Infotech's Mufuruki on African Entrepreneurship

Tanzanian tech entrepreneur Ali Mufuruki discusses the challenges Africa confronts and his efforts to help build a new generation of continental leaders

By Steve Hamm

Silicon Valley entrepreneurs may think they have it rough. But their biggest difficulties, even during a downturn, are trifles compared with the challenges faced by Ali A. Mufuruki when he launched an info-tech services business in his native Tanzania in 1989. The country was still in the grip of socialism and computers were officially banned.

Now Mufuruki is chief executive of Infotech Investment Group, a holding company for businesses that include the IT services company, an advertising agency, and subsidiaries focusing on real estate, strategy consulting, retailing, and private equity investing. Mufuruki is a strong advocate of the importance of improved leadership in both African governments and private industry. He answered via e-mail questions put to him by BusinessWeek Senior Writer Steve Hamm. An edited version of their exchange follows:

What were the main challenges you faced when you created Infotech Investments?

I decided to start a business in Tanzania in 1989, when my country was still officially a socialist state. The private sector had been all but run into the ground by a quarter-century of a Tanzanian brand of socialism.

Computers were officially banned by the state and here I was trying to set up an IT firm. I had to get a permit from a government agency for every PC I imported into the country and yet the government was my biggest—if not the only—customer at the time.

There was no private capital, no credit, no talent, no family support. And to make things worse, my training as a mechanical engineer with very little practical experience did not prepare me enough for what turned out to be a very difficult and unpredictable business environment.

Going into business was a risky move in many ways, but I had a strong sense that change was on the horizon and opportunities would eventually come.

What are the biggest challenges you face today?

Capital remains elusive even today, especially for startups. Bank credit is expensive and available only to well-established businesses with strong balance sheets. Talent for almost all professions remains in short supply and—despite the fact that the Tanzanian government has embraced capitalism for the past 15 years—doing business generally remains tough.

What are the principal barriers to entrepreneurship in sub-Saharan Africa?

The biggest barrier is access to capital. Alan Patricof, an American venture capital pioneer, once told me how shocked he was to find that Africa is probably the only place on earth where startups are funded by debt and at interest rates as high as 20%. And I was shocked that he was shocked because that is the only reality I know.

Having said that, things are slowly changing for the better. A solid foundation for a private sector-led economy is being built. The next generation of business leaders will have an easier time.

What needs to be done to overcome the barriers?

I can answer this question by looking back at how far we have come in the last two decades. Socialism is gone and almost forgotten. Tanzania is slowly but surely becoming an attractive investment destination. The policy environment has greatly improved and there are strong signs that things will get better, not worse.

This has come as a result of significant improvements in leadership. Understanding how a globalized world works helps and it is going to take strong, wise, and enlightened leadership to sustain the successes we have achieved as a country.

You have written about the crisis of leadership in Africa. What are the roots of the crisis and how can it best be dealt with?

The roots of this crisis lie in the tragic acceptance by successive generations of African leaders—and, sadly, by millions of ordinary Africans—of a notion that we are victims of a particularly traumatizing and dehumanizing experience of slavery and colonialism.

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