A New Dawn for 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.”

The Path to Inclusion is Mobile: An Interview with Ibukun Awosika

It may be a slow process, but financial inclusion in Africa is improving. Given the barriers formal banking faces on the Continent, including practical issues such as dispersed populations, and regional variations in infrastructure, it is unsurprising that this is not an issue which will be resolved overnight. As of 2014, 34% of those in Sub-Saharan Africa had a bank account – leaving approximately half a billion people in Africa unbanked.  

The popularity and accessibility of the mobile money account – almost six times more utilized in Sub-Saharan Africa than anywhere else in the world – is a good sign for financial inclusion, putting many on the path toward accessing formal financial institutions. In Nigeria (in 2015), one of the biggest economies on the Continent, approximately 45% of the population did not have a debit card or access to a financial institution account. 

This is figure is on the wane however, perhaps partly as a result of the efforts of one bank putting financial inclusion are the forefront of their strategy – First Bank of Nigeria. With campaigns designed to provide financial literacy early-on, as well as reaching underserved markets including young people and students, FirstBank has been committed to leveraging mobile technology in order to improve financial inclusion in Nigeria. Hoping to grow their customer base from 14.5 million accounts in 2017 to 30 million by 2021, they've also bolstered their mobile money services through their brand Firstmonie. Firstmonie agents are positioned in communities with low rates of banking penetration, allowing customers in rural locations to open accounts and access FirstBank services – with the hope that convenience and locality will fuel financial inclusion.  

“Individuals and businesses are increasingly adopting digital payments and financial accounts ... unleashing large gains in productivity and investment, and prompting greater financial inclusion”

— Ibukun Awosika

The face of these efforts is, to a great extent, FirstBank of Nigeria's Chairwoman, Ibukun Awosika. The first female chair of the bank, Ibukun Awosika has overseen the implementation of their FirstGem account, specifically designed for women and female entrepreneurs. At FirstGem's first anniversary at the end of last year, she announced “we will not stop until every Nigerian girl-child has found their voice and found their pocket.” Embracing the new possibilities of mobile tech, FirstGem not only supports women entrepreneurs through training and research, but fosters relationships through its provision of a virtual community for its users. 

Ibukun Awosika, Chairman, Board of Directors, First Bank of Nigeria Limited

We spoke to Ibukun Awosika to find out more on First Bank Nigeria's actions on financial inclusion, her thoughts on improving access to banking services – plus the impact of mobile in Africa.  

In your opinion, what is the most significant issue hindering inclusive financing in Africa?   

Financial services are the lifeblood of an economy, enabling households and businesses alike to save, invest, and protect themselves against risk. However, in emerging economies today, the majority of individuals and small businesses lack access to even basic savings and credit products, hindering economic growth. An estimated half a billion individuals in Africa today are financially excluded. 

Success in financial inclusion entails reaching these users with products that can significantly improve financial lives. Specifically, the issues of distribution, product development, and financial inter-mediation will need to be tackled at scale. It is also important that an optimal regulatory framework exists to properly incentivize all stakeholders (banks, non-bank financial institutions, mobile network operators, agents, etc.)  

The 2014 Africa Progress Report found that only one in five Africans have any form of account at a formal financial institution – how much progress do you believe has been made in the last five years?  

In recent years, mobile technology has been instrumental in driving financial inclusion on the continent. In addition, disruptive new entrants continue to gain ground. Individuals and businesses are increasingly adopting digital payments and financial accounts to interact seamlessly and efficiently, unleashing large gains in productivity and investment, and prompting greater financial inclusion. 

In Nigeria, the Central Bank is fine-tuning its policy around agency banking as a strategy to tackle the distribution problem. Agency Banking is expected to provide services such as cash withdrawal and deposit, bill payments, payment of salaries, funds transfer and balance inquiry through the use of mobile phones and mobile banking.  

FirstBank recently launched their digital platform for women, FirstGem. What do you hope to achieve with FirstGem?  

At FirstBank we recognize the importance of women in driving socio-economic growth.  

The FirstGem platform includes benefits which empower women to achieve their financial goals and lifestyle aspirations. With FirstGem, our female customers – whether working class women, business owners or students, FirstGem is suitable for a broad range of women – customers enjoy a range of services, such as advisory services on wealth creation and investments and business advisory services on business funding. In addition, they have the opportunity to benefit from specialized training on business development initiatives (online and in-class), regular insights on business opportunities and openings in various sectors and industries, and discounts at merchant outlets that offer lifestyle products and services (spas, grocery stores, event centres, etc).  

You're FBN's first Chairwoman - what have you found most exciting about this position?  

The hope and aspiration that my appointment has kindled in many women across many generations that they can get to the top of anything they apply themselves to. 

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To hear more from Ibukun Awosika, join us at The Annual Debate 2018, where she will be speaking on our panel Inclusive Financing in Africa. 

A Continent 'Poised for Growth': Olam on diversifying Africa's Industrialisation

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. 

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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

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.”

— Geoffrey White, CEO, Agility Africa

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.”

— Geoffrey White, CEO, Agility Africa

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.

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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.

Africa as a Work in Progress: An Interview with Zemedeneh Negatu

The 'Africa Rising' narrative that took hold of the Continent's global image at the start of the new millennium was a welcome change to that which had come before it; a period where Africa's economy was cast as stagnant and unrewarding. 'Africa Rising' was swept along with a worldwide boom in emerging market investments, and there was a sense that the continent was stepping onto the path of ascent that Asia had walked in the previous decades.

