The Tatas have been in Africa since 1977 and today they make revenues of over $600 million from Africa and hope to reach one billion in two years. On the other hand, Bharti Airtel has just betted $10 billion on the continent. Kohli had been on a 20-day tour of 15 African countries



Below is a verbatim transcript of the exclusive interview on CNBC-TV18.



Q: Since you have seen Africa both in the 1970s and 1980s and now in the new millennium, what kind of an increase in opportunity do you see? Would you sense that Africa is on that cusp of a quantum leap in terms of development?



Muthuraman: Africa is definitely on the threshold of many major developments. If you see the GDP growth in the last seven-eight years, all the African countries together, it has averaged to 4.9% per annum. This is almost double of what one has seen in 80s and 90s.



The reasons are three-fold. One is there is definitely a much better political stability in many countries in last decade compared to earlier. There has definitely been a better microeconomic conditions in terms of containment of inflation, in terms of government deficits, in terms of government debt as a percentage of GDP, all that has become better in the last decade.



Thirdly, I think there is definitely a much better business climate, opening up of the economy, lot of private entrepreneurs going, so definitely Africa is on the threshold of a very major growth.



Q: What has been your sense, for the past three months probably several times you have studied economic geography of Africa several times and now having visited 20 countries, what is the sense you are getting? Is Africa as big an opportunity to say that the next decade or two belong to that continent?



Kohli: It is so apparent when you go down to Africa that this prediction will come true. After the revolutions led by China as a big 1 billion country then India as a 1 billion country, I think next economic revolution has started in Africa.



In last two years, we have reviewed Africa very closely because we will have significant investments there, not only now, but in the next five-ten years. One, the population is about a billion and in the next 30-40 years, India may go to 1.6 billion, China will go to 1.4, Africa will actually go to 2 billion. That is a big one for us.



Within the same population, urbanisation is great. Today, 40% urbanisation is going to 50% urbanization, which is higher than India. The labour market availability is bigger than China, middle class is bigger than India in terms of savings per capita PPP ratios, youth population is 25% of the world, median age is about 17-18%.



As Mr Muthuraman said, economic growth is picking up very well, 27 out of 30 top countries in Africa have grown very fast in last two-three years. Raw materials for the first time are fully being utilised. Oil is being found in many countries like Nigeria, Ghana, Angola and they are utilising that oil money for the economic growth. So I think next couple of decades will belong to Africa’s economic growth driving global economic growth.



Q: You are putting the perspective of a company that is looking for consumption, but a lot of the chatter and conversation on Africa is also with respect to its natural resources and this Mr Muthuraman at a time when the world is heart-pressed for natural resources, probably many of them dwindling, unreplaceable and for which even substitutes are not being found. What should be the goal of Indian business? Would it be that you better hurry about Africa because the mineral resources are not going to be available for you to come and tap, they may exhaust or they may get captured by other companies much faster?



Muthuraman: In terms of metallic mineral resources, a lot of good resources in places like Australia, Brazil, USA and so on, they are all already in the hands of large mining companies. For several decades, the African minerals have been unexploited, largely because of infrastructure and people unable to go there and transport difficulties and so on. But in the last decade or so, there has been a better exploitation of African deposits and minerals. We must remember Africa has plentiful mineral resources, it has half of the world’s gold, it has got 80-90% of platinum and chrome ore, 10-12% of world’s oil, iron ore, good thermal coal, it has got many other mineral resources and some of them are unexploited and unknown also.



Q: A conspiracy theory that one often hears from economist and even from businessmen is that a lot of it is perhaps already being captured in a sense or exploited by the Chinese. Do you see that as a very big competition, are they way ahead in terms of getting to the mineral resources or do you think people like you still stand a good chance since you all have been there earlier?



