Celebrating New Beginnings: Unveiling Our Inaugural Newsletter

Unlocking Africa's Economic Potential: Addressing Account Receivable Challenges for SMEs

A decade ago, I had the privilege of engaging in an interesting conversation with a successful French investor during an African business conference held at Harvard University. Our discussion revolved around the influential 2010 McKinsey & Company report titled “Lions on the Move: Progress and Potential of African Economies,” which delved into the extensive economic prospects of Africa. I was profoundly impressed by the investor’s extensive knowledge of the African market. This encounter prompted deep introspection as I pondered the curious reality that a non-African individual possessed a more profound understanding of my continent’s economic potential than I did. It was a moment that compelled me to question why, as someone of African heritage, I had not taken on the role of an educator, imparting insights on this pivotal subject matter. Ten years later, I find myself writing and sharing my insights on the Africa business landscape.

While growth has seen a slowdown in Sub-Saharan Africa over the past few years (3.6 percent in 2022 compared to 4.1 percent the previous year, as reported by the IMF), the region still sparkles with boundless opportunities, thanks mainly to its vibrant, young, and enterprising population. Small and Medium Enterprises (SMEs) form a pivotal pillar of the African economy, holding the reins of economic growth and development. According to the World Economic Forum, their contribution encompasses over 80% of the region's employment and a significant 50% of the GDP.

Nonetheless, the path to prosperity for SMEs, as well as micro-enterprises, and early-stage startups within Sub-Saharan Africa, is strewn with challenges. The prominent obstacles include the uphill battle of securing financing, a difficult issue compounded by the strict requirements set by financial institutions. These include credit history, financial statements, and collateral, hurdles that many SMEs struggle to overcome. Adding to the fray, high interest rates and tight repayment windows accompany those fortunate enough to access credit. However, a less-spoken-of but equally important challenge revolves around the delicate management of accounts receivable, a puzzle that can wreak havoc on cash flow. Businesses in the B2B realm often twiddle their thumbs for a taxing 90-180 days, praying for payments to materialize. Indeed, the average time it takes to collect a debt in Sub-Saharan Africa is 120 days, compared to 30 days in developed countries (World Bank). This delay, unfortunately, brings the threat of lagging behind in crucial expenses such as payroll, utilities, and rent, casting a shadow over their operational prowess.

Reflecting on a personal story, five years ago, I invested in a media company in Central Africa that faced the heart-wrenching consequences of delayed payments. The client happened to be a governmental agency, which after rendering services, took a staggering nine months to pay only two-thirds of the amount owed. But the toll was greater than numbers could convey; the company lost some of its key personnel to unpaid salaries, casting shadows of financial strain. By the time the payment arrived, it was too late to heal the wounds.

To gain a deeper understanding of the complex world of accounts receivable, I engaged in a candid conversation with Patrick E., the founder and CEO of a CPG company in West Africa:

Me: What does your accounts receivable figure look like?

Patrick: Somewhere in the range of 65 to 70 million CFA (~$106k-$115K).

Me: How long does it typically take to secure payments?

Patrick: It really depends on sectors and business types. For mass market goods, we often get paid promptly or it takes a maximum of 3 months. But generally, the wait spans 90 to 180 days, sometimes even stretching to 180 to 300 days for some products. There are instances when we reluctantly forgo payments, acknowledging that our goods may never yield any income. Unfortunately, pressing charges isn't viable, given the costs and time involved.

Me: In the face of liquidity challenges, how do you keep operations afloat? Are there stopgap measures to fuel cash flow?

Patrick: In our earlier days, we invested personal funds into the business. Presently, we leverage earnings from other ventures to support struggling activities. Occasionally, we're compelled to infuse our own resources or dip into personal savings, though this has become rare due to our diversified revenue streams.

Me: What if savings weren't an option, and other ventures weren't generating income?

Patrick: I don’t even want to think about it! We'd be left with no choice but to consider selling the company or shutting it down.

These narratives mirror the reality for many SMEs in Sub-Saharan Africa.

There are several factors that contribute to the challenges of managing accounts receivable in Sub-Saharan Africa. These include:

• Lack of credit history: Many SMEs in the region do not have a long credit history, which makes it difficult for them to get loans from banks. This can lead to businesses having to extend credit to customers who may not be able to pay on time.

• Weak legal systems: The legal systems in many Sub-Saharan African countries are not well-developed, which makes it difficult for businesses to collect on debts. This can lead to businesses having to write off bad debts, which can hurt their bottom line.

• Culture of late payments: In some countries in Sub-Saharan Africa, it is not uncommon for people to pay their bills late. This can make it difficult for businesses to collect debts on time.

