In the first part of a new series Anver Versi looks at the history of trade and sets out the three basic rules for becoming a master trader
In July, international attention was focused on Kenya because the world’s most powerful man, US President Barack Obama, was visiting his ancestral homeland. But, for the rest of Africa, the real value of Obama’s visit was the global spotlight it shone on the power of entrepreneurship to change Africa. Hosting the Global Entrepreneurship Summit in Nairobi – the first time this event, initiated by the US President himself in 2000, was held in Sub-Saharan Africa – he said Africa was on the move and that, “People are being lifted out of poverty, incomes are up, the middle class is growing and young people like you are harnessing technology to change the way Africa is doing business.”
This focus on entrepreneurship in Africa is becoming more urgent because, within two decades or so, Africa will have the largest proportion of young working-age population in the world. This factor alone could propel Africa into a new era of accelerated growth similar to that of Asia; however, if there are no worthwhile employment opportunities, the continent could descend into the sort of chaos and insecurity that is currently engulfing several countries.
It is also clear that, as more people move into the cities, the old pattern of seeking jobs in government, the public services or with large organisations will no longer suffice. The onus has now passed to entrepreneurs, new and established, to create new businesses not only to employ themselves but also provide work for others.
The example from other countries shows that entrepreneurship generates a continuous stream of wealth and jobs. One original idea leads to a whole network of other viable ideas; one successful new company spawns scores of others and on and on in a virtuous cycle. Entrepreneurship also becomes a crucible for new skills, for the application of new knowledge, for cutting edge innovations, for new ways of looking at things – in short, for an entirely new paradigm shift, a new life.
The African Centre for Economic Transformation, Africa’s leading think tank, says the continent has to create a million new jobs per year to keep up with the demand for employment. The only way this can be done, it says, is through an explosion of entrepreneurship that will feed into industrialisation and export competitiveness and help the economic transformation of the continent.
The good news is that it has never been easier to break into business or to succeed in it as rapidly as it is now. The Asian countries have now joined the international trend and are rolling out newly-minted multi-millionaires by the week, most of them under 40 years of age. The number of new African millionaires, while not anywhere near the scale of Asia, is also growing steadily.
Globalisation has shrunk the world into a huge ‘village market’ and technology has made possible what was impossible only a couple of decades ago and virtually obliterated constraints of distance and time. You can connect and communicate with hundreds of people scattered in the far corners of the earth at the click of your computer mouse.
The power of trade
The global business environment today is custom-tailored for the good old-fashioned commercial trader – albeit armed with the array of technical tools that anyone can acquire with a small outlay. Yet, when people talk about entrepreneurship, they too often think of digital innovations, financial gymnastics and outlandish products.
There is a tendency to look down on trading as something that belongs to the antiquated past, to be unexciting, unglamorous, a chore, a routine, a painful and slow way to accumulate a little surplus. Yes, trading, just like any other enterprise, can be all this and worse – but it can also be something else.
Throughout history, and in literature, traders have always been associated with wealth and power. Consider the Phoenicians operating out of what is now Tunisia who ruled the Mediterranean through their mastery of trade; the Medici of Italy who started out as textile traders and ended up as the most powerful family in 16th-century Europe; or consider Britain, described by Napoleon as ‘a nation of shopkeepers’ who nevertheless defeated him and went on to rule the world.
Fifteenth century European countries were so dependent on trade with the East for their wealth and power that when the route was closed by the Ottomans they set out to find a sea-route to India and ended up ‘discovering’ the Americas as well as Africa and began the whole saga of colonialism, again based on the enormous benefits of trade.
A large part of the last century consisted of ‘trade wars’ between the various power blocks, and to this day negotiations on trade regimes form some of the bitterest and most protracted struggles at international level. Trade sanctions can not just cripple nations, they can destroy them.
Such is the power of trade. Indeed, today the volume of trade that a country engages in is often a reliable measure of the wealth of that country. The transformation plans of every African country place increased international trade at the very top of its agenda.
On average, the trading class in any economy is usually better off than most professionals, and even at the most basic level, traders tend to enjoy better standards of living than their neighbours.
The majority of Africa’s richest entrepreneurs started out as traders – Aliko Dangote comes immediately to mind followed by a long list specific to each African country. Even De Beers started out as diamond traders, not miners.
Africa’s youngest billionaire, Ashish J Thakkar, began his own extraordinary rise when, at the age of fifteen, he traded his computer and made a small profit. From there, he expanded his range and today heads a massive global investment vehicle. Recently, he became the first African to be appointed chair of the United Nation’s Global Entrepreneurship Council, whose members are all under 40 years of age.