Muthuraman: It is not a conspiracy theory, it is a question of which country or which set of people identify opportunities and resources faster. While India has been in South Africa and in African countries probably many decades earlier, I think China has made use of the opportunities better, if you were to see in last 20 years or so. If you go to any African nation, you will see hoards of Chinese, the Chinese businessmen are extremely well supported by the Chinese government. I think China very wisely is making huge investments in capturing mineral resources of the African countries.



So, it is a question of competing, and the world of business is about competition and Tatas have been there for some years, there are other companies which are coming there. I think we need to ensure that we look upon Africa as a place where we need to go and do some big things. I think that realisation in India and among Indian companies is of a more recent origin. But I am quite confident that our companies will pick up the pace quite fast in the coming years.



Q: China is also a very big donor of aid for several African countries that gives you some kind of a moral clout over the governments in their decision making. Do you encounter this as a major theme at all when you start looking for business in those African countries?



Kohli: I don’t think so. I haven’t encountered such kind of a major theme. The only thing I know is that the approaches are very different. I think Chinese approach is led by government of China and Mr Muthuraman is right, the truckloads and planeloads of Chinese are landing up there to exploit the minerals and metals and raw materials whereas Indian approach is very different. I think in our case it is our old relationships, which are very positive, Indians are perceived to be in a very positive frame and it is led by Indian private sector, whether it is Tata or Bharti or Essar or many others.



So, the approaches are very different, but one thing I agree with Mr Muthuraman that I think we have been slower of the take. I hope with this deal of Bharti-Zain, I think we can catalize much faster Indian movement into Arica because I think the timing is right. As that FIFA song says ‘it is time for Africa’, so I would like to invite all Indian businessmen, if they have to grow global, they should definitely look at Africa.



Q: Mr Kholi referred to the fact that Indians are perceived as friendly. There is also another image that some African nations have of India, having come probably a century ago, they are also seen as a colonial people, people who are already very rich and therefore not seen as very friendly, there is an iniquitous relation that some African nations bear towards their old Indian residents. Is that a problem at all when you invest in Africa?



Muthuraman: Infact on the contrary, I think Indians have a very good image in Africa, especially for example in South Africa where Mahatma Gandhi has been there, he is still remembered there, Tatas have been in Africa for some 35 years and there have been many Indians who have been to Africa much earlier times than compared to China. So, there is definitely a positive image that India has and Indians have in most of the African countries.



My only disappointment is that we have not made use of that for many years and ofcourse India is growing and we need to focus on India, there is no question, India has got fantastic opportunities, but I can tell you that the African positiveness about India is something which we have not yet fully made use of. Not withstanding the Chinese onslaught of last twenty years, I think India and Indians and Indian businessmen and we are perceived to be very friendly, honest, straight forward and that positive image we must make full use of. I think time is now and I agree with Mr Kohli completely.



Q: What is your sense, is this push factor? Some Indian consumer markets atleast are getting saturated, is that a factor that is likely to push Indian companies to Africa or do you think in the fullness of time, Indian companies will look at Africa as a land of opportunity along with India, what is the sense you are getting?



Kohli: I think India is a great opportunity itself, but if Indian companies have to go global as our company is trying and Tatas are already ahead of us then we need to look at this last frontier of Africa. We studied all continents in the last two-three years and we felt that our best opportunity lies in Africa because other parts of the world whether they are in the US or Europe or China and Japan, many other parts are already saturated and matured. For the next one-two decades, the last frontier of economic growth is Africa. If we participate then along with India, companies who participate heavily will become very large companies.



Q: Is there anything that the Indian government can get right? Do you sometimes feel that there could be something that a government to government relation can do in terms of improving the prospects for Indian business?



Muthuraman: Government to government relationship in developing businesses is extremely important. In the last decade or even before the last decade, while the Indian businessmen and Indian private companies have taken the initiative to go to South Africa and many other countries of Africa, the government’s involvement for supporting the Indian businesses have not been as much as, for example it is the case in China.



I would very much like to see Indian government’s involvement with many African countries. The government of India needs to recognize many of the African countries as growth nations for the future, we need to develop special friendly relations and all this will help the process.



