A New Dawn for Zimbabwe?
Watch our interview: A highlight of The Annual Debate 2018, Alex Russel, Editor of the FT Weekend interviews the Honorable SB Moyo, Minister of Foreign Affairs and International Trade, Zimbabwe.
Watch our interview with the Honorable SB Moyo, Zimbabwe's Minister of of Foreign Affairs and International Trade at The Annual Debate 2018.
The Annual Debate 2018 brought together Alec Russel, Editor of the FT Weekend, and Honorable SB Moyo, Zimbabwe's Minister of of Foreign Affairs and International Trade, for a much anticipated interview. After the events of 2017 brought about new leadership in the form of President Emmerson Mnangagwa, Zimbabwe post-Mugabe has initialized a shift internally - and internationally - to make the nation one of free and fair elections, as well as a business-friendly environment; as seen in the President's words in Davos this January: 'Zimbabwe is open for business'.
Honorable SB Moyo, as Zimbabwe's Minister of of Foreign Affairs and International Trade, is leading the way in transforming the nation's international investment reputation. In conversation with Alec Russel, the Minister addressed the question; 'Zimbabwe: A New Dawn or More of the Same?', focusing on the country's coming elections in July, and their commitment to a free, fair and transparent process. Minister Moyo said: “this is the time to end isolation. We have taken a strategy of re-integration with everyone from the the global village so that Zimbabwe can participate in the global economy without any hindrances.”
A Continent 'Poised for Growth': Olam on diversifying Africa's Industrialisation
As industrialisation continues to be held as the crucial step towards economic development in Africa, much energy has been poured into the potential for the Continent's manufacturing and heavy industry sectors. The conversation about Africa's industrialisation, however, cannot exclude a crucial driver of its economy – the agricultural sector.
Last year, President of the African Development Bank Dr. Akinwumi Adesina wrote that 'no region of the world has ever moved to industrialised economy status without a transformation of the agricultural sector'. As industrialisation continues to be held as the crucial step towards economic development in Africa, much energy has been poured into the potential for the Continent's manufacturing and heavy industry sectors. The conversation about Africa's industrialisation, however, cannot exclude a crucial driver of its economy – the agricultural sector.
Agriculture already contributes considerably to Africa's GDP at 15%– although this can vary significantly, ranging from 3% in South Africa to 50+% in Chad. Despite this diversity, agriculture has an enormous impact in employment, with over half of Africa's population involved in agriculture in some capacity. Yet there remains that much cited statistic, that in the face of vast agricultural potential the Continent actually imports US$35bn worth of food each year.
“people have the misconception that industrialisation is only about machinery – we take a broader view. There are opportunities for industrialising all sectors, including agriculture which is still the biggest job creator across Africa”
If in the process of industrialisation Africa embraced its agricultural sector, it would not only have the potential to feed itself - but if with the right infrastructure, the chance to capitalise on the growth of its exports. Agriculture in Africa could provide more than poverty reduction; it could be a pillar of wealth creation and self-sufficiency. Indeed, this is already the ambition held by Olam, an international agri-business which has been operating in Africa since 1989, when they established themselves in Nigeria.
Today, Olam has operations in all African regions, with a presence in twenty-five countries across the Continent. In Nigeria, the launchpad for their African endeavors, they have had a transformative effect in the country's agri-business sector – investing around US$1bn during their time there. This investment has gone into procuring and processing agricultural products, as well as rice milling and wheat milling infrastructure, and has helped drive Nigeria towards its ambitions - not just of self-sufficiency, but of becoming a global export power.
We spoke to Venkataramani Srivathsan, CEO of Olam Africa and Middle East, to find out more about the impact of their work in Nigeria, his thoughts on the role of industrialisation on the Continent – and his key advice for those looking to invest in Africa.
Venkataramani Srivathsan, Chief Executive Officer, Olam Africa and Middle East
You're speaking on our panel, Driving Africa's Industrialisation: Now or Never. In your opinion, what role does industrialisation play in Africa's economic development?
