Africa has experienced the best decade of the past 50 years, but there are still more challenges that need to be tackled and most participants of the World Economic Forum on Africa which is held for the first time in Addis Ababa, Ethiopia, from 9 to 11 May, are hope full that Africa will continue its pace of growth in the years to come. Capital’s Groum Abate interviewed participants from a wide variety of professions about their view of Africa and how the forum will help transform the continent in the future both politically and economically. Excerpts:
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industral agendas. For the first time Ethiopia is hosting the forum. Elsie S. Kanza, Director and Head of the Africa for the World Economic Forum talk about the expected outcomes of the forum.
Capital: Could you tell us about the forum in general and how the regional and the global forums are related?
Elsie S. Kanza: That is a different regional meeting. We do it once in Africa. This is the World Economic Forum focused on regional investment. This economic forum is focused in bringing together multi stock holders in the state of Africa, to meet the interests of the continent. We also have other regional meetings that will take place in Latin America, East Asia, and different locations in the Middle East, northern Africa, and elsewhere in Europe. The focus of our annual meeting that takes place in Davos is more of a global forum. In Africa, regional issues and concerns take precedent.
As Africa is part of the world, what happened around the world has a direct impact on it. And inversely, in some aspects, what happens in Africa has an impact on the rest of the world. Take for example issues of the climate change. Local actions and activities such as desertification can ultimately impact the global sphere. Then it becomes a priority for the rest of the world. For example, during our meeting we discussed climate smart agriculture recognizing that agriculture is absolutely critical to the continent. There is currently a lot of interest. We are now concentrating on transforming the sector by increasing its size. If this is not done in an environmentally sustainable way, we look to accelerate the challenges of climate change around the world. This is how the two meetings are related.
Capital: How do you see Africa in the coming years?
Kanza: We have participants who attend the global summit and have interest to attend the regional meeting. They may have companies or operations in Africa. They have an interest on a global level and operate in the global level and in Africa. There is a heightened interest Africa, as it is the fastest growing region in terms of investment in the developing countries. There is stagnation or slow growth in Western Europe, America and elsewhere and some of the Asian economies. Africa’s growth opportunities and Africa’s growth possibilities were featured in detail at Davos this year. The undeniable truth is that Africa is the next growth pull.
Capital: What do you expect from the forum?
Kanza: In terms of the meeting, the outcome is threefold. One is realization of Africa’s importance as the fastest growing region and Ethiopia’s place among the fastest growing ones. Just by being here, we need to understand the changes that have taken place, the changes undertaken by the government, regarding Ethiopian government officials, the business community and also the Ethiopian society, with particular emphasis for the Ethiopian young people who will be present. That is one part.
We have brought diversification in the participation, coming from the sub-Saharan Africa of which one of the key concerns is how do we increase African trade and how develop African interact and network together. This will be a major change in the Sub-Saharan Africa. Hopefully this will accelerate the needed integration in the continent. In addition to that we have a number of initiatives driven by public-private collaboration such as grow African partnership. The forum is also partnering and collaborating with the NEPAD agency. The expectation here is that change is going to happen in agriculture and recognizing that the government can’t do it alone. Stake holders need to participate.
Another aspect and which is exciting personally for me, is to see the emerging new leaders. From this we expect Africa to continue forward under leadership that is more aware and responsive. We have tried to address these increased responsibilities and for the leaders to listen to their people. Using social media as a dialogue, we also want to see what changes the citizens are interested to see next year; giving feedback and an ear to their responses.
Bain & Company Inc. is one of the world’s leading business consulting firms. It works with top executives to help them make better decisions, convert those decisions to actions, and deliver the sustainable success they desire. For forty years, it has been passionate about achieving better results for their clients—results that go beyond financial and are uniquely tailored, pragmatic, holistic, and enduring. The company advises on issues related to strategy, marketing, organization, operations, technology and mergers & acquisitions, across all industries and geographies. The company has fifty offices around the globe employing more than 5,000 consultant. Tiaan Moolman, Partner of the Inc talked about his vision for Africa in the years to come and what his company is focusing on.
Capital: Do you have businesses in Africa?
