Handling Regulation


(Eric Halsey) #1

It doesn’t get talked about enough, but every African startup has to deal with regulations just as much, if not more, than their foreign counterparts. Teddy Ruge has developed a set of perspectives, tactics, and goals for how to deal with African regulations. Here’s what he told us.

##The Right Mindset

“You build that into your business plan, it’s simply a cost of doing business on the continent. Anyone having to do business here shouldn’t balk at regulation compliance being a line item.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab

The first bit of advice here from Teddy is to anticipate regulation. You’re not going to get around it and it’s always going to cost money to comply. So make sure you’re ready for that reality from day 1. If someone isn’t ready to take the time to deal with regulation, they’re probably not ready to do business.

“If you’re planning on growth you have to plan to deal with 53-54 different regulatory entities.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab

That advice gets multiplied when it comes to growth. So just as you have to be prepared for regulation in the country where you get started, you’ve got to build it into your business plan when you expand. Still, Teddy also reminds us that in the most cutting edge industries, you might still be waiting for regulations to catch up.

“We’re stitting on 100 year old western regulations. It took that to leapfrog all that old reguation for them to say oh this is something new. Sometimes it’s one of those things where you do the business and wait until the regulation catches up.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab

But whatever the case, once you’ve accepted the reality of regulations, you’ve got to develop the right tactics to deal with them.

##The Right Tactics

“It’s very much operate until someone says no. Just go in there and plead ignorance at the end. You have to be scrappy as an Africa startup.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab

Teddy’s tactic of pleading ignorance may not work in all cases, but the most important bit of advice there is to be scrappy. If you’re a small startup, you may be able to get away with some things a larger company can’t. But be creative.

“[Those regulations] limit growth a bit if you’re not well funded. Our way of doing that is fighting one small battle at a time and thinking of ways the EAC (East African Community) unifies faster before we have to deal with 5 entities with our growth potential. Then we have to open 5 offices in each country, which is costly and prohibitive.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab

For Teddy, based in Uganda, working with the EAC directly is a great tactic to avoid the hurdles of dealing with countries individually. So, you can also ask yourself whether your startup can potentially work with a larger regulator to skip the process of dealing with every single bureaucrat in the organization individually.

##The Right Goals
Besides simply dealing with regulations as they are, Teddy also looks forward to how he can influence them. Doing that requires lobbying, which will be the topic of the next lesson.

“You have a business model you want to expand, all other companies have to do the same thing, you can’t kill a business idea because you’re afraid of regulatory cost. You can also out some of that cost into lobbying for a better regulatory environment. We at hive colab want to get to a point where we influence regulation in the region.”
-Teddy Rouge, Founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab