Wednesday 24 June 2009

World Bank report highlights downturn in growth and capital flows to SSA


On 22 June, the World Bank released its 2009 edition of Global Development Finance, in which the institution indicated that the world economy would shrink by 2.9% this year vs a 1.2% growth in developing countries. In this latter group, investment flows ebbed to $707bn in 2008, significantly down from the $1.2trn recorded in 2007.


In the case of Sub-Sahara Africa (SSA), the World Bank highlighted that the region had been hit hard by negative dynamics in external demand, plunging export prices, weaker remittances and tourism revenues, and sharply lower capital inflows. Growth in SSA is now seen at 1% in 2009, from 5.7% in 2006-08, although it should strengthen in 2H09 and may rebound to 3.7% in 2010 and 5.2% in 2011, respectively.

On World Bank data, the fastest growing economies in the region in 2009 include the Republic of Congo (7.4%), Malawi (6.6%), Ethiopia (6.0%), Rwanda (5.1%) and Uganda (5.0%), while six nations could experience a contraction in GDP growth (of which Seychelles' is estimated at -10.5%, Botswana -8.0%, and Angola -1.9%). Nigeria is forecast to expand 2.9%, in line with the IMF projection.

Friday 19 June 2009

WEF: A Future Roadmap for Africa

The World Economic Forum in Cape Town last week brought together the public, private and non-governmental sector, as well as media and commentators on Africa.

Here, a final word on Africa’s Roadmap: From Crisis to Opportunity
  • Maria Ramos, CEO, ABSA Group: If we can build world-class stadiums we can build schools and health centres. We have the capacity, just not the execution. Africa is only limited by its imagination.
  • Graca Machel: Founder, Foundation for Community Development (Mozambique): We need to bring women and young people into the discussion. Women are more than half of emerging markets so must be part of the re-design of a world that equally belongs to them. They bring more than just numbers; but also entrepreneurship, talent, experience.
  • Graham Mackay, CEO, SAB Miller: The reality is that business creates wealth. If we could get Africa to grow by 6-7% instead of 4-5% we could solve most of the issues that we have talked about here today.
  • Soud Ba’alaway, executive chairman, Dubai Group: Africa needs to take risks. To realise opportunities and success you need more than plans, you need to execute. Africa is a land of opportunity and needs to celebrate its success stories.
  • Jacob Zuma, President of South Africa: We need to look at improving the perception of doing business in Africa. Larger economies on the continent should play a bigger role, but smaller ones also need to be ready to work together. South Africa is very transparent – you know the good and the bad of being here as a business, but we will continue to invest in creating jobs and changing the economic landscape.
  • Five key priorities for investment and participation:
    o Privatise education
    o Improve health
    o Combat crime
    o Rural development
    o Improve infrastructure

Thursday 18 June 2009

WEF: Football, phones and food

The World Economic Forum in Cape Town last week brought together the public, private and non-governmental sector, as well as media and commentators on Africa.

Here, we summarise the sessions on the 2010 FIFA World Cup, the mobile revolution in Africa, and the agricultural sector.

FIFA World Cup 2010: Building a Legacy for Africa
  • Danny Jordaan, CEO 2010 FIFA Wolrd Cup Organising Committee: We recognise that hosting a major event can contribute to an integrated local government, better infrastructure etc. We are putting this country on the coffee table of the world. You can’t have a FIFA that is rich in a country that is poor. They said don’t do it in Africa, but FIFA is in the best financial position it has been in for 100 years, with 70% of profits going back in.
  • Kgalema Petrus Motlanthe, Deputy President, South Africa: The AU Summit in 2007 agreed the World Cup was for the whole of Africa. The key challenge is to extend the connectivity with the rest of the continent.
  • Michael Jordaan, CEO, First National Bank: Recognising we’re not there yet is key – South Africans work well under pressure. We will get there. Often the benefits of hosting a World Cup are over-estimated. It’s not just about money, it is about sport, branding, clearing up misperceptions. Legacy thinking is a great way to plan your business, family or government – we hope that we can use the momentum of 2010 to continue good work afterwards.
  • Helen Zille, Premier of the Western Cape Province: The legacy of 2010 will be that we change the perception of what African can do, we show that we can produce the best World Cup ever seen, delivered on time, on budget, with unity. If we put as much effort in to our education as we do into our sport, we'd solve a lot of problems.
    Five key legacy pillars of the FIFA World Cup 2010:
    Ø Infrastructure
    Ø Job creation
    Ø Tourism
    Ø Nation building
    Ø Country branding


    The Mobile Revolution
  • Ory Okollo, founder, Ushahidi: What’s next for the mobile story beyond basic applications? How to lower cost, how to get networks to talk to each other. We need to move the conversation beyond penetration to commercial and development opportunities. But mobile development doesn’t always have to be connected to social good. We are human, we need to communicate – whether African or not. Mobile development should focus on enabling communication and making money doing that, everything that comes on top is extra.
  • Wolfgang Lehmacher, CEO, GeoPost Intercontinental: Hurdles in infrastructure are not so much hurdles, but drivers of innovation.
  • Michael Joseph, CEO, Safaricom: 70% of Africa’s economy is informal – and they need methods of communications to work too, which also impacts social life, health, education etc. The next revolution is mobile payments. Mobile money will fundamentally change the face of society.
  • Nicholas Nesbitt, CEO, KenCall: The future is not about having a laptop anymore. It’s about how you get the information you need when you need it. Technology can make national and global content accessible.