We see three big positives. First, it directly drives job creation. Secondly, industrialisation enables greater value-add within each market by allowing it to move further up value chains. Thirdly, this in turn allows Africa to be less dependent on imports and move towards greater self-sufficiency. There is a clear multiplier positive effect at play.
I would add here that people have the misconception that industrialisation is only about machinery – we take a broader view. There are opportunities for industrialising all sectors, including agriculture which is still the biggest job creator across Africa. There are so many low-hanging fruits that if harvested, can significantly improve economic and social development.
Indeed - Olam has worked for many years building Nigeria's agricultural sector. Beyond Nigeria, are Olam looking to increase their presence in Africa?
We will always be focused on growing in Africa - Olam was born in Nigeria 28 years ago. Africa is one of the strategic pillars for Olam. Africa is at a pivotal point right now, and is poised for growth. The headwinds of the past few years have served as a catalyst for further diversification of African economies, and we believe there is a real opportunity for Africa to leapfrog past many other developing regions if macro and policy trends continue on their positive trajectory.
We have always been passionate about Africa. Africa’s unique features offers ideal land and climate conditions for companies to grow responsibly in the agricultural sector.
The African Continental Free Trade Area Agreement was established last month – do you believe this will have an effect on Africa's industrial progress?
We welcome the landmark development of the first Pan-African FTA - free and open markets will be beneficial for all. It is a tremendous opportunity that can lead to increased intra-Africa trade, higher job creation and improved trade flows. But it is crucial that Africa’s leaders are committed to fully participating in the FTA to ensure mutual growth.
“The headwinds of the past few years have served as a catalyst for further diversification of African economies, and we believe there is a real opportunity for Africa to leapfrog past many other developing regions”
What would be your key piece of advice for global investors looking to invest in African industry?
You have to be committed to Africa long-term to build a successful and enduring business. We invested some S$1.89 billion across Africa over the years – not just we believe in its opportunities but also because we want to grow together with it.
Africa is also not a singularity; it is a collective of 54 different countries – more than in Asia or Europe. You cannot simply replicate business models that worked elsewhere. Neither will success come by managing from afar - you have to have boots on the ground. Instead, think about Africa in economic clusters – coordinating a collective of near and similar economies to derive scale and synergy.
Which of our speakers at The Annual Debate 2018 are you looking forward to hearing from?
The Annual Debate brings together leaders with a wealth of experience and expertise across various fields. I look forward to hearing all their views.
To hear more from Venkatramani Srivathsan, join us at The Annual Debate 2018, where Sri will be speaking on our panel, Driving Africa's Industrialisation: Now or Never.
Africa's Road to Industry: An Interview with Geoffrey White
The effect of limited road connections is estimated to add 40% to transport costs in Africa's costal nations – and 60% to landlocked ones. With the rate of population growth and urbanisation outpacing other nations worldwide, the necessity for infrastructure to support African development is vital.
It has long been understood that if Africa is going to meet the United Nations' Sustainable Development Goals for 2030, there is no more efficient path to fulfilling this than industrialisation. The impact of industrialisation will, of course, vary by nation, but its potential for sustainable job creation, innovation in technology, and skills development means Africa's industrialisation process holds huge promise for the eradication of poverty. Given the millions of young people joining Africa's labour force each year, industry holds the key to the Continent's inclusive development.
Indeed, Africa is already showing signs that it may be the economic powerhouse of the future – if it manages to take these crucial steps toward sustainable industrialisation. Ground has already been made in the form of last month's African Continental Free Trade Agreement, an unprecedented move to improve intra-African trade and facilitate the relationships for structural transformation. UNECA's research has suggested that the success of the agreement could increase intra-Africa trade by 52%, fuelling the Continent's manufacturing exports and allowing the sector to develop.
Yet beyond these agreements, there is still much work to do on the ground. Business continues to struggle with poor infrastructure: unreliable power supply, transport links, water and sanitation. The effect of limited road connections is estimated to add 40% to transport costs in Africa's costal nations – and 60% to landlocked ones. With the rate of population growth and urbanisation outpacing other nations worldwide, the necessity for infrastructure to support African development is vital.
