Back in June 1995, I applied to McGill
University in Montreal, Canada. These were the days before the Internet arrived
in Kenya in a proper manner, so applications to foreign universities were a
matter of innumerable faxes, thick packets of information about far-off
institutions, and anxious trips to the post office.
Between June and October 1995, my
apprehension levels kept going up, because the city in which McGill was
situated, Montreal, is the biggest in the province of Québec. Separatists in
the province had been promised a referendum on independence that year, and all
indications were that it was going to be extraordinarily close – Québec had a
more-or-less even chance of winning its independence. The anxiety on my part,
then, was whether I would be graduating from a Canadian university or a
Québécois one. Would a university in a brand new country be as prestigious as
one in an old, established one? Would the character and reputation of McGill
change because of the country in which it found itself?
These two-decade-old concerns were repeated
in the run-up to last Thursday’s referendum in the United Kingdom. There, as
was the case in Canada nineteen years ago, separatists in Scotland had been
promised a referendum on independence. Opinion polls in the final weeks were
showing the vote as being too close to call, and it was unclear whether the
Kingdom would remain United, or whether the Scots would opt to go it alone.
My anxiety must have been reflected in
quite a few students who are studying in universities as diverse as Strathclyde
and St. Andrews. But, more to the point of this column, businesspeople had to
make contingency plans depending on how the vote went. If Scotland became
independent, all sorts of decisions were going to follow, from whether the new
country was going to use the British pound, to the formula for sharing the
proceeds of North Sea oil, to whether and at what speed it would be allowed to
join the European Union.
Reports were that quite a number of
companies were shifting operations to south of the border, calculating that
their chances for continued success lay with the rump England and Wales. The
Governor of the Bank of England, who is, coincidentally, Canadian, weighed in,
warning that currency union between Scotland and what remained of the UK would
be almost impossible.
Many companies, though, opted to maintain a
studious silence. Once it became unclear whether the vote would be successful
or not, companies and their chief executives were caught in a bit of a Catch-22
– their coming down one way or the other on the independence sentiment was a
risk. Because customers, suppliers and regulators were most likely split down
the middle as well on independence or union, it would have been risky to
declare one’s stance one way or the other.
Political risk for businesspeople is not
just in times of conflict and war. Events such as those in Québec and Scotland
mean that business leaders must navigate pretty tricky shoals, ensuring that
their business remains sensitive to the prevailing political realities and
sentiments, yet at the same time not bowing to political waves that could leave
them exposed.
Closer home, this manifested itself most
clearly in the run-up to and aftermath of the 2007 elections. Businesses (and,
notably, media houses) were painted as being pro- one side or the other of a
tight election, and revenues and profits began to reflect these sentiments. At
some point, in the height of the violence in January and February 2008,
distribution of products in certain parts of the country became a logistical
impossibility, as roving gangs refused passage to delivery trucks from the
‘wrong’ company.
Kenyan companies seem to have learned the
lessons, remaining studiously neutral in the 2013 election, but they seem to
not have gotten too far away from political considerations. This is because,
again last week, a political decision in a foreign land meant scrambling for a
reaction that would be the right mix of responsiveness and responsible caution.
A minister in the government of South Sudan declared the prohibition on foreign
workers in that country’s economy, and proclaimed an impossible deadline for
the implementation of this edict. Many Kenyan companies have set up shop in our
northwestern neighbour, and their management ranks are evidently chock-full of
Kenyans. These companies could not make precipitate decisions, but they had to
display responsiveness to the host government of a country that was
increasingly important to their operations. The relief when the edict was ‘clarified’
a day later, meant that difficult decisions did not have to be taken. The level
of uncertainty still remains, though, and investment decisions will have to
reflect that uncertainty.
In the Québec and Scotland case, the
separatist side was defeated (by a vanishingly thin margin in Canada), and the
status quo remained. While some may consider these to be dodged bullets, many
executives must of necessity scan newspaper headlines with an anxious eye, and
be prepared to act accordingly.
By the way, about my McGill application – I
jumped the first couple of hurdles, but a missed deadline saw the chance slip
away, and the postscript is that I ended up at Moi University in Eldoret and
eventually, the University of Nairobi.
Also published in the Business Daily on 23 September 2014 at http://www.businessdailyafrica.com/Opinion-and-Analysis/Businesses-learn-to-navigate-political-risks-/-/539548/2461900/-/11attxq/-/index.html
Comments
Post a Comment