“There’s an informalness to the way you do business there, where someone might expect a gratuity. As an expat, you’re sort of marked as someone who might be willing to do give a little extra to help get the transaction done.”
It’s a brief segment that no doubt is going to be lost among the far more influential breaking news in frontier markets today, but this doesn’t make it any less important. I believe this situation poses one of the most enduring and complicated challenges for many developing countries. So I’m going to try to sum this up in as tidy a way as I am able for now without using any of the following words or phrases: “empowerment”, “sustainable”, “bottom of the pyramid”, “win-win”, “pro-poor”, “doing well by doing good”.
In an ideal world, some enterprising African (or Latin American or Asian or Middle Eastern) entrepreneur who lacks high-level political connections would be able to take out a loan at a market-competitive interest rate, lease the storefront at a market-competitive price, obtain the necessary fixed assets and licenses to execute his or her vision, and open for business.
As anyone plugged into this universe knows, such a starry-eyed vision breaks down at numerous points, opening business opportunities for people with more money, more connections or both. Some of those people are locals; some are foreigners. Some of them masquerade as purveyors of a solution to solve poverty; some go in with no other vision than to capture high profit margins or more market share.
There are many elements of this reality that might be considered deplorable, but as with many other things in life, an outcome can only be called “bad” when judged against reasonable alternatives.
I have no opinion about the food quality, business practices or social responsibility efforts of Subway. What I do know is that a society’s cultural robustness in today’s world necessarily relies in part on its ability to foster home-grown solutions, whether those manifest as consumer products, artistic expressions, philosophies, services, business practices or what have you. One can argue (and many do) that there is nothing purely “home-grown” anymore and that even some of the most time-tested phenomena associated with certain cultural identities were originally borrowed or imposed from some other culture. And there is merit to that argument. But from the street level, the more foreign presence that permeates a society, the more whatever passed as “native” culture fades into the background. This is not something I can back up with data; it is a totally subjective observation of mine borne from several years of exploring different cultures and the most blatant example of this that I can think of is Singapore, which has very little native “culture” to speak of in the way that we have loosely come to understand this concept.
There is no doubt something fascinating about melting pots. But that fusion comes at a price.
Kenya, where Mr. Edmonds is apparently focusing his efforts for the foreseeable future, is surely a far way from looking like Singapore, but it wasn’t that long ago that the two were not so far apart from an economic development standpoint. How the two diverged so much so quickly is a subject for another time, but it demands an accounting for how cultural specifics drive economic development.
Mr. Edmonds’ observation about the so-called “gratuity” of doing business in Kenya doesn’t leave much to the imagination and obviously perpetuates certain stereotypes that unfortunately have some truth to them. Since Mr. Edmonds didn’t elaborate on his encounters with bribe-seekers (or else Bloomberg just edited them out of the clip), I suppose we are to give Mr. Edmonds the benefit of the doubt that he will not succumb to too many gratuities. But before we lament this as another case of brand imperialism, profiteer invasion, exploiting the poor, or some other such knee-jerk judgment of modern commerce, it is worth asking the questions:
What are the reasonable alternatives?
And what is the full scope of obstacles preventing unreasonable alternatives from being realized?
And which obstacle should be tackled first?