Unpacking the 2015 World Economic Forum on Africa: Key opportunities for investors
While the World Economic Forum on Africa in Cape Town in June 2015 attracted many business leaders, African heads of state were noticeably absent. Still, business leaders were upbeat about progress and the political will to get projects completed.
Although this was the 25th World Economic Forum (WEF) of Africa, the question arises whether the forum is mainly a talking shop or whether it promotes actual progress by bringing together leaders who can then implement projects. In the sessions GRI attended, the emphasis was on getting things done.
This was also reflected in the media coverage of the event, which emphasized that serious business does take place in the corridors and at the breakfasts and dinners around WEF sessions.
Networking is the raison d’etre of the WEF and it has demonstrated over the past quarter of a century that it is adept at bringing together leaders in business, civil society and governments for the collective good.
Power and transport infrastructure: a key theme
A key theme this year was getting the power and transport infrastructure in place so that Africa can promote inter-regional trade and provide its citizens with electricity, which is a major economic enabler.
The Africa Progress Panel 2015 report entitled “Power, People, Planet” set out a way that Sub-Saharan Africa can leapfrog to a low carbon energy future. The African Progress Panel report called for a ten-fold increase in power generation to provide all Africans with electricity by 2030, which would only happen by 2080 according to current growth projections.
The report also encouraged African governments to use the region’s natural gas resources to provide energy domestically, as well as for export, while harnessing Africa’s vast untapped renewable-energy potential. In particular, outgoing African Development Bank President Donald Kaberuka said at the media conference that there was an “institutional” bias against large hydro projects, despite Africa’s large untapped hydroelectric potential.
The report also called for international cooperation to close Africa’s energy sector financing gap, which it estimated will be $55 billion a year until 2030.
Climate change: another focus
Panel member Graca Machel, who has served as First Lady of South Africa, said 2015 was a year of great opportunity, and pointed to the upcoming climate summit in Paris in December and the United Nations General Assembly meeting in New York in September as opportunities to adopt 17 global sustainable development goals.
“Infrastructure itself might sound like a technical or a boring word, but it is the economic and social fabric that is essential to improve the quality of lives of the people of Africa,” former UK Prime Minister Gordon Brown said at the media conference presenting the WEF’s Africa Strategic Infrastructure Initiative.
Brown highlighted the Central Corridor Presidential Round Table Investor Forum held in Dar es Salaam, Tanzania, in March 2015, which commits the political leaders to a quarterly briefing session that reports on progress and reduces bottlenecks, noting “there is an emphasis on delivery and getting things done.”
“We are sending a message out to the rest of the world that Africa is ready with projects that can be financed by international investors if they are interesting in seeing the benefits that flow by investing in Africa,” he concluded.
Apart from the returns to investors available from infrastructure projects, there was also a $350 billion per year opportunity awaiting businesses in Africa, according to an Accenture and National Business Initiative joint report.
The report outlined paths that companies could use to generate new revenue streams by developing new opportunities aimed at what it called the new “floating” class – the 21% of Africa’s population that was on the brink of joining the middle class, which would create $186 billion in annual revenue.
Making business sustainable by improving resource efficiency would generate $84 billion annually, the report argued, while creating collaborative operating models would create $43 billion. Building trust through transparency would add an annual $37 billion.
That is the prize that has many investors salivating about Africa’s prospects, but it will not come without hard work and a willingness to go the distance in spaces where opportunities abound.
South Africa in focus
The evidence so far this year shows that the South African economy is learning how to make the most of the opportunities in the rest of Africa. In the first four months of 2015, this region became the most important region for South African exports, eclipsing those to Asia and Europe.
By way of example, an article from the Daily Maverick highlighted the lack of South African products in Mozambique, South Africa’s neighbour, even as it highlighted that Mauritanians were prepared to move across the continent and thrive in an alien culture. The message of WEF was that opportunities abound, and investors need to seize them.
