The ‘groupthink’ mentality killing business

MASERU-HORDES of Basotho are queuing to buy paraffin in downtown Maseru. Just about 10 metres away, there are four other small outlets, also selling paraffin. Within that small radius are five bars. From the bus stop, down along the Maseru west industrial area, there are at least five car dealers. Thousands of Basotho also run 4+1 taxis, flooding Maseru’s streets. Most of those running the taxis were retrenched from the gold mines in South Africa in the late 1990s and early 2000s. To survive, they all bought taxis. Not so long ago popcorn machines were at every corner in Maseru. All the above examples vividly capture the “groupthink” mentality that affects how Basotho do their businesses. Instead of coming up with new innovative ways of doing business, Basotho tend to “ape” what others are doing in business, according to analysts who spoke to this paper this week. That explains why we have so many “car wash businesses” within the same area, they said. Robert Likhang, a business consultant and former CEO for the Basotho Enterprises Development Corporation (BEDCO), said this practice is a result of lack of innovation among Basotho. Likhang said Basotho culture itself has failed to facilitate and encourage innovation over the years. “We grew up being told what to do and our views did not matter,” Likhang said. In societies like ours where culture does not encourage innovation, he said, universities and government agencies take it upon themselves to promote innovation. “Government agencies should invest in project preparations, meaning that they will learn and study value chains across various industries and avail such information to the public,” he said. This enables those who want to go into business in those industries to identify where they can fit with which type of businesses, Likhang said. He said government policies need to enable a variety of businesses. Likhang cited the case of the textile industry. He said when a decision was made to grow the economy through foreign direct investment in terms of textiles there should have been a link between FDI and domestic investment. “Our policies should have been clear, maybe say that 20 percent of raw materials must be sourced from local companies,” he said. “In that way we would have married FDI to our Micro Small Medium Enterprises (MSMEs) and generated a variety of businesses in the process.” Likhang said another way to minimise the tendency to flock to the same businesses is through universities. He said through their research units and incubation centres universities must guide MSMEs in terms of which businesses to get into. He said business development support plays a critical role in the diversification of business. “Business support can be in the form of training by equipping people with pertinent business skills.” It can be in terms of access to markets and quality control, assisting businesses to produce good quality products for certain markets, Likhang said. He said Lesotho’s ambassadors in foreign countries must also help look for markets for Basotho. He said Basotho businesses should aim to produce for the export market. Another critical tool is financial support which should be driven by development banks as they offer long term loans at low interest rates. Likhang stated that commercial banks are not ideal for those seeking capital to start businesses as their interest rates are too high. Funding can also be sourced privately through venture capitalist or angel funding, he said. “Venture capital is cheap and paired with technical experience as funders often fill executive and board positions with people they want,” he said. “In this case founders are often left with full ownership after certain years and paying back capital.” Business angels on the other hand are individuals with access to funds who are not directly involved in the business but get a return on their investment. “When the ecosystem is right it promotes innovation as funding is available, markets are there and people find their dreams attainable.” The Lesotho Chamber of Commerce and Industry (LCCI) Secretary General, Fako Hakane, told thepost that the lack of a regulatory framework has contributed immensely to this problem. According to Hakane the government has failed to regulate business as a result it left the field open. Hakane said people venture into industries where they think there is a demand and are often looking to make quick money to take care of their needs. “As an entity we cannot stop people from doing that because it is the survival of the fittest. This (Covid-19) pandemic has worsened things,” Hakane said. “Everyone is just trying to make money because no one knows when business will be closed,” he said. Lemohang Rakotsoane