Tiaan Moolman: Yes we do. We operate a regional model from South Africa that covers sub-Saharan Africa. We have an office in Dubai that covers North Africa. But currently we do work all over the continent. From the South African office perspective, we often coordinate but not necessarily own a company involved. We think about it not only from an industry perspective but also from language perspective. For example, we do work in Mozambique and Angola in oil and gas and natural resources in mining. Predominantly there is a discussion on financial services. We think to cover those engagements from our office in Sao Paulo, Brazil from the language perspective. I myself have worked in Angola; the language is a barrier if you don’t speak Portuguese. We cover Franco phone speaking African countries from our office in France and some times from Dubai as well because we have a lot of French speakers there. A lot of the West African countries are covered from South Africa because the work there is consumer related products. In southern Africa, it is mining because we have a very strong mining practice in South Africa. And then, the east coast of Africa there is also a lot of consumer product, telecommunication, and financial services. So, we have a reasonable coverage as a company.
Capital: Do you have any new business interest in the continent?
Moolman: Yes we do. Ethiopia has a really interesting market not only for us as a company but also for a lot of other companies who are excited about the countries future growth opportunity in particularly and the continent in general. The growth rate Ethiopia achieved in thelast few years and the projected growth is staggering. It sounds as though the conditions for future growth are taking place. The macroeconomic policies of the government are easing up allowing more public-private partnership to foster. So, Ethiopia is definitely a place we are interested in doing business. From a business perspective we are unlikely ever to have offices in every country because so much of businesses in Africa are becoming regional businesses. When we upscale, we have to make a decision where our office will be in East Africa. But for the time being, we basically bring teams and get the work done.
Capital: Can you mention a specific business interest in Ethiopia?
Moolman: As far as I know there is no specific discussion related to Ethiopia at the moment. But the things that are happening in Ethiopia are obviously very interesting. All the emerging agro businesses, manufacturing, agro processing, infrastructure, telecommunication, and financial services are very inviting as the markets open up to the global competitions.
Capital: Are you going to wait until the markets in Ethiopia open up to the global competition?
Moolman: I think so. I mean if projects come earlier than that it must be in the area where the business is open to companies around the world. But, as I understand at the moment there is nothing immediate that is going on in Ethiopia specifically with our company. But one of the things that are interesting for us in Ethiopia at the moment is that we do a lot of work for multinational companies that are interested in spreading their foot print in Africa for the first time based on the 300 million emerging middle class in Africa. We do work a lot with those companies as well as with big continental champions in South Africa and other places to help them figure out what is the best way for them to be successful in Africa. Because you cannot take models from other part of the world and put it down and expect things to work. You need a customized African solution. We try to understand some of those rules of the game without which, how can you be successful?
Capital: So, How do you find the World Economic Forum in Ethiopia in its role to help you understand Africa better?
Moolman: I think it is fantastic. This whole wave of information allows people both from the private and public sector as well as civil society organizations to make crucial decision based on ground up information in “off the record conversations”. You often walk away with a much better understanding regarding real investment potential and what is really going on behind the scene. I am personally coming away with the understanding that the next 10 to 20 years is going to be the African decade. If we as Africans are all together, it could be great time for us.
Capital: Where do you picture Africa 10 years from now based on the moderators view regarding the continent?
Moolman: In one or another session somebody talked about even a longer time frame. He talked about his vision of Africa in 2050 which I think is entirely achievable. Africa will become the base of the world’s manufacturing taking over from China. Obviously, there are a lot of challenges to overcome in order to get there. You need all the skills, the infrastructure, and a braking down of the barriers that exist between countries so that it becomes simple to have a free trade zones. If you can do that, then there are a lot of better conditions waiting to happen. I mean access to raw material becomes simple which were imported earlier in a lower cost. This keeps and encourages more manufacturing in Africa. So, I am hopeful that in 10 years time we will take a big step toward that vision. But, I think, it is not a job done for 10 years only. My hope in 10 years time is to see three things happen: All the talks for infrastructure projects materialized because people talk about the fifty bond plan for Africa investment. If five projects actually happen, that is really a big step forward. Second, Africa needs to graduate with skill base. That will require bringing in the Diaspora of Africa from all over the world. It is necessary to open up their minds for the opportunity at home. Government and companies need to be very serious about skill development. Africa’s big gap in skill is observed in technical areas. We need to bridge it. We need to produce enough engineers, mechanics, trades people; people that work in heavy take manufacturing. Thirdly, I believe there is a kind of business war going on the entire continent at the moment. It is much easier for African countries to trade outside Africa than to trade among themselves. Those practice needs to be broken down. There must be a way to allow a free flow of capital and goods throughout the continent. I heard a very surprising statistic today. Africa represents 15 percent of the world population but only 2 percent of the world trade. And of that 2 percent trade, 15 percent of it is inter African trade, I think. All the rest is traded outside Africa. This is obviously the legacy of the colonial regime. It is a crime and shameful that the real opportunity from trade is almost lost. We are not yet engaged on it. The change in these three things will make real progress in the continent. It will transform the continent.
