowledge of the continent and scalpel attitude to growth, Frost & Sullivan is more than equal to the task.
FROST & SULLIVAN AFRICA Tel: +27 21 680 3260 rebecca.mabika@frost.com www.frost.com
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FROST & SULLIVAN AFRICA 32 Kloof Street, Gardens, Cape Town South Africa, 8001 Tel: +27 21 680 3260 rebecca.mabika@frost.com www.frost.com PRODUCED BY AFRICA OUTLOOK MAGAZINE