The good news is that these colossal challenges have set the stage for equally remarkable opportunities in the B2B payment and B2B Debt collection domains. Navigating through the formidable terrain ushers in innovation, prompting a fresh perspective and spawning creative solutions. Providentially, some African startups are taking up arms against the challenges of managing accounts receivable and payable. FinTech’s such as Duplo (Nigeria), Churpy (Kenya), and Float (Ghana, Nigeria) stand at the forefront, pioneering the drive to address these issues through digitalization and automation of receivable and payable operations for SMEs throughout Africa.

The challenges of managing accounts receivable are real, but they are not insurmountable. By taking steps to improve their accounts receivable management, SMEs can improve their cash flow, reduce their financing costs, and protect their bottom line.

Food for thought: Embrace Meaningful Paths and Build Lasting Legacies

"Call your grandmother when nothing's going right," they say. I remember a day when I needed that advice more than ever. I visited my late grandmother, and even though I tried to hide it, she saw through me. She noticed that I wasn't the cheerful, joking person she knew so well. With her perceptive gaze, she asked me, "What's wrong? What's eating at you?" I opened up about my disappointment; I had missed out on a longed-for work promotion. I thought I deserved it, but life had other plans. My grandmother was a wise and compassionate person, and she always knew how to make me feel better. We had several conversations about my career in the past and she knew that I wasn’t happy with my job.

In her comforting presence, my grandmother shared wisdom that initially felt distant. "Armel," she began, "life's finest achievements require patience. Remember, greatness takes time to unfold. Furthermore, do what brings you joy. And lastly, let your career be a force for good in the world." At the time, her words merely brushed the surface of my consciousness, failing to truly penetrate my youthful impatience.

The real turning point came in my early thirties, when a close friend's sudden passing hit me hard. He was a bundle of aspirations, dreams, and energy. We often talked about the businesses he wanted to launch. His departure was a stark reminder that life is short, and that I needed to make the most of it. Here was someone younger and healthier than me, gone in an instant. It sparked a fire in me; a contemplation of my own legacy. How did I want to be remembered? How could my career and life choices reflect my values, my goals, my impact on the world?

I started to think about what my grandmother had said, and I realized that she was right. I didn't want to spend my life doing something that I didn't enjoy. I wanted to do something that would make a difference in the world.

That's when I stumbled upon entrepreneurship, a path that beckoned with its promise of solving real problems and making direct impacts on lives. It was a tangible way to heed my grandmother's counsel about meaningful work.

A decade ago, I had an epiphany. I shifted my focus from titles to purpose, emphasizing the importance of the latter. In the search for a purpose-driven life, I learned that reflection is key. When life feels uncertain, revisiting your values, passions, and dreams can guide you. These insights become a compass, pointing the way forward.

If you're not sure what you want to do with your life, here are a few things to consider:

What are your values? What is important to you?

What are you passionate about? What do you love to do?

What skills do you have? What are you good at?

What kind of impact do you want to make on the world?

Once you have a better understanding of yourself, you can start to explore different career options. Talk to people who are doing work that you admire. Do some research online. And most importantly, don't be afraid to take risks.

But the journey to a meaningful life is far from instant. It's about taking small steps every day, learning, growing, and staying true to your path. It's a road that demands self-discovery, persistence, and hard work, but the rewards are boundless. A meaningful life is one where purpose, happiness, and genuine connections take center stage; a life well-lived in every sense of the word.

Game Changers: The Inspiring Journey of Pr. Yap Boum II

As we delve into the realm of leading a meaningful life and forging a purposeful career, let me take a moment to shine a spotlight on someone who occupies a special place in my heart: Pr. Yap Boum II. Our journey began back in high school, and over the course of more than two decades, our bond has grown unbreakable. Allow me to share his remarkable story with you:

Yap is an accomplished microbiologist and epidemiologist who is currently serving as the Executive Director of the Institut Pasteur of Bangui in the Central African Republic. Prior to his appointment, he was the regional representative for Epicentre (Africa), the research arm of Médecins sans Frontières (MSF), also known as Doctors Without Borders. He is also a co-founder of several impactful ventures, including Kmerpad, The Village, and iDocta. In addition to his professorial roles at the University of Mbarara in Uganda and the University of Yaoundé in Cameroon, he has been a frequent guest lecturer at prestigious institutions like the University of Virginia, Havard and Yale University.