Q: What would be your advice to Indian business? If I were to ask you give us a simple toolkit, a list of top five lessons which Indian business should adopt while approaching Africa, what would they be?



Kohli: Let me start with government because government is most important. We need to build bridge with every government because if you build that bridge, I think you take off much faster. So luckily in the last three weeks, I did that in every country. We build bridges, government fortunately look upto India, prime ministers, presidents, ministers, they look upto India as a democracy because democracy is gradually growing in Africa. So they look upto India how we do election, how we run parliament, how we do all this, which is a great news and we can help to expose them to India.



Second is on the market side. Consumers are very different in every country, so don’t go to Africa as Africa. Go to Africa as 53 countries. Each country is different, each country has to be dealt with in a customised fashion, don’t have a broad brush, go for customised country-by-country strategy.



Third is people, people’s cultures are different, tribes are different, languages are different, don’t customise, respect them a lot which is a fundamental value of Africa, be happy, make them happy and I am sure they will come up to task. We, for example, have 42 nationalities, working in our company now in Africa. We are trying to leverage all of them and customise our people’s strategies country by country.



Fourth is brand and it is very important to launch Indian brand and launch them in a qualitative fashion so that Africans are accepting Indian brands. Global brands are not that big there, except for Coke etc, so there is a vacuum, which Indian brands can go and fill up as soon as possible.



The last thing is about working with partners, you need to have partners there, whether they are global partners or local partners, work closely, respect them, give them space and they will help you grow much faster whether they are shareholding partners or marketing or distribution partners, they are important because our knowledge of Africa, especially the deep-end of Africa, beyond the capital cities is not that great. So in my view, these are the five top drivers for great success in Africa.



Q: The same thing in a slightly negative frame, what can be the dangers that Indian business should be careful about? Would sudden disruptions in law and order be an issue, which they may have to encounter, would it be that the law of contract is not so sacred, what can be the pitfalls, which you are not quite prepared for from this end but you might encounter over there?



Muthuraman: The pitfalls are the same in all developing countries. We also have similar pitfalls in some of Indian states and there are many countries in Africa, which are more developed than some of the states of India. That is also true. So Africa is a mixture of many countries. There are countries, which have got diversified economy like South Africa, like Egypt, like Morocco, all these are fairly diversified economies. Then you have got these oil exporting countries, then you have got economies, which are in transition like Ghana, Nigeria and so. There are also countries, which are pretransition. I think India also has some states, which are pretransition.



So, you need to treat each country differently, each country is in a different state of development. One positive thing that we have in Indian business is Indian businesses have got good governance practices. I think as companies many of our companies are very well evolved in terms of governance practices, in terms of systems and processes and so on. We can bring all that to this developed countries, we need to make sure that we don’t underestimate any of these countries, each one of them have got enormous amount of potential and we need to respect them. We need to respect their culture, we need to respect their social habits, we need to respect their systems, and that is very important.



Q: If you were not a cellphone seller, what would you like to sell in Africa? Where is the big opportunity, a lot of businessmen, CEOs are listening to you over here, which are the top businesses that have an easy run of that continent or of those countries?



Kohli: If I was not a telecom guy, I would have definitely got into food and FMCG because food and FMCG in Africa, especially packaged food etc will be a fantastic demand with population growing, consumption growing, people spending much more disposable income on higher quality products and services. The next ten years or twenty years will give so much of disposable income at new products and new services, especially with this billions of oil money coming back into the economy. So I feel these two-three businesses will also do well.



Transportation is another one because about 10% of GDP is being spent on transportation and telecom. So transportation needs, including airlines need lot of investment and there is huge potential. For example, in airlines, sometimes when you go from one country to the another in French speaking countries, you need to go back to Paris and then come back to Africa. Can you imagine the potential? So, there are a lot of good businesses to be picked up by Indian companies.
(http://www.moneycontrol.com/news/business/is-africanext-frontier-for-indian-business_470512.html)