The Independent (Kampala)

Africa: Continent At Davos 2013

The investment and profit pie in China, India, and the ASEAC region is far bigger but the smart money at the World Economic Forum in Davos Switzerland this year was on a different regional altogether; Africa and its sustained 5% and above GDP growth amidst adversity.

John Zhao, chief executive of Hony Capital, a private equity firm with some US$7 billion in assets under management, spoke of the opportunity. "We see the weak infrastructure in some African countries as an opportunity. If everything was already perfect, they wouldn't need us any more, would they?

"There are always risks, but if we go in only when it's big and everything is grown up, that makes things a lot more difficult," he said. Zhao and others were speaking about the prospects for Africa in under the topic; "De-risking Africa".

Several heads of state and government from Guinea, Ethiopia, Nigeria, Rwanda, Tanzania, Kenya, South Africa, and Mauritius were at Davos.

The leaders told potential investors that with growth rates to rival Asia and vast untapped potential, Africa has moved beyond its reputation as a risky place to do business. South Africa's President, Jacob Zuma, and his Nigerian counterpart, Goodluck Ebele Jonathan, and Graham Mackay, the executive chairman of South African brewing giant SABMiller were the panelists during the session.

Support private sector

Mackay said economic growth spurred by big business would solve Africa's problems but it must be supported.

"Economic growth comes from the private sector: business will fix it, if it's allowed to," he said.

"Is Africa more risky than any other region in the world?... This is a perception that needs to be dealt with," said Zuma, "There is evidence that Africa is growing, there is also evidence that African leaders have collectively moved together to do things that will help Africa move forward."

"In any investment, any venture, there is always a risk in business, not just Africa," Nigeria's Jonathan said but, he added, "Before this time, African states were quite politically unstable... Now most countries are reasonably stable, so businessmen can make predictions."

The World Economic Forum is an independent international organisation that hosts political and business leaders at the Davos resort in Switzerland each year to discuss ways to improve the state of the world. Standard Chartered Bank's Chief Executive, Peter Sands, HSBC Chief Executive for the Middle East and North Africa, Simon Cooper, who are already heavily invested in Africa were at Davos to encourage others to join the so-called "south-south trade"; facilitating trade between Africa and resource-hungry emerging markets like China. Sunil Mittal, the founder and CEO of the Indian telecom firm Bharti, has been active across Africa for 17 years.

"All emerging markets offer growth," said Mittal. "But today, really the last real bastion of big growth is the African continent. One billion people of which 500 million are connected and 500 million are yet to be connected. And those who are connected want to move up to the next level of mobile Internet. And that's what excites investors like us."

Nigeria was hunting investors in its agriculture sector where it hopes large-scale investment can turn from a net importer of rice to a net exporter of the staple in five years. The country's Agriculture Minister Akinwunmi Adesina told Deutsche Welle: "I have tried to attract investors," told Deutsche Welle, "I've been in discussions with Syngenta, DuPont and several others that are talking to us about coming to Nigeria. "Why are they coming to Nigeria? They can see the opportunity," he continued. "And I can tell you, there is no better place to be for agriculture in Africa than Nigeria."

Long way to go

But all conceded that Africa, especially south of the Sahara, has a long way to go.

The International Monetary Fund in October 2012 predicted the region's economy would grow by 5% last year and by 5.7% this year. Most of this growth would be in West Africa; Ghana, Ivory Coast, Nigeria, Angola and Gabon.

Today, Sub-Saharan Africa accounts for only 2.5% global Gross Domestic Product (GDP). South Africa's President Jacob Zuma downplayed the violence surrounding miners' strikes in his country last year when almost 50 people died.

"We have seen the worst," he told potential investors over dinner, "All of us - organised labor, business, the government - we are dealing with it to correct it because it cannot go back to a situation that created the impression that there's no governance of this matter."

Poor electricity, water, and transport infrastructure in many African nations also scares off many potential investors.

"Can you imagine if Africa would start investing heavily into infrastructure, what it can do to uplift people from poverty - the economic growth rate that is required there," Mittal said. "So to my mind, the single biggest factor remains focus on infrastructure."

Nigeria's Jonathan agreed.

"The infrastructure gap is significant in Africa," he said at Davos, "And of course that is why trade between African countries is quite limited, because it's easier to move from African countries to Europe and the rest of the world than to move from one African country to the other."

Zuma said that African leaders were working together to improve infrastructure and coordinate efforts, pointing as an example to the US$80 billion Grand Inga Dam project in the Democratic Republic of Congo. "If colonialism left us with no infrastructure, the solution is to grow the economy," he added, stressing that the Organisation for African Unity is working on "very concrete measures" for improving infrastructure. According to Deutsche Welle, some studies suggest that some US$100 billion (74.2 billion euros) would have to be invested in Africa's infrastructure each year to achieve real improvement.

President Paul Kagame, of Rwanda, Speaking from the audience, stressed that Africans had to trust themselves - not outsiders - to solve their problems.

"For me, the major problem I see is that Africa's story is written from somewhere else, and not by Africans themselves."

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