Pr. Yap's impact is vast. His extensive research spans tuberculosis, malaria, COVID-19, and many other neglected tropical diseases. He is also leading Ebola vaccine trials. He holds four master's degrees and a PhD in biology, reflecting his endless pursuit of knowledge. His life's purpose is magnificently defined by his efforts to improve healthcare access in resource-limited settings, alongside his unyielding commitment to combat infectious diseases on a global scale. He is a frequent speaker at international conferences on global health and infectious diseases.

From the moment our paths intertwined, Yap has always made it his priority to contribute to the overall development of the African continent. He chose to reside in a remote area of Uganda after completing his college education instead of chasing a lucrative career in Europe. When I asked him why he made that decision, he told me, "Armel, if you are not part of the solution, you are part of the problem… Africa’s future depends on us, its children."

Yap's work has had a profound impact on the lives of millions of people. He has contributed to the development of new diagnostic tools and treatments for diseases that have plagued Africa for centuries. He has also helped to train the next generation of African scientists and health workers.

Today, I stand brimming with pride, as I take this opportunity to honor the remarkable journey my friend, Pr. Yap Boum II, has undertaken. His story inspires us to embrace purpose, make a difference, and be a part of the transformative change our world deserves.

Closing thoughts - Hip Hop's 50th anniversary

"The Mac Dad 'ill make ya (Jump jump)

Our Daddy Mac 'ill make ya (Jump jump)

Kris Kross 'ill make ya (Jump jump)

Uh huh uh huh (Jump jump)"

I was at my friend's 10th birthday party when I first heard "Jump" by Kris Kross. I didn't understand a word of the lyrics, but I was immediately drawn to the beat, the drums, and the Chorus. I had never heard anything like it before.

The early seeds of my hip-hop journey were planted by the captivating rhythms of "Jump" and the infectious energy of "Hip Hop Hooray" by Naughty by Nature. I vividly recall the rebellious thrill of wearing clothes backwards, much to my mother's disdain; a testament to the power of music to challenge norms and spark youthful defiance.

Back then, I was young, hanging out with my friends at school, listening to “Regulate” by Warren G at recess and trying to imitate his flow, without realizing the deeper meaning of his words.

Hip hop was a way for us to connect with a culture that was far away from us. We lived thousands of miles away from America, but through hip hop, we could feel like we were part of something bigger.

There was a certain magic in the air; a musical revelation that felt like a secret portal to another world. The beats and rhymes felt like they spoke to all of us, capturing emotions we had yet to fully grasp, even though we didn't fully understand them yet.

It wasn't just the music, it was a whole style that gave us confidence. We used to wear baggy clothes just to look like our favorite rappers. We felt connected to the artists and their stories. The swagger of those artists became ours, their stories intertwined with ours as we navigated the landscape of early adolescence.

In the midst of this musical journey, I was introduced to an artist who transcended the boundaries of artistry: Tupac Shakur. His words were more than lyrics; they were profound messages that reverberated through the corridors of my soul. A visionary, he fearlessly tackled societal issues, leaving an indelible mark on hearts and minds.

Then there was Nas, known by many names: Nasty Nas, Nas Escobar, Esco, and ultimately, God's Son. His artistry was a gallery of poetic expressions that spoke to the very core of humanity. His album "Illmatic" was nothing short of hip hop's holy book, an eloquent narrative that left me speechless. It was a lyrical collection of poems. Nas is simply my GOAT.

In the early 2000s, I fondly recall those hours spent in my friend's living room, crafting rhymes alongside C.E.M and Sango Pip as part of our rap group, 'Antistar.' The process of composing lyrics was exhilarating; we weren't concerned about what people’s opinion about our music was, only about the art itself. Even today, I occasionally revisit our old tracks, astonished by the creativity we once possessed. I reminisce about those late nights in our makeshift 'studio' while our peers hit the clubs, often chuckling with nostalgia. Those were indeed the good times, and hip hop made life truly enjoyable.

Hip hop is the bridge that connects cultures, proving that emotions know no linguistic boundaries. It unites souls from distant corners of the world, forging a sense of unity that is profound and heartening. It helped me to understand the world around me in a new way.

Almost 30 years have passed since I heard my first song, and now I call the United States “home”. Hip hop's music, stories, and culture have guided me along the way. It seems almost fated that my journey would bring me to New York, the birthplace of hip hop. Hip hop helped me feel at home in a new place, offering comfort when things felt strange.

As hip hop turned 50 this past August, I wanted to express my gratitude. It's been more than just music to me; it's been a source of change, a way to find myself, and a connection to a world without borders. Each song left memories in my heart, and each beat connected different parts of the world. Thank you, hip hop, for shaping lives, inspiring dreams, and showing how art brings us all together. Happy 50th birthday, and thank you for changing my life.