Africa will need a system to discover and nurture entrepreneurial talents to grow its economy and create jobs for its young population. This recommendation was made by Jim Clifton, chairman of the globally renowned polling and analytics firm, Gallup, when he delivered the 7th annual Babacar Ndiaye lecture on 14th October 2023. The lecture, which was held at the Fairmont Royal Palm Hotel in Marrakech, Morocco, was under the theme "The New World Order and the Future of Entrepreneurship in Africa"., An initiative by the Africa Export-Import Bank (Afreximbank) in honour of its founder, It was the first time that the lecture series was being held in Africa with the IMF/Annual Meetings being held on African soil for the first time since Nairobi in 1973.
In his welcome remarks, Professor Benedict Oramah, President and Chairman of the Board of the Bank, reminded the audience of the changing nature of global trade, particularly the slow-down of globalisation at a time when Africa was poised to benefit from rising wages in China. The growth in global trade, following the collapse of the Soviet Union, the emergence of the World Trade Organisation and the opening-up of China had seen global trade accelerate dramatically, rising from $2 trillion to $7 trillion in the year 2000 and $24 trillion by 2022. The uneven benefits of globalisation, Oramah said, had led to a backlash, with populations in the west and some political leaders souring on the idea. "The discontentment of the army of displaced "Blue Collar" workers [in the west] had unprecedented political consequences, leading to the emergence of anti-globalisation sentiments and movements amongst political parties and candidates across most of the economies of the West," he observed.
These adverse currents have led to an end of what Oramah called the "golden age of entrepreneurship," characterised by a reversal in the flows of foreign direct investment to developing countries, restrictions on technology transfers, re-emerging trade barriers, including a trade war between the world's two largest economies and an environment in which building businesses in the developing world has become riskier and more difficult. These developments pose a challenge to Africa and require the continent to prepare for this new era. "The world as we know it has dramatically changed, and it has changed for the worse at a time when Africa was expecting to benefit from globalisation that pulled almost a billion people out of poverty in China. However, as businesses explore new investment destinations, they can either consider their home country or elsewhere. What of Africa? What must we do to attract these investments in Africa?" Oramah questioned, introducing Clifton as someone with the capacity to help address these questions.
In his keynote address, Clifton said one of the major challenges in the world now is that economies are not growing as much as they used to. The search for growth and the desire to boost it has led many countries to focus on innovation and invest in systems to facilitate innovation. Clifton argued that this is the wrong approach pointing out that it is building businesses that brings innovation to life and engenders economic activity. "There are a lot of innovations but they have no value unless a customer is willing to pay for them," he stressed. It is important to distinguish between academic talent and the ability to generate ideas from entrepreneurship, which requires a different set of skills, he argued. "We have to understand that while innovation is really important, if we have a system to support and grow entrepreneurs or rainmakers, everything will change."
At a rate of 3% the global economy can grow to $200 trillion over the next generation, which Clifton said would be a failure. To reach $300 trillion which would need growth of 4.5%, there must be a clear understanding of the respective roles of innovation and entrepreneurship. "We have to understand that it's a cart and a horse situation and I would suggest to you that the cart is innovation, and the horse is entrepreneurship and we have to get really good with the horse," he said. According to Clifton, there are about 5 people in every thousand who have the capacity to build huge companies and have the entrepreneurial impact that the late founder of Apple, Steve Jobs had, which means there have to be about 7.5 million of such people in Africa. The challenge, he said, is to find them. The solution is to have a "dragnet" that helps to identify and support these individuals, he said. "This continent has plenty of talent, perhaps more than anywhere else and there's no reason why you can't build the biggest businesses in the world here. There are all kinds of minerals here in Africa, but the big money is still in the human spirit, and we haven't done a good job of unlocking that," he concluded.
In his closing remarks, Dr Hippolyte Fofack, chief economist of Afreximbank, highlighted the role that entrepreneurs play in economic growth, pointing out that while Africa has abundant labour and natural resources, it needs more capital and entrepreneurship to make up the complete quartet required for production. "Entrepreneurship is one of the most important drivers of growth in both the developed and developing countries. but I would argue that it is even more critical in Africa where it is not a choice but a necessity," he argued, explaining that the low levels of employment require much more entrepreneurship. "It takes an ocean of entrepreneurs to develop a continent and entrepreneurial governments to effectively facilitate and coordinate their actions as we have heard tonight," he added. Dr Fofack celebrated the role that Afreximbank is playing in supporting entrepreneurship in Africa through its subsidiaries and initiatives such as the Fund for Export Development in Africa, Creative Africa Nexus, African Medical Centre of Excellence and other programmes to support entrepreneurs and small businesses around the continent.
About the Lecture:
Afreximbank has hosted this Lecture every year since 2017 in honour of the late Dr Babacar Ndiaye, the fifth President of the African Development Bank. Dr Ndiaye transformed the Bank during his decade-long leadership and was also instrumental in establishing several other enduring Pan-African institutions including, among others, Afreximbank, Shelter Afrique, and the African Business Roundtable.
About Afreximbank:
African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. For 30 years, the Bank has been deploying innovative structures to deliver financing solutions that support the transformation of the structure of Africa's trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa. A stalwart supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA. Working with the AfCFTA Secretariat and the AU, the Bank is setting up a US$10 billion Adjustment Fund to support countries to effectively participate in the AfCFTA. At the end of 2022, Afreximbank's total assets and guarantees stood at over US$31 billion, and its shareholder funds amounted to US$5.2 billion. The Bank disbursed more than US$86 billion between 2016 and 2022. Afreximbank has investment grade ratings assigned by GCR (international scale) (A), Moody's (Baa1), Japan Credit Rating Agency (JCR) (A-) and Fitch (BBB). Afreximbank has evolved into a group entity comprising the Bank, its impact fund subsidiary called the Fund for Export Development Africa (FEDA), and its insurance management subsidiary, AfrexInsure, (together, "the Group").
For more information, visit: www.afreximbank.com