The mistake was, perhaps, the expectation that such regions would develop at the same rate, or in the same direction. With growth faltering across sub-Saharan Africa since 2015, the 'Rising' narrative has been put to the test under the burden of poor commodities prices – particularly the decline of oil prices in 2015/16, which saw African giants, Nigeria and Angola, stumble into economic contraction.

“Africa is enormously wealthy driven by two key elements: millions of talented young people who can provide a huge workforce to power the global economy and second, the abundant natural resources the continent has, without which the modern global economy can’t function.”

— Zemedeneh Negatu, Global Chairman, Fairfax Africa Fund

Investors would not be blamed for questioning the effectiveness of their efforts in such a climate. But there were also those who went against the warnings of skeptics, and paid greater heed to trends of a booming middle-class and a huge demand for infrastructure investment. Today, economic growth in Africa is on the upswing and those like Fairfax Africa Fund, who began their investment in 2012, continue their commitment to investing in Africa.

With a planned oil refinery project worth $4bn, Fairfax's recent investments have drawn them to East Africa, with an ambitious infrastructure investment looking to provide Ethiopia and it's neighbours with 120,000 barrels of crude oil a day. Through financing as private equity and venture capital, the fund has created a profile of investments across manufacturing, agriculture and infrastructure - including co-investing in Hello-Cash, a leading mobile payment platform. By refusing to shy away from the challenges posed by investing in Africa, the fund has focused on high-performing sub-Saharan Africa nations and now enjoys a portfolio of companies employing more than 1,600 people - projected to reach 6,000 by 2020. 

“We have already made several investments in Ethiopia. We like the 8% to 10% Annual GDP growth, the 100 million population (second to Nigeria) and the focus on value-added manufacturing for export. ”

— Zemedeneh Negatu, Global Chairman, Fairfax Africa Fund

We spoke to Global Chairman of Fairfax Africa Fund, Zemedeneh Negatu, on Africa's changing role in the global economy, the fund's expanding portfolio in East Africa, and Zemedeneh's words of advice for those looking to invest in African markets.   

You're featuring on our panel: Africa's Role in the Global Economy. How do you view Africa's part in developing the international economy?  

Zemedeneh Negatu, Global Chairman, Fairfax Africa Fund

Africa’s role in developing the global economy could be material if it focuses on three factors: first, there needs to be sustainable rapid growth by its largest economies including Nigeria, South Africa, Kenya and Ethiopia. Second, effective economic integration across the continent is imperative. Third, Africa has to migrate to value-added manufacturing including resource beneficiation.

Given this potential, it seems the Continent's economic role is often mischaracterised. What do you believe is often overlooked when considering Africa's global economic impact?  

What’s often overlooked about Africa’s global economic impact is the fact that Africa is enormously wealthy driven by two key elements: millions of talented young people who can provide a huge workforce to power the global economy and second, the abundant natural resources the continent has, without which the modern global economy can’t function. For instance, a significant portion of the raw materials required to run electric cars or mobile phones is sourced from Africa. Unfortunately, these resources are exported raw, under-valuing Africa’s importance to the global economy. But, I am certain Africa’s migration to industrialization in the next 25 years will result in an economy bigger than the United States GDP today, which will make Africa a respected global player.  

As a proud Ethiopian-American yourself, in your opinion, how is the African diaspora influencing the future of Africa in the global economy?  

The African diaspora is already playing a significant role influencing the future of Africa in the global economy. For instance, talented Africans returning to the continent, especially from the industrialized countries, bring highly developed knowledge and expertise in science, medicine, technology, entrepreneurship and corporate governance. Furthermore, the African diaspora sends tens of billions of dollars of remittances each year to Africa contributing to the continent’s economic growth.

“Talented Africans returning to the continent, especially from the industrialized countries, bring highly developed knowledge and expertise in science, medicine, technology, entrepreneurship and corporate governance.”

— Zemedeneh Negatu, Global Chairman, Fairfax Africa Fund

It was announced in January that Fairfax is to invest $4bn in an Ethiopian Oil Refinery. Does the fund have any other African projects on the horizon?   

Fairfax is currently evaluating several opportunities across Africa, especially in West and East Africa. For instance, we recently entered a US $70 million manufacturing deal together with a large Singapore based company and a local partner, to produce building materials for export and local consumption. We are also actively looking at agro-processing, FMCG (fast moving consumer goods) and renewable energy opportunities. Our key investment guiding principle is that it must be in sub-Saharan Africa, in a country with high growth potential. Furthermore, the investment has to fit into one of our five key priority sectors, with special preference for manufacturing, infrastructure and agro-processing - and must be exportable. That’s one of the reasons we have already made several investments in Ethiopia. We like the 8% to 10% Annual GDP growth, the 100 million population (second to Nigeria) and the focus on value-added manufacturing for export.

Exciting prospects! Investing in Africa is not, however, without its challenges - what would be your key piece of advice for global investors looking to invest in Africa?  

Think strategic not transactional. Plan for the long term. Invest in the community. Don’t try to quickly “flip assets”. Also, look at Africa as a work in progress with the “glass half-full” perspective. And, finally, don’t be discouraged by bumps along the way.

To hear more from Zemedeneh Negatu, join us at The Annual Debate 2018, where Zemedeneh will be speaking on our panel Africa's Role in the Global Economy.