The Bill and Melinda Gates Foundation is one the biggest philanthropic organization in the world. The majority of the foundation’s focus is on health, poverty, and development in Africa. Haddis D. Tadesse, Ethiopia Country Representative of the foundation spared sometime out of the forum to discuss his views about the forum and his foundation’s work.
Capital: What is your organaization doing right now?
Haddis D. Tadesse: The Bill and Melinda gates foundation was created a decade ago because the family of Bill and Melinda Gates believed that inequities in health, food security could be alleviated if the right intervention was put in place. Particularly in the health sector where there’s a huge disparity between the developed world and the developing world, where kids were dying because the right vaccines weren’t delivered to them or the proper treatment was not being conducted. Bill and Melinda gates use their personal resources to get to this issue. The foundation in its history has given over USD 26 billion to efforts in health and development. About five or six years ago when Warren Buffet gave a huge chunk of his resources to the foundation, we also started exploring some other opportunities, and we thought agricultural development had a unique opportunity of not only becoming an economic agent of an economy but also addressing the food security and poverty reduction tool. So we’re now involved in health which is primarily our biggest investment area. In the US we focus on education and then we have an agricultural, financial services, water sanitation and urban programs around the world including emergency relief for polio. In some cases when emergencies happen, we intervene and provide some support. Generally that’s what we’re doing ,we give roughly anywhere between USD 3 to 3.5 billion annually, Africa represents perhaps about half of the giving and within that, Ethiopia is one of the priority countries.
Capital: Why are you attending the forum?
Haddis: We have been attending and been a partner with the WEF for a number of years now, both at Davos and the regional summits. We find it a unique opportunity where you have critical and important people coming together from government, the private sector, the NGO community, and from media. Increasingly the forum is focusing not only on economic growth but also on developmental issues. I just left the session where heads of states and other business leaders were talking about agriculture which obviously is a backbone of the economy for many countries including Ethiopia, so we find this forum as a venue where we can engage multiple partners at the same time over a three day period. We find it very useful as a strategic member of the WEF and we’ll continue to engage in that level.
Capital: What do you expect from this forum particularly?
Haddis: Well in this forum there’s a lot of excitement about the transformation of Africa, analysts and other observers expect this is to be a tipping point for Africa to really go into a transformational journey. We believe strongly in development being a critical component in that, so the grow Africa initiative that’s coming out of the WEF or other initiatives that focus on development and health issues are paramount. We continue to support that stance particularly in the agricultural sides; we think the initiative that’s coming out is promising. We will continue to go to the G8 and then the G20 summits, which have really galvanized the global community to do something meaningful about agriculture, and we’re very excited about that.
A leader in mobile and fixed, IP and optics technologies and a pioneer in applications and services, Alcatel-Lucent, includes Bell Labs, one of the world’s foremost centers of research and innovation in communication technology. With operations in more than 130 countries and the most experienced global services organization in the industry, Alcatel-Lucent is a local partner with a global reach. Alcatel-Lucent achieved revenues of Euro 15.3 billion in 2011 and is incorporated in France and headquartered in Paris. Daniel Jaeger, Vice President of Africa for Alcatel-Lucent talkss about his companies interest’s in Ethiopia.
Capital: How are you looking to gain from the forum?
