Entrepreneurship in Africa Master Class
In January, seven teams of Columbia Business School students from the Entrepreneurship in Africa Master Class visited companies in Nigeria, Tanzania, Ghana, and South Africa. Each team produced a case study and completed a hands-on project for the company they studied.
One team worked with Joseph and Damasi Mfugale, founder and CEO (and father and son), respectively, of the Peacock Hotel in Dar es Salaam, Tanzania. The Mfugales received $2 million from the East African Development Bank to add 75 luxury rooms, a health spa, and a conference center to their 93-room, three-star hotel. They hope to finish the expansion in one year, turning the Peacock into a five-star hotel, and open three new five-star hotels in five years. The Columbia team worked with the Mfugales to develop a strategic plan.
Although tourism is one of the fastest-growing sectors of the Tanzanian economy, development is impeded by such factors as extreme poverty, high rates of infectious disease, unsustainable use of natural resources, widespread corruption, and limited foreign and domestic investment. In response to increased demand, the government is building infrastructure and creating investment incentives to attract developers.
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Joseph Mfugale began his career as a carpenter in 1967. Although his formal schooling ended after the sixth grade, he went on to run two dry-goods stores, which qualified him for a $30,000 loan from the Tanzanian National Bank of Commerce.
In 1992, Mfugale opened the 27-room Peacock Hotel. In 2006, he self-financed and opened 66 additional rooms and in 2007, Mfugale secured a $2 million loan from the East Africa Development Bank to build an additional 75 luxury suites, a conference center and a spa.
Working with his son, Damasi, Mfugale also secured from the government the operating lease for the Millennium Hotel, an upscale hotel on the outskirts of the Dar es Salaam center. This new property is the Mfugales’ first step toward branding the Peacock Hotel as a quality hotel chain.
As part of their company’s growth plan, the Mfugales’ next step is to develop a luxury hotel and resort on beachfront property on the Kigamboni peninsula near Dar es Salaam. The Mfugales purchased the Kigamboni plot from the government for $100,000. If they don’t begin construction by August 2009, the government can exercise its right to take back the land. The Mfugales have also targeted two other areas for hotels: Iringa, southwest from Dar es Salaam, and Arusha, a safari hot spot near Kilimanjaro.
Damasi Mfugale, who earned his MBA from the University of Lausanne in Switzerland and worked for the Omni Hotel in North Carolina and the Savoy in London, plans to move the Peacock Hotel brand into its next growth phase before his father retires.
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The Columbia Business School team meets Joseph and Damasi Mfugale, owner and ceo of the Peacock Hotel. The Mfugales take the CBS team on a tour of their $2 million hotel expansion that will include a spa, conference center and luxury suites.
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Damasi takes the Columbia Business School students to survey the proposed site for their beachfront luxury hotel on the Kigamboni Peninsula. The site is a five-minute ferry ride from Dar with an additional 10-minute drive from the Kigamboni ferry. This day, the ride took almost two hours.
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Damasi and the Columbia Business School team arrive at the beach front property. The Mfugales paid the Tanzanian government $100,000 for the prime real estate. There is a catch. They have two years to raise funds and break ground for their new hotel or they must give the land back to the government. They could also lose their $100,000 investment. They have until 2010. The Kigamboni project is Damasi's #1 priority.
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The Columbia Business School team meets with members from various financial institutions and Peacock Hotel staff to understand the financing for the planned Peacock Hotel expansions.
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Meeta, Charlly and Danielle prepare their strategy for their final meeting with the Mfugales.
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Meeta and Charlly recommend how the Mfugales might proceed with the Peacock Hotel brand and their planned expansions.
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Meeta Sethna, Charlly Greene and Danielle Cyr speak about the impact the Dar visit had on their lives.
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Meet the Columbia Business School Team.
Meet the Entrepreneurs and Learn About the Hotel.
The Mfugales give the team a tour of the Peacock expansion.
The team travels to Kigamboni to survey the proposed luxury hotel site.
Damasi gives the team a tour of the Kigamboni property.
The team meets to discuss financial strategies.
The team prepares for its final meeting with the Mfugales.
The team presents its strategic plan to the Mfugales.
The team discusses its final recommendations.
The team reflects on its project.
