She studied international law but worked in a law office only for a few weeks. Afterwards she tried luck in Brussels. Successfully. She was there when Centre for European Studies by European People´s Party was being created. After a stop in London she applied for the position of economic diplomat in South Africa. Again, successfully. She came back just recently and shared her experiences from business environment in this country. Katarina Kralikova.
You studied law abroad. Where have you been?
I started at Banska Bystrica followed by Erasmus program in Salzburg. Afterwards I studied at UCL London and got my international public law degree. I find these two experiences much more interesting in the way how they perform the studies and how they approach students. It was much more practical.
What followed after London?
I came back to Slovakia and started to work for an international law firm where I stayed no more than three weeks. I didn´t have any other work offer so I went to Brussels. Without any knowledge of EU institutions, any knowledge of how Brussels really works, basically with no cash.
I was quite lucky, I got a paid internship in the European parliament and stayed there for half a year. So finally something that was more than a month 🙂
So that job was interesting, right?
It was interesting enough in order to stay there. Then they offered me to stay with them as a contract agent for up to two years. But I wasn´t really sure if that´s the path I want to take. I found the EU Parliament quite a rigid organization where you are a tiny wheel in a huge process. So I started to look for another job. I think I had a lot of luck in that phase because I got and offer from the European People´s Party (EPP), in the headquarters. On one side I was working at the Centre for European Studies and the Centre´s policies that were attached to the EPP. At the same time however the president of EPP was interested in me writing speeches for him so I was travelling a lot and visited many regions. Once, maybe twice a week I had to go to different countries. It was very nice experience but barely had I a chance to see the destination. Most of the time it was only preparing meetings, documentation, etc.
How long did you do the job? After that South Africa came your way?
I was at the job for about five years and I liked it. It was super interesting but very demanding. Friday morning I was planning the weekend off and at 2 pm I got a call that we are leaving the next day to Lithuania. After a stop in London I found open Slovak economy diplomats positions for several countries as South Africa, Egypt, Japan and some others. I couldn´t imagine what I would be doing in South Africa. But I wanted to go there. We stayed there for four years until the end of January 2016, I came back very recently.
What were your first impressions of the country? What surprised you the most?
I knew that South Africa was very different from other African countries in terms of development. What impressed me was that it is even more developed than i expected, in many ways more than Slovakia.
In what ways?
Infrastructure like concentration of shopping malls, stuff you can buy there, the quality of food, clothes. The houses are much more luxurious. There is no middle class so regular houses are for higher class. It struck me how big the houses were. Everything is massive. It reminded me in many ways more of US than Europe. Wide streets, dispersed houses. The population is not that dense as in Europe.
The black and white population is very mixed, they are rainbow nation as they call themselves. But what surprised me strongly, they are still very segregated, like the apartheid still existed in the minds of people. You come to the restaurant and it´s either purely black or purely white. There are fewer mixed couples probably than in Slovakia. This was very shocking to me, 20 years after the apartheid fell down.
What´s the structure of the population?
It´s 80% black people, 10-12% white and 8% others as for example Indians or Chinese. Particularly in Pretoria where I stayed. South Africa has three capitals. It´s Pretoria as governmental seat, Bloemfontein is judicial seat and Cape Town as parliamentary seat. Johannesburg that is known the most is not capital at all. It´s financial and commercial center.
How were the beginnings at your new position?
It was quite flexibly loose. When I started there was no one before me for 8-9 months therefore I had to create the full database of contacts and the whole network from scratch. It took me the first half year to get to know different people and understand how the business looked like in the country, who are the main players, what are the main industries. I read a lot and went out a lot to network with people. Just after that I started to help Slovak companies.
What did your daily job look like in South Africa?
My job was divided into two main fields which are usually covered by two or more people at bigger embassies. One field was that I was responsible for informing the Slovak Ministry of Foreign Affairs about different economic policies in South Africa, what was happening there, the economic situation, new developments and also to be present at all the EU delegations, meetings and acting as the representative. The other part of the job was to create contacts and opportunities for the Slovak companies in South Africa. If there was a Slovak company that wanted to export something they contacted me and I tried to find partners for them whom they could approach. We obviously had some boundaries and we were not allowed to step into the contract negotiations. I was more the one who opened the doors, I didn´t go much beyond that point. If I saw an opportunity, I did the introduction and there my role ended.
Business in South Africa
In terms of business how would you describe South Africa?
The structure of the GDP is relatively similar to ours. They had to be quite self-sufficient during the apartheid era because they faced a lot of embargos and restrictions. South Africa produced basically everything from cars to groceries. But their main export articles are minerals. They have big mines, mostly exporting gold, platinum, coal, aluminum. The processing industry around the minerals is big as well. However, as always, the resources are shrinking, so they must develop other industries as well and they realize that. Lot of miners are on strikes, that´s why their exports and GDP grow much slower. The currency has been depreciating very badly in the last years. Nevertheless, they have quite developed automotive, chemical and pharmaceutical industry. Fine wines are produced and exported too.
How is it with the small and middle businesses?
They have a syndrome of a big country in a certain way that they believe in large projects and large, multinational companies. Previously they failed to support SMEs which has been changing recently.
State supporting SMEs is not that usual practice, correct?
It is, actually. They have the Department for Small and Medium Enterprises and they do support them. There are many programs but you often come across quite a big problem – certain percentage of those who get a support from the state must have 50+% black people in the leadership of the company or a startup. It´s an official policy of the country, a positive discrimination. There are many ways how one can go around that and find a way but it´s definitely an obstacle for many companies led by young white people. That´s why many of them are looking for job opportunities abroad in London or Australia. They feel they cannot get the full support. If they are skilled and they have a strong drive, see the market in broader terms than just South Africa they can make it. There is much greater margin than in Europe, especially as there are many things that do not exist on the market.
So there are big gaps on the market.
There are bigger gaps on the market than in Europe for example. And the market is much bigger. South Africa is 51 million people. If you include Namibia, Mozambique, Angola, Botswana, it´s getting even bigger.
Can you think of any specific gaps right now?
Depends on the region. The richest province with Johannesburg and Pretoria is quite saturated. But you can still have success with ideas in the area of financial or medical software. In the east and west of South Africa, where there is less saturated market, it can be basically anything what is better then something already existing on the market. If you, let´s say, provide better chocolate of higher quality, you can make it through. That´s actually a story of a gentlemen I know. He used to be a banker in Austria, after coming to South Africa, he launched a small chocolate business and got massively successful in three years. It´s a small thing you would never think of here but it was very easy to target the shops and restaurants with such premium chocolates.
How difficult is it for Slovak startup or company to approach the South African market? Can they just come and start the business?
It´s doable but much more sensible would be to already have contacts with other hubs or entrepreneurs who might be interested in the idea. It is always good to have a local partner. If you have one, he has his own network and can help you a lot setting up your business and promote your product. Without a local partner it would take you much longer to understand all the details.
Startup environment in South Africa
How does the startup ecosystem look like in South Africa?
Sometimes they joke about themselves that it´s much less developed than in Kenya. Kenya actually is the trendsetter in startup industry in Africa. Every bigger city in South Africa has its own hub or several startup hubs. Some of them have really easy life because they are supported by the government with big budgets to be spent.
Only to run the hub or also to support startups as an accelerator?
Also for that. However, they lack having the right startups and right people in. They have their Innovation hub in Pretoria as a permanent thing connected to Gauteng government. It´s a huge campus, very modern with different sectors. They have several companies they support, mentor, train and give the offices for free. They try to accelerate their growth, even invest in some of them which are interesting for the Hub. When I asked which companies were successful in last five years, they could name one. And there are about 80 companies at the moment.
There is also one interesting hub called Tsimolong Precinct being created at the moment next to the Wits University in Johannesburg. They try to attract startups in cooperation with IBM as IBM recently opened a research center next to them. And they are keen to cooperate with international startups as well.
How is it with the venture capital and fundraising in South Africa? Is there money or not really?
I am sure there is money but I have never got a request to help in the area of VC. From what I know when there is a company or entrepreneur well established and has money he wants to take that money out of the country as well. So I am sure they are keen to invest also in the small companies or into good ideas.
What advantages or disadvantages do you see in South Africa compared to our region in terms of entrepreneurship?
As I said the country is very big so the market is big. The opportunities grow. People are really innovative in many areas with just a very simple innovation. Here we sometimes tend to complicate stuff and always try to find the best solution. There they look for a solution that simply works and implement it and improve it as the business grows. They love business, they want to be business people and not employees therefore they have strong drive to make their own money.
When a Slovak entrepreneur wants to approach South African market what do you think he or she needs to be aware of?
There might be a problem that he approaches someone who might not be honest and there is the risk that he won´t deliver what he promised. So you need to be really careful in choosing the right partner. Here comes the support from embassy. He also must be aware that it´s not so easy just to come and offer the product or service. You need to know the market, how it operates and fit in there. You must come, meet the partners, see the country, a regular personal contact matters to them very much and you must be the one who drives that whole process. It´s long term and not easy. But at the end it can pay off with a big contract. You must be patient and devoted. Africa is not for everyone.
Still, it might be the market of the future…
Africa as a continent is growing very fast. There´s huge growth projected, Chinese know it, Germans know it, many other countries are there enforcing their economic presence. They try to make Africa attractive for their companies. If we are not present there now or in a few years, we are not going to catch up. We must at least try.
From your point of view why are we not trying to be present in South Africa?
For many reasons. I think that for most of the Slovak companies the European market is already quite a big deal. South Africa in that case is something very far away, especially in their minds. It´s also for fear and lack of knowledge of the market. It´s suspicion that it might be dangerous and bring too many problems. Sometimes also the language issue pops out when a Slovak company is not able to prepare a decent presentation in English.
Would you like to go back there once?
Photos: Katarina Kralikova & Melman Production