After the Pandemic – The Future of East African Family Businesses
Interview with Dhruv Jog, Tanzania
Second-generation family business owner, Dhruv Jog, has seen and felt firsthand the severe effects of the COVID-19 pandemic on his family’s construction business. Based in Dar es Salaam, Tanzania, Jog’s Advent Constructions is in its 25th year of operations, a tenure that has given him decades of unique insight into the East African business environment. Moreover, his diverse portfolio of business interests, which include real estate development, FnB and banking, has illuminated the challenges he and other business leaders in the region face as consumer demand dwindles, and the fear of uncertainty takes hold.
However, Jog has also been part of the conversation related to localisation, a conversation that began before the rise of the pandemic and that has only gained momentum since. He believes that for East African family businesses, there may be a host of opportunities in store for those that can sustain themselves through to the post-pandemic normal.
We spoke with Dhruv Jog to get his take on the crisis, on the return of localisation and the future of East African family businesses.
Q: What has been the biggest impact in your region so far related to the COVID-19 crisis?
Because we are headquartered in Dar es Salam but operate across Kenya, Uganda, Tanzania and Mozambique, we have a unique regional perspective. Each one of these countries has dealt with the situation differently. Kenya and Uganda have taken a very conservative approach, locking their respective countries down in the face of COVID-19. Conversely, Tanzania has taken a more aggressive approach; they’ve kept their borders open, and the government has maintained a position of business-as-usual. This attitude creates some uncertainty, which leads to operational challenges, especially in terms of securing accurate data and information related to the pandemic’s impact in Tanzania. However, it also creates a level of buoyancy in the market as the government is not encouraging a “shut down” mode and businesses are being given the opportunity to continue and limit the damage to the economy.
Even before the major effects of COVID-19, the economy of Tanzania was in a soft patch, and we can see how the pandemic has exacerbated that across the country. The economy is now not only slow, it’s come to a point where investors have had to leave since Covid 19 came about, and local businesses that were once prospering are now facing challenges associated with dropping consumer demand. We’re seeing something similar all across East Africa. Tanzania’s natural resources sector helps insulate it moderately due to continued global demand for gold and other metals. Still, the demographic makeup of East Africa, and Tanzania in particular, is such that small and medium enterprises are primarily family-owned. As a result, family firms have been the most hit during this time.
Q: What do you foresee as the biggest challenge family businesses in your sector will face over the next year or two?
Construction and real estate development will be very challenging over the next year. It’s one of the first sectors affected by a slowdown because it’s primarily linked to consumer demand that is not need-based, unlike food processing, for example. Although our civil and infrastructure driven projects are ongoing, we see similar yield-related challenges impacting our public clients as with our private clients due to the government’s drop in revenue during this period. Continuing to operate in construction and real estate over the next 12 months without making significant operational changes will be the biggest challenge we confront.
That said,I’m optimistic about the future beyond 2020. The conversation in East Africa is that the region should become more independent, and not as reliant on imported goods and services. This will lead to a boom in construction and local industry across the board as the region expands its production capacity.
Q: Do you feel that the push toward localisation was something that was inevitable in East Africa or has the COVID situation changed people’s position?
The conversation isn’t new. Uganda, in particular, had been developing its local capacity even before the pandemic. Tanzania has followed closely behind with a renewed focus on local content and a push to driving local participation in major projects. There is always opposition to change, however, and there are those who argue that efficiency will go down and cost will go up by moving away from manufacturing epicentres such as China and India.
However, I think COVID-19 has made people realise that whatever is lost in terms of efficiency and cost to the customer, is made up for by having the basic requirements needed to function independently.
Everyone ultimately benefits from infrastructure and systemic improvements in aid of independence. So even though things were moving in this direction, COVID-19 has helped brush away any remaining arguments against developing our local capacity.
Q: Do family firms have an advantage when it comes to sustaining themselves through the crisis?
Absolutely – It comes down to the strengths inherent in them. They are resilient, dynamic and nimble in their decision-making processes.
Moreover, family businesses are also family – an environment of unity, where everyone uses their role to support the business as it moves forward.
This is where I think family businesses are much stronger in times of need than traditional businesses that rely solely on employee loyalty. Also, family businesses can act quickly; I’ve seen family boards address all of the important issues they are facing and establish contingencies in a single meeting. This is a time when the strengths of family businesses far outweigh any perceived weaknesses.
Dhruv Jog is a 2nd generation family member in East Africa and currently the Managing Director at Advent Construction Ltd, as well as several other group companies. His family business was established 25 years ago, focusing on construction and real estate development, as well as insurance and banking.
Dhruv is also a member of the steering committee of the Tanzanian Real Estate Industry governing body that was formed to provide a formal structure to all Tanzanian real estate industry stakeholders, including the National Housing Corporation. He is a member of the board of the Tanzania Private Sector Foundation, representing the entire Construction and Engineering sector of Tanzania and an advisory Board member for the Strathmore Business School in Tanzania that aims to transform leaders in the region.
Dhruv has been awarded several prestigious awards by continental institutions and has been recognized across the African continent as a pioneer businessman and leader.