Congo Capitalism
In the world's most difficult place to do business, an Indian entrepreneur has built an empire of soap.
By Anjan Sundaram

(Fortune Magazine) -- Rajesh Nambiar manages a consumer goods empire like the proverbial village elder under a palm tree. Ambling by the green foliage on his factory premises in Kinshasa, Congo's capital, Nambiar isn't preoccupied with any grandiose supply-chain or production problems but rather with the quotidian concerns of his local staff.

"Has your wife given birth yet? Ah, wonderful. Here's a little something for the child," he says with a hug for one factory worker. "Your colleague is making trouble again?" he asks another. "I'm sorry, come to my office, and we'll see what we can do about it."

Nambiar may not be your typical CEO of a multimillion-dollar enterprise, but then little is typical about doing business in the Democratic Republic of Congo.

Nambiar moved from India to what was then Zaire to open a Yamaha motorcycle dealership in 1996, one of the worst moments in the country's recent history. Inflation had hit 9,800%, the army had pillaged the nation's businesses, a rebellion was brewing in the east, and expatriates were selling off estates and jetting home.

Nambiar, then 26, saw in Congo's ruins an unlikely launch pad for his fledgling career. "These countries are the world's last frontiers," he says, sitting behind an enormous desk in his whitewashed office at the Rawji Group, one of Congo's leading businesses, of which he is the CEO. "Next we'll have to go to Mars or the moon."

In theory, business should be next to impossible in this corrupt nation. Neglect and two wars in a decade have left the country's infrastructure in shambles. The Parliament is filled with former warlords, and the World Bank reckons that Congo's taxes cost businesses more than their profits.

Indeed, the global lending agency rated Congo the worst business environment in the world in a 2005 survey. But Nambiar is thriving in Congo's chaos: He created one of Africa's largest Yamaha distributors from scratch, then engineered a turnaround of operations abandoned by Unilever.

Since Nambiar took over Unilever's soap, detergent, oil, and foodstuffs factory in 2002, he and his team have cut costs and tripled production. A new palm oil refinery is set to open next year.

"You can make a lot of money in Congo if you have the guts and tenacity," says Nambiar, who learned his craft selling electrical motors in Mumbai, fighting for the better half of 1% profit margins. "But you need the patience to understand business traditions in Africa and how to get things done."

A "get things done" attitude is what's needed to move soap, milk powder, and margarine across a country the size of western Europe with hardly a decent road.

"It's all about logistics. Our trucks could take a week to travel ten kilometers, but they get there, and our products reach every village in the country," Nambiar says. "We have a guy sitting in godforsaken Ndjokopunda--the only expatriate for miles around--just to get things done. That's what it takes."

That, and a fleet of 30 trucks, 20 pickups, nine barges, four boats, and hundreds of motorcycles - mostly Yamahas, of course - plying marshy rivers and bumpy roads. "We're the Wal-Mart of Congo," Nambiar says.

If the acrobatics of Third World distribution aren't worrisome enough for businessmen on the outposts of globalization, there's the turbulence of Congo's politics. "Instability means our insurance premium alone is enough to fund a medium-sized business," says Nambiar. And with Congo's first election in four decades scheduled for late July, businessmen are watching anxiously.

It wouldn't be the first time that Congo's politicians meddled with the economy. In 1973 dictator Mobutu Sese Seko hatched one of Africa's most comprehensive nationalization plans, overseeing the handover of largely Greek-, Portuguese-, and Indian-owned enterprises worth about $1 billion to politically connected Congolese, most of whom showed little interest in their businesses and plundered company accounts for personal enrichment. Over the next three decades corruption became entrenched, and Congo's industries slowly decayed.

Many of the 33 candidates running for President come from that kleptocratic class enriched by Mobutu. Incumbent President Joseph Kabila, who has led Congo's transitional government since 2002, is one of the exceptions, and by far the favorite.

The reclusive 35-year-old, credited with uniting warring rebels to end Congo's conflict, is widely expected to encourage foreign investment, especially from the West, if he wins. His two closest competitors, ex-rebel Jean-Pierre Bemba and former central bank governor Pierre Pay Pay, have both promised to develop Congo's infrastructure and aid the private sector.

There is hope that Congo's lot could improve - not because anyone believes democracy will engender good governance, but simply because after decades of Western-backed dictatorship, Cold War power games, and debilitating conflicts, there is optimism that Congo might at last have legitimate leadership and some peace.

The vote will be the largest the United Nations has ever overseen, and more than 17,000 peacekeepers have been deployed to secure it. The real challenge, however, will lie in pacifying those who lose at the polls, especially if they happen to be ex-rebels with loyal armies at their disposal.

"We are hoping the elections will pass smoothly, because all the economic indicators are positive," says Freddi Milambo, a senior Ministry of Industry official. "International investors have their eyes on the country - all we need is peace."

Gregory Mthembu-Smalter, an analyst with the Economist Intelligence Unit who has worked in the region for more than a decade, shares this sense of optimism. "There is a feeling among investors," he says, "that they could still be doing business here in five or ten years' time."

Citigroup (Charts), Vodafone (Charts), and mining giant Phelps Dodge (Charts) are among the multinationals already operating in the country. Vodafone holds a 50% stake in South African telecom operator Vodacom, which has invested more than $225 million in its Congolese operations since 2002. Vodacom has rapidly grown to become one of Congo's two biggest telecom providers, with more than one million customers in the country.

Phelps Dodge has a huge copper-mining operation in the southern province of Katanga. And Citigroup, which has a relatively small presence, is betting that Congo's economy is set to take off.

"With a legitimate government in place, conditions will be favorable for private investors," says Yav Henri, a senior official in Congo's Federation of Enterprises, a business lobbying group. "Citigroup is here already; they see Congo's potential."

Congolese companies, including Rawji, are secretive about their revenues and profits because of the unpredictable and corrupt business environment. But Henri said Rawji has grown to become one of the country's biggest businesses.

Nambiar admits that doing business amid conflict has been a challenge. "I would be lying if I said I never thought Congo was a mistake," he says. "We often had to shut everything down during the war."

After the war, Nambiar says, he found his staff locked up in the company's depots, holding on to their stocks of shampoo, toothpaste, and palm oil, even in the smallest towns and most faraway villages. "They could have taken everything, but not a cent was stolen."

That kind of loyalty didn't come free - it was cultivated over years of wealth sharing and building family-like bonds with staff. "It's a very alien concept to Western culture, where it's more like, 'I made my money, now you make yours,'" Nambiar says.

Lending company cars for a family funeral or creating a clerical job so a retired grandfather can earn a decent living are common practice at Rawji. "You have to build a network of trust. And if you have money, it's got to trickle down."

Congo is a country rich with mineral-laden hills, acres of fertile land, and a mighty river with the hydroelectric potential to light up all of Africa. Conflict and corruption have meant that few of those resources have been developed. But millions of unemployed Congolese are eager to work and lift themselves out of their misery.

"Villagers bring us single cans of oil after traveling weeks from deep in the bush," says Nambiar. "We test the oil, buy it, and have payment ready in three days. We try to encourage small businesses, because we believe Congo has the potential to be self-sufficient."

Although the country was once one of the world's principal producers of palm oil, Nambiar says he now has to import some 2,000 tons every month. Congo could potentially produce 50 times that amount. "It's a tragedy for the country," he says.

In spite of all its problems, Congo holds a special appeal for the idiosyncratic entrepreneurs who have ventured here. "Sure, we edge forward and we edge backward, like in any other economy," Nambiar says. "But you understand, in a country like the U.S., it's too predictable. In Congo the risks are high, but so are the gains. That's why we're here."  Top of page