South African Entrepreneurs Thinking BIG: Business ideas, success stories, marketing and innovation

Africa Open For Business – A View From Davos


by on 27/02/12 at 10:09 am
No comments


With Africa being proclaimed as the future for business investment, the 42nd World Economic Forum (WEF) held in Davos in January presented a great opportunity for me to verify this view.

There were any number of issues clamouring for attention at Davos this year – the Arab Spring, the Eurozone crisis, burgeoning youth unemployment, the shifting of power from West to East, to name but a few. Nevertheless, the clarion call from Africa was quite distinct: “Africa is Rising”; this was the message from the African heads of state who attended the Forum.

They put on a great show. The stigma of Africa as the “hopeless continent”, as it was labelled by the Economist in 2000, must be removed they said. There is new hope, democracy is growing, dictatorship is dying out, pragmatic leadership is on the increase, political instability is on the decline. The tables are turning; Angola is funding Portugal and the genocide in Rwanda happened 18 years ago – it is over and Rwanda is making great strides in opening its economy to investment and new enterprise.

Indeed, the African delegation effectively countered India’s case, presented at Davos a year ago, as an alternative to investment in Africa. India argued that it is English speaking, it is a democracy, people are literate, it has mineral resources and it is an attractive alternative for foreign direct investment. Africa’s rebuttal this year was just as strong.

The delegation presented a compelling scenario of a continent that is experiencing the highest rate of urbanisation in the history of mankind, that is the second fastest growing region in the world after Asia, that experienced the least volatility during the financial crisis and where the average economic growth for 2011 was 6%, with 45 out of 46 countries growing their GDP last year. In the West the general perception is that Africa is a continent of poverty but, in truth, 34% of households are middle-income. The size of the untapped market is formidable – Nigeria alone will have a population of 390 million people by 2050, making it the 5th most populous country in the world.

A notable presentation came from President Alpha Condé of Guinea Conakry who reported on his country’s drive for transparent governance within in government. For instance, Guinea’s mining tenders are now placed online and the winning bids are also published online in the interests of transparency and reducing fraud and corruption. President Condé also spoke, to great acclaim, of the need for Africans to develop self-respect by setting higher standards of professionalism for themselves, including moving away from the ubiquitous ‘Africa time’. “I see our country as a sleeping beauty that needs to wake up soon,” he said.

At the same time there was a pragmatic consensus that Africa still has many obstacles to overcome, foremost amongst these being infrastructure, education, transparency and governance, trade barriers and access to energy and technology. Investment is seen as the necessary catalyst for change, bringing new capacity and empowerment to the continent and, in turn, producing economic dividends for all. In this context, the Governor of the Bank of Botswana, Linah Mohohlo, called for a sovereign credit rating for Africa, as a route to providing clarity and confidence to the investor market and increasing investment into Africa.

There is, as we know, huge scope for infrastructure investment. Africa needs roads, pipelines, intra-country airline services, power generation, supply chain capacity and connectivity (digital connectivity in particular). With infrastructure investment coming into the country, industry and manufacturing opportunities would be there for the taking – at present, only 1% of the world’s manufactured products come out of Africa.

Governments are welcoming private-public partnership initiatives that involve capacity building and skills transfer to local communities. Indeed, the most successful investment projects are those that are delivering holistic solutions, with companies in diverse sectors collaborating with each other and with in-country and regional stakeholders, to supply infrastructure, logistics, services, connectivity, training, routes to market and so on.

The potential for agricultural development in Africa is very encouraging. At present, only a small percentage of arable land on the continent is used for cultivation; yet there is huge opportunity for food security. China is already buying up large tracks of arable land for growing its own food. But investment in logistics infrastructure is critically needed, so that local producers can reach wider markets. Without this kind of investment, farmers will remain trapped in subsistence agriculture and we will continue to see famine-stricken areas dependent on food flown in by donor agencies, rather than receiving supplies from their neighbouring countries.

Kenya reported on its forward thinking strategy to supply cheaper bandwidth. The Kenyan government took the decision to slash the cost of bandwidth to promote the uptake of internet connectivity and drive business growth. The result is that Kenya has leapfrogged South Africa as the country with the highest internet penetration in Africa (South Africa has dropped to fourth place) and is making rapid progress in building an IT culture and economy.

The quality of life of even the poorest and the most marginalised is affected by wireless connectivity – look at the impact of M-PESA, the mobile phone payment service for the unbanked.  And we are only now starting to appreciate the impact that digital connectivity has on intellectual capital and to see how we can harness collective intellectual power to develop solutions. The opportunities in a wired Africa are breathtaking.

The message from Davos is that it is time for a new story about Africa – this will, in fact, be the theme of the Africa WEF meeting in Addis Abbaba in May this year. Although impediments remain, African leaders are showing greater unity on strategy. The world economy is a complex system in which all the pieces of the puzzle are shifting and one of the new favourites is Africa. For South Africa the opportunities are very exciting. We have the access, so we need to wake up and seize the day.

Allon Raiz is the CEO of Raizcorp, the only privately-owned small business ‘Prosperator’ in South Africa and the only South African Enterprise Development faculty accredited as a Centre of Excellence by the UK-Government approved Small Firms Enterprise Development Initiative (SFEDI). In 2008, Raiz was selected as a Young Global Leader by the World Economic Forum, and in 2011 he was appointed for the first time as a member of the Global Agenda Council on Fostering Entrepreneurship, making him one of 15 world experts in the field. For more information, visit www.raizcorp.com. Follow Allon on Twitter: www.twitter.com/allonraiz. View more articles by Allon Raiz.

Tags: Africa, Business in Africa, World Economic Forum

Related Articles

Leave a Reply