“The new free trade area agreement will create a single open market of 1.7 billion people with an estimated US$ 6.7 billion of consumer spending.”
One such company working to meet this need is Agility Africa. Led by CEO Geoffrey White, Agility have brought international standard logistics to Africa's emerging markets, supporting business by providing the crucial infrastructure. With a focus on developing distribution parks across the Continent, Agility's parks are facilitating sustainable business, creating a reliable platform for others to operate on within the African market. In doing so, Agility are providing a springboard for the growth of African business, and a route to exporting Africa's goods internationally.
We spoke to Geoffrey White to find out more about the impact of Agility Africa's projects, his thoughts on the role of industrialisation on the Continent – and, of course, who he's most excited to hear from at The Annual Debate.
Geoffrey White, Chief Executive Officer, Agility Africa
You're speaking on our panel, Driving Africa's Industrialisation: Now or Never. In your opinion, what role does industrialisation play in Africa's economic development?
Industrialisation is fundamental for economic growth, jobs and prosperity. Without the benefits of industrialisation Africa will continue to struggle to compete in global export markets. Goods and services in Africa remain amongst the most expensive in the world as the majority need to be imported. This supports manufacturing based economies outside of Africa, not those in Africa.
The African Continental Free Trade Area Agreement was established last month– do you believe this will have an effect on Africa's industrialisation?
Low inter-regional trade in Africa, which is only 12% currently compared to 50%+ in developed markets, is a major constraint to economic development on the Continent. The new free trade area agreement will create an single open market of 1.7 billion people with an estimated US$ 6.7 billion of consumer spending. The challenge is getting all countries aligned on the agreement and the implementation and ensuring the easy movement of goods cross border. Africa as a whole will benefit significantly as it will be more attractive for investment and the dependency on imports will be able to be reduced.
You spoke in 2015 on Agility's five-year plan to invest $4bn into African distribution parks – what impact has this project had?
International standard warehousing is one of the central foundations of economic development. Our funding and development of warehouse parks permit multinationals to enter Africa on a capital light model, making their investment decisions less risky, simpler and much faster. Our unique SME warehouse programme provides the essential warehousing that small businesses need to expand and grow without having to raise expensive funding for non core infrastructure. We now have warehouse park projects open or under construction in Ghana, Cote D’Ivoire, Mozambique, and Nigeria with additional locations to follow in 2019 in Kenya, Tanzania, Uganda and Angola. We also have built to suit sites available for customers in Djibouti, Senegal, Mauritius and Cameroon.
“Africa is for those willing to make long term, sustainable investments and those that keep their business focused and simple, addressing the needs of the Continent, will see significant upside over time.”
Are there any specific Sub-Saharan African markets you're particularly interested in developing?
The Agility Africa strategy is to fund and develop warehouse capacity to support the growth in all the major cities in Africa. The initial focus is on delivering our initial top ten locations : Cote d’Ivoire, Ghana, Nigeria, Angola, DRC, Mozambique, Tanzania, Kenya, Uganda, Ethiopia. Thereafter we see additional projects being developed across the Continent to establish a pan African warehouse network that delivers one part of the essential infrastructure that is instrumental to the development of regional trade.
What would be your key piece of advice for global investors looking to invest in African industry?
I think the macro economic opportunity is very attractive but it is important to understand your market and align your product offering with the real growth in demand. The main challenges are around project execution and hiring, developing and nurturing quality human resources. Africa is for those willing to make long term, sustainable investments and those that keep their business focused and simple, addressing the needs of the Continent, will see significant upside over time.
Which of our speakers at The Annual Debate 2018 are you looking forward to hearing from?
Arnold Ekpe. His practical experience across Africa always gives him a unique insight into African macro economics.
Hear more from Geoffrey White, join us at The Annual Debate 2018, where he will be speaking on our panel, Driving Africa's Industrialisation: Now or Never.