One of the remarkable things about international investors is the speed with which they adjust to economic realities when they are left with no other choice. And then come up with self-serving rationalisations for these changes in policy.
It is tempting to speak of this as hypocrisy on their part. But I will leave that for readers to judge.
For now, let me just share this anecdote that I heard many years ago from an old friend of mine, who was one of the pioneer indigenous hotel managers at the Kenya coast.
He told me that, back in the early 1970s, when he and a few other senior managers once asked a convivial hotel owner – an indigenous Kenyan himself and the proud owner of a coastal beach resort – why it was that none of them had ever been promoted to the two top positions of resident manager and general manager, the answer was that the owner was just trying to maintain industry standards.
The tycoon pointed out to them that not a single beach resort in the entire coast – most of them owned by Swiss or German investors – had an indigenous African as a general manager. And this was not because there was any doubt about the competence of the African managers, some of whom had trained in Europe and even spoke fluent German or French. Rather it was because, to quote word for word, “European tourists will never feel comfortable staying in a hotel which is not managed by their fellow European”.
By current standards, that is an incredibly racist statement. And yet some 50 years ago or so, in the early decades after Independence, this was something freely stated as a basic fact of life that had to be taken into account when deciding on staffing policy.
And in fact, as late as the 1980s, I would occasionally hear the indigenous junior staff of such beach resorts – waiters, receptionists and the like – make much this same statement, when complimented on having their hotel overflowing with foreign guests when it was not yet the official “high tourism season”.
They would attribute it to their “mzungu” general manager, who they said was the reason they were the beach resort of choice for many tourists, as his presence was an assurance of high standards being maintained in that hotel.
In short, the European hotel managers were, in many cases, mere window dressing. Many of them would probably have been lucky to get a job as an assistant restaurant supervisor in their own countries. The serious work of running a world-class, four-star beach resort was actually done by indigenous Kenyans.
The expatriate managers were nonetheless alleged to be indispensable.
But then look what happened.
In time, the investors learned to ask themselves if they really needed an expatriate hotel manager who had to be provided with two family cars; school fees paid for the expatriate’s children to study at exclusive international schools; and return tickets for the whole family to go back to their country every two years or so on vacation.
Why pay those huge salaries and magnificent benefits when the real work was actually done by indigenous Kenyans who were willing enough to accept salaries that were as low as one-third to one-fifth of what the expatriates were paid?
In time, these European expatriate hotel managers were slowly weeded out until they were only an insignificant minority of the top managers in the roughly 100 beach resorts that Kenya has along its Indian Ocean coastline.
Meanwhile, the number of European tourists coming to Kenya continued to grow exponentially.
I use this anecdote to illustrate the psychology of investors. Not all of them, of course, but I would say most of them. If they can get away with it, they will make all kinds of self-indulgent and irrational decisions in planning for their operations in a developing country.
But in time, economic reality always catches up with them.
And then the very thing that they had all along insisted would have a negative impact on their bottom line is eagerly embraced as enlightened policy.
More on this next week.