Daniel Jaeger: I think you can gain from this forum in different ways, in that you can meet with people that are in the same environment, I wouldn’t even say industry or market because you meet people that are from the business community, government officials, people that have come from the world, there are people who try to help, and there are people who try to make money. You have to just widely define a group of people that have a common interest in Africa and meeting those people, discussing with them, making connections. The second part would be to dive deeper into the situation of the continent. From a business point of view we tend to look at places where business can be done fast in the telecommunication industry, we focus on the markets where we see there are big growth in telecommunication.
Capital: Are you going to meet with some officials of the telecommunication sector?
Jaeger: Yes. But not specifically in Ethiopia only, but Ethiopia is a special market from the telecommunications point of view. Because most of the other markets in Africa or at least the bigger countries tend to have three or four mobile operators, I would say the situation here in Ethiopia is still different and we will see how it develops. Knowing that the agenda is tight I haven’t scheduled any meeting here with the local players but I will plan to do it for sure in the future. As a company we have a weak presence in Ethiopia but I see the potential of the place where we want to engage strongly. But as I said, it goes hand in hand with market development.
Capital: Actually you were the first ones to enter the Ethiopian market previously many years back. But now you aren’t doing anything.
Jaeger: I think over the last few years or even for more than a decade, the focus of our telecommunication endeavors was the traditional name. Now we tend to call ourselves solution providers because we try not to just be boxed in but provide a solution for our customers to focus on countries where there is strong business. I see that there is a lot of interest in Ethiopia from people like us, but also from the international operators, from the African ones of course but also from outside the continent. We see the potential, this is a huge country with a big population there’s market but it just depends on the regulatory environment, if this market is opened I am sure a lot of us solution providers and operators will be pretty much interested in investing here and working in Ethiopia.
Capital: Do you have hopes that the monopoly will be changed?
Jaeger: I don’t know but I can hope, but we’re giving our messages and we understand that this is a governmental decision on how to structure a sector. I do understand that there are some others pointing out to the government and stakeholders that there’s a big challenge in a lot of sense. There is business that can be done which in turn will generate other business with local companies no matter who would be the next operator or even this company will create jobs directly or indirectly locally. And of course as we know competition is done in a normal or smart way, then this will drive the prices down, enabling the bigger part of the population to afford all kinds of telecom services and all kinds of advanced services.
Capital: How is your business in general in Africa compared to other similar service providers?
Jaeger: Today the industry of solution providers is a rather tough one, a strong competitive pressure. Probably there always has been a strong competitive pressure but clearly it has changed. For us it’s still important to maintain full portfolio, what we have today in our portfolio basically what our customers, the telecom operators need, be it radio access or transmission network or the submarine cable where we’re very successful at the moment in and around Africa. So that’s the full portfolio which is important to us, whereas of course there are new competitors which came over the last year from China in particular. While we see the traditional competitors we have, like other European companies narrowing down their reach and focusing on parts of the technologies but not providing the end to end as we call it anymore. I guess the competition is there and still very strong of course it’s changing with the players and their strategies.
Capital: How are you planning to compete with Chinese companies who come up with finance for projects?
Jaeger: We see that not only in Ethiopia but also many places in Africa, it’s just not about the solution, it’s about making the whole package of it which consists of the product, the financing but also on the support system. Not every operator in Africa or generally in emerging countries has the skills within his own team which can run a unit immediately. We see it with a lot of operators immediately, we see it with more and more operators, also to the management of the solution or to manage it with the different models it has. At least to manage it in the beginning, for the first 12 months we will take the responsibility for actually managing a network on day to day basis. In this period we’ve trained the people of the operator and after 12 months we would hand it over. So that’s still the packaging that’s indeed different, I agree on the point financing becomes more and more important.
- Service Providers – Bring high bandwidth access and IP services to South Africa.
- Education – Education and training as a key enabler to empower the next generation
- Healthcare – To improve the citizen’s quality of life throughout Africa
- Critical National Infrastructure – Heavy efforts to sustain natural resources
- Defense and National Security – To enhance national security and strengthen defense capabilities
- Mining and Gas – Capitalize on income and use it as the fuel to grow a diversified economy.