    Africa: The World’s Potential Breadbasket?
  • Sylvia Matthews Burwell, President, Global Development Program, Bill & Melinda Gates Foundation: There’s no silver bullet but we are optimistic that the green revolution can succeed, working in strong partnerships.
  • Harish Manwani, President, Asia, Africa, Central and Eastern Europe, Unilever: Why the commitment to food security? No choice. Most businesses today depend on emerging markets for growth. Three themes in food security – Sustainable agriculture, engagement with small farmers, public-private partnerships. Africa needs the ambition of not just solving hunger but creating a better world. Changing the mindset comes from government policy change and local farmers who need to understand how they can make money –key to the green revolution.
  • Kofi Annan, Co-Chair of WEF on Africa: People don’t starve in democracies. We need sustained leadership and commitment to agriculture. But we also need to commit our own resources and show we are serious.

Wednesday 17 June 2009

WEF: Investment Climate and Climate Change

The World Economic Forum in Cape Town last week brought together the public, private and non-governmental sector, as well as media and commentators on Africa.

A quick summary of some of the sessions I attended...

Investment Climate: A Better Way of Doing Business
  • Jeremy Ord: Executive chairman, Dimension Data: Need the right infrastructure for business – including telecommunications, otherwise foreign investors will stay away.
  • Raila Odinga, Prime Minister of Kenya: Have to knock down the hurdles to doing business, such as lengthy legal and operational processes - but this has to be permanent, not temporary measures.
  • Cecilia Ibru, CEO, Oceanic Bank International: Banks need to re-establish trust with consumers and business customers.
  • Omari Issa, CEO, Investment Climate Facility: African media needs to be part of changing the perception of Africa as a good place for business, as investors still often look to international media for info – needs to come from the inside.


    Addressing Climate Change: An African Imperative
  • Buyelwa Patience Sonjica, Minister Water & Environment, SA: We need to demystify climate change, so everyone understands the meaning, the impact.
  • Ulla Tornaes, Minister of Development Cooperation, Denmark: Climate change is a global issue that needs global solutions involving all stakeholders – public, private sector and civil society.
  • Marcus Aguis, Chariman, Barclays, UK: Investors are looking for future business opportunities that make sense, ways to diversify our income – that will include emissions trading. The capital will be there for investments that address climate change.
  • Robert Godsell, Non-executive chairman, Eskom Holdings: Not a question of development or climate change mitigation – has to be both. Should always be development. Business people are always more optimistic than scientists and academics. The two powerful forces for future solution will be technology and market forces.
  • Tom Boardman, CEO, Nedbank: We can’t underestimate the scale of this issue. We can’t treat the parts – needs a big solution. Technology is important, but takes a while to come on stream, so before we can adapt we need to mitigate. Preserving rainforests is one of the best returns on investment we can make. Already 200 mn people in African under ‘water stress’, with or without climate change. We can’t afford to lose another decade.

World Economic Forum and the New Global Economy

The World Economic Forum in Cape Town last week brought together the public, private and non-governmental sector, as well as media and commentators on Africa.

Despite the recession, the overall feeling was upbeat. Most conversations were framed within the current economic circumstances, but if I took one message away it was “Africa can do it, but we need less planning and more doing”.

Another theme was that the talent and capability exists already, the resources and the will. Africa needs to celebrate its success stories, to change international perceptions of the continent as a place to invest, as a destination of choice. But it’s easy to be positive in a room of 700 people who all feel the same way. My question is whether Africa believes in itself when faced with international pressure, when confronted with China or Brazil making its demands, or when trying to find a voice at the global negotiations table on climate change, for example.

I do also sometimes wonder what we would all talk about if there wasn’t a global financial crisis on. And what would be the trigger to inject investment into Africa’s infrastructure and tourism business if the continent had not won the opportunity to stage the FIFA 2010 World Cup finals. But while we do have both crisis and opportunity right here and now, there are some interesting discussions.

If you are a Twitter follower, check out #africa09 for a summary of things coming out.
Zaprio’s cartoon posted to Twitter -
http://twitpic.com/7g9y3

A quick summary of some of the sessions I attended follow...

Africa and the New Global Economy

  • Jacob Zuma, President of South Africa: The global economic crisis is being felt all over. Africa has its own way of response. Its own problems too, but we must do our best in the spirit of belief in a recovery. All economies become inward looking during a crisis, but we must avoid shutting others out.
  • Kofi Annan, Co-Chair of WEF on Africa: We are facing a crisis of governance and a crisis of leadership, and need to restore it. Africa needs to be part of the solution by seeking to invest in infrastructure, education, health. We can’t ignore the needs of the poor, or any system we set up won’t last long.
  • Ngozi Okonjo-Iweala, MD, World Bank: There is a short-term response, but also an opportunity for long-term development. To quote Hilary Clinton: “Don’t waste a good crisis.” We need to think about shape of the continent post-crisis, working things like climate change in to our solution. China has expressed an interest in Africa – are we crafting our own response or simply waiting for it to happen?
  • Soud Ba’alawy, Executive chairman, Dubai Group: There is a misperception of Africa as high risk, it is a good investment destination. Africa needs to develop its own home-grown solution, using its resources, its young population, and to create an environment conducive for business.