The number of new members of this organisation has surged over the past decade indicating that a rising volume of young entrepreneurs is making a success of their businesses in record time. A very large proportion of these are traders.
Becoming a master trader
The term ‘trader’ covers a multitude of activities – from the most basic bartering to global operations with turnovers of billions of dollars a day. Incidentally, a substantial number of very small scale Chinese traders plying their wares in remote African locations started out bartering their cheap manufactured goods against food and shelter and recent studies suggest that this is still one of the most used entry points for them to gain a foothold in the continent.
But one should not scoff at the idea of barter – when you dig deep down, that is what all traders do: they act as agents of exchange between seller and buyer and they use money as the medium of exchange. There can be many value chains between the original product and the final buyer and at each stage, there is a trader involved. Traders are intricately and intimately involved in virtually all commercial transactions we make. Modern life would be impossible without traders. They come from all backgrounds and, like the rest of society, contain the good, the bad and the ugly. But good, successful traders make for sound, prosperous economies.
How does one become a master trader? When this question was put to some of the very best master traders they did not speak about advanced processes or brilliant accounting systems; instead they said they relied on a few simple rules.
• Rule No. 1
“It does not really matter what your line is,” says Africa’s master trader, Ashish J Thakkar. “What matters is to know where you fit in the value-chain, how you conduct your business and how much you know about it. Knowledge is power in this game.”
The best thing about trade, says Thakkar, is that the principles are as old as history but the practice is perfectly adapted to the latest innovations. Traders are always the first to bring the latest products to the market and to adapt the newest systems to their own environments.
When Thakkar left school at the age of 15 to follow a business hunch, he did what thousands of Africans had been doing and continue to do – he travelled to where the goods (in his case, computers) were available at a cheaper price – and returned with suitcases brimming with them to sell where he could make a profit, back in his home country. But he did not pat himself on the back and squander his profits. He saved and with the extra capital he was able to buy even more computers and make an even bigger profit – and thus add to his capital. He was on his way to becoming a proper trader, but what propelled him at a young age into becoming an entrepreneur is that he never stopped learning and applying what he learnt.
“Sometimes there is too much focus on the how and why and when – all the processes involved,” he says. “These are important, of course, but what is even more important is the passion behind what you do. Trading is all about people; it involves you doing your part to make life better, fuller, more pleasant for people. For me, the most important requirement of a master trader, or for that matter, any entrepreneur, is to do your work honestly and to do good while doing well.”
If you are a trader, the most important tool in your armoury is money. The rest of us tend to regard money as something that enables us to buy all the things we want in life; but the master trader sees money as his or her principal means of engaging in the value-chain exchange. The more of his profits he can save and invest back in his trade, the more trade goods he can buy and sell and the greater the volume of his revenue. This sounds simple, and is simple; but in real life there are always urgent demands made on the money we have. You may be able to tighten your belt and shun temptation, but what about your partner, or parents or children whose needs are pressing? Should the master trader impose a code of strict discipline not only on himself but also on his family? Should he ring-fence his personal expenses and say he will only spend on essentials for himself and his family and not a penny more? Should he analyse every act of his life from a cost/benefit basis? Should profit and nothing but profit be the driving motivation of everything he does?
“That is the description of a miser, and in my opinion, a loser, not a master trader” says my friend S.V. He borrowed Ksh500 from his father some four decades ago and used it to export wood carvings from Mombasa to Florida in the US. He recently completed a US$100m deal involving copper smelters in the DRC.
“Never forget why you are trying to make money,” he says. “For most of us, it is so that our families, our children, can have decent lives. Don’t encourage extravagance or trying to keep up with the neighbours, but make sure that your family lacks for nothing. Otherwise why bother?
“If all you do is collect money, then you are a loser. Being a master trader is about being alive and living life to the full. It is about fulfilling people’s needs and desires – God knows our lives are short enough. Trading should not be a joyless, grim business. Enjoy it and you will make money and bring happiness to others too.
“If you have to dig into your capital, do so – but resolve to make even more profit the next time around so that this necessity does not arise. Remember that you are borrowing from your own business, and repay it as soon as you can.”
He has an unusual piece of advice for those who want to be master traders: “Never forget why you are trying to make money – if you do, you lose touch with people and your own feelings; and a trader who does not understand people and what motivates them is headed for bankruptcy”.
• Rule No. 2
“A fool and his money are easily parted,” warns Nigerian J.T. Akpabio (not his real name). He did the whole ‘flying suitcase’ routine during the 1970s, travelling to Japan, Taiwan, China, Europe and the Middle East to buy and sell goods. Today he owns a chain of mid-sized supermarkets in three Nigerian cities.
