Will the continent, long synonymous with hunger, disease, war and corruption, now find its economic and political footing and ways to resolve so many of its problems?
That was the question posed by panelists and participants in a two-day conference held on October 25 and 26 at The Fletcher School of Law and Diplomacy at Tufts University. Organized by Fletcher’s Institute for Business in the Global Context (IBGC), the conference, titled “Africa's Turn? The Promise and Reality of the Global Economy's ‘Final Frontier,’” featured discussions and presentations from business leaders, development experts, entrepreneurs and government representatives who are helping to shape business and investment, policy, development and international relations in Africa.
In the last decade alone, Africa has seen remarkable growth and reform across many parts, according to Mimi Alemayehou (F98), executive vice president of the U.S. Overseas Private Investment Corporation, who moderated the panel discussion “Private Sector as a Catalyst for Development.” The panel included bureau administrators, CEOs, private sector officials and representatives from the World Bank.
Seven of the 10 fastest growing economies in the world are currently in Africa, Alemayehou said. What’s going on now is the realization that it won’t be just private companies alone, or just multinational lending giants, or just government development agencies that will fuel this quickening change.
The United States has long been one of the biggest games in town for development, said Wendy Peter Abt, deputy assistant administrator of the Bureau for Economic Growth, Education and Environment at the U.S. Agency for International Development. But no longer is this the case; private sector investors are playing an increasingly influential role alongside governments: “we need to engage financial flows in development problems,” said Abt during the panel discussion.
Jay Ireland, president and CEO of GE Africa, who also sat on the panel, elaborated on this point. “It’s a combination that’s not just private capital itself, or private industry, and not just governments driving it or ECAs (export credit agencies) or whatever,” Ireland said. “It’s a combination of working together to drive change."
Infrastructure will be one of the biggest drivers for economic growth because small entrepreneurs—for example, farmers—will otherwise be limited in their access to larger markets. Up to 40 percent of agriculture products end up rotting, say, in transit or being held up at ports or railway terminals or borders or other transit points.
“You really cannot be productive if you don’t have access to electricity, if you can’t get your goods to market, if your employees cannot come to work because there’s a traffic jam or there’s a flood on the road,” said Mouhamadou Niang, a manager in the Industries & Services Division of the African Development Bank’s Private Sector Department. As much as 50 percent of the bank’s lending is in infrastructure projects, said Niang, speaking during the same panel.
Ian Solomon, U.S. representative to the World Bank executive board, emphasized how the changes need to come from the countries themselves. “None of us can make any government or any country actually improve its business or regulatory environment: we’re not going to do it, these institutions, as much as we’d like,” Solomon said. “It’s going to come from the public and private leaders … to make their countries and investment climate more attractive. We can push them for years… It doesn’t work without the leadership on the ground.”
Niang seconded that point, observing that money hasn’t flowed naturally to Africa for a variety of reasons, including governance problems and inefficiency. He pointed out the example of Senegal, which has had problems with electricity and power cuts for 10 years now. But in principle, it shouldn’t take more than five years for a government to plan, design, build and put into operation a power generation. Regulatory frameworks—things like taxation, competitive, transparent bidding, concessions—need to be changed, along with capital requirements.
“Any country that is run properly in terms of governance, in terms of openness and transparency, should be able to resolve its electricity supply issues in a period of 10 years. It just makes sense,” Niang said.
Other panels during the conference examined how regional issues are affecting the investment climate, the key emerging African markets and the international influences shaping Africa’s business landscape.
At the conference’s final panel, titled "Implications for Business and Social Enterprises,” Bhaskar Chakravorti, senior associate dean for international business and finance at The Fletcher School and executive director of the IBGC, asked three main questions:
- “What innovation can we look for from the private sector? What creative solutions will help close some of the major gaps in infrastructure, capital markets, business models and funding, talent and human resources?
- Where are the opportunities to invest in Africa?
- Where do you see Africa 10 years from now?”
The panel featured Patrick Bitature, founder of the Simba Group, an East African conglomerate, Ann Cotton, executive director of Camfed International, an anti-poverty/anti-HIV-AIDS organization; Anamitra Deb, senior manager at consultancy Monitor Inclusive Markets, Ian Soloman, U.S. representative to the World Bank executive board, and Laila Macharia, founder of Scion Real, an East-African based investment firm.
Bitature stressed the importance of peace and security as precondition for growth. He said Uganda was an excellent example, emphasizing that the Lonely Planet travel guide had named the Ugandan capital, Kampala, as one of Africa’s safest cities. He said governments need to think proactively about how to garner the trust of private investors. “It’s been lack of trust in the past, how to make private sector more friendly. It’s a mindset: the government has been the enemy within for too long,” Bitature said. He also stressed the idea that “government plays a pivotal role in development. We have to get governments invested in playing their role.”
Macharia followed Bitature’s comments by stating that African investors and entrepreneurs have typically managed risk by staying small. Now there is a situation where larger investors from outside of Africa are looking for opportunities, and the challenge is to bridge the gap between both worlds. She said that “individual Africans are already succeeding in the private sector, and the way people have managed risk in the past has been small. Most talk has been about the average middle tier business owner, not large corporations. The challenge is bridging those two worlds.”
Investment in human capital, especially urban youth and young women and girls, remains a critical gap to fill. Cotton said that there’s has to be “heavy investing in education, if we are to prevent the next generation from being born into poverty.” Macharia also spoke about investment in urban youth, that “the young population who missed the window of education are unskilled but able bodied, and are waiting for something to do. One way to solve this is with the building industry, which will absorb unskilled workers, and employ all the way up to high level architects.”
On the question posed about where investment should take place in Africa, Anamitra Deb said the opportunity to invest in Africa was “everywhere,” particularly in agriculture, food security (especially in rural Africa), urbanization, property and Wifi. He stressed the idea that “less development does not equal less demand for products. There is not enough impact investing capital and designing fund models, there are too many one size fits all focusing on large deals in agriculture, infrastructure, or health and energy. We haven’t started with the businesses on the ground to see what they need.”
On the future of Africa, there is no lack of innovation and ideas by African leaders according to Macharia. “We have to work at change every day, building momentum. Ten years from now we’ll be better off, but there’s a values battle going on in Africa,” she remarked, in reference to progressive leadership voices that are contending the more traditional voices in Africa. She reiterated, “The continent should not underestimate the work needed to make development a reality.”
Solomon echoed this sentiment with “cautious optimism” for the future of Africa, adding in closing: “No one is going to give Africa its turn. It has to take it.”
- Mike Eckel, F13 MALD Candidate
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