“I have seen so many promising traders from West Africa being wiped out by one bad deal,” he says. “The world of trade is like a jungle surrounded by shark-infested waters. Whether you carry cash (which many Africans still do), or cards, there is always somebody, somewhere who is waiting to relieve you of your money or sell you worthless junk at high prices.” He recalls several instances in his early years when, lured by ‘warm smiles’ and ‘unbelievable bargains’, he lost virtually all his money and had to endure nightmarish conditions before eventually making his way back to his hometown.
“We traders, particularly Nigerians, take pride in our sales patter and often think we are smarter than everybody else. That is just what the conmen are looking for. They work on your greed and your vanity. They make you believe you have just discovered a wonderful way to get rich quick. The next thing you know, your money is gone and you are left holding something totally useless or nothing at all except some empty promises,” he warns.
To be a master trader, he says, you have to learn to step carefully and not be dazzled by appearances. “Check, double check, triple check everything, compare and contrast prices, quality, delivery, guarantees before committing yourself. Also spread your risks when dealing in a new market so that if you happen to pick up a dud, the damage is limited.
“Be careful about accepting advice – people are very willing to dash out the first thing that comes to their mind as their advice even if they have no real experience of what they are talking about. Free advice is as plentiful as hot air – and just as useless.”
Had he been discouraged by all the blows he suffered from unscrupulous dealers in his early days? “My father told me that to be a successful trader you have to imagine you are made of rubber – you get back up as soon as you are knocked down.
“It was the hard lessons that I managed to survive that made me a master trader,” he says. “I have never heard of any master trader who has not, at some point or the other, been taken for a ride. Learning from the mistakes you make is what makes you a master. It took a while, but I learnt that there are no short-cuts to success; the swindlers always offer you what look like short-cuts. Avoid them, these are short-cuts to your own destruction.
“We keep talking about the destructive effects of corruption, but what else is corruption other than attempts to take short-cuts? Make money quick. In the end, everybody pays double or triple what they should and despite all the scheming and cheating, the more corrupt you are as a society, the poorer you remain,” he concludes.
The crook, he says, rules for a day; the honest trader endures.
• Rule No. 3
“Have you ever heard of a trader who does not know something about everything?” asked my companion Kwesi Boateng (not his real name). We were in Accra, Ghana, strolling through the quite stupendous Makola market – the largest in West Africa.
Boateng owns a chain of stores in Accra’s second-largest market, Kaneishi, from where he sells reconditioned electric household items, mostly imported from the United Kingdom. Makola market defies easy description. It is a trader’s paradise. I was told that some years back there was a sign saying you could buy everything ‘from a pin to an elephant’ in the market, and I believe it – although I suppose one would have to put in a special order for the elephant.
The market was teeming with people all determinedly going about selling or buying something. Porters, many of them sturdy women, deftly made their way through the crowds with huge loads on their heads. The sidewalks were covered by women selling basketfuls of fruit, tomatoes, yams, red and green chillies, vegetables of all varieties, palm nuts, cashews, peanuts in jars and hundred of other items. Stalls along the overflowing streets were crammed with bolts of colourful cloth, ready-made dresses, hats, shoes, sweets, bottled drinks, cooked foods in large aluminium pots, biscuits from England, cheeses from wherever, flip-flops and tonnes of plastic utensils from China.
We entered a store because I wanted to buy some of the famous West African printed cloth – some brands made locally, some from Holland – and asked the lady in charge to explain the various products. She spoke expertly and I was convinced that she had had something to do with the making and designing of the cloth.
Then Boateng took me to his market, Kaneishi, where either side of the main road was chock-full of every household item you could think of. I wanted to buy a reconditioned fan and an electric kettle. We went to his store and the salesman in charge gave me the entire history of each fan I was looking at and all the technical details that he could remember. I picked out one model and he was quick to interject that it was not the latest model on the market, that it came from Vietnam, not Korea, that it lacked certain features and so on. When he learnt that I had been living in the UK, he produced ‘English’ products and told me which store in which locality in London it had come from.
“Yet he has never travelled outside Ghana,” Boateng told me, “and he did not get past junior school. But he just loves to learn everything about everything.”
I discovered that the salesman’s love for knowledge about his products came from Boateng himself. He told me he steeped himself in details about all the products he sold. “Maybe I know even more than the engineers who made it in the first place!” he smiled.
Here was a master trader if ever there was one. He gave me a lift in his sparkling Pajero and pointed out all sorts of accessories in the car. I told him I was looking to buy a new mobile phone. “Now you’re talking,” he said. “Okay, where do we start? Android or…”. He was still talking phones when he dropped me off half an hour later.
More tips on how to become a master trader will follow in part two of this series.