Article by Boko Inyundo following the Royal African Society's Sustainable Development Goals (SDGs) event held on 22nd March 2018
What an inspirational event we had on the evening of 22nd March 2018 that was led by the Royal Africa Society and Dalberg Advisors with The Africa Club at London Business School kindly hosting the gathering. Together with a stellar cast of speakers and a fantastic audience of business executives, investors, social entrepreneurs and development actors, at this event we explored the 17 Sustainable Development Goals (SDGs) that have been set by the United Nations (UN) and which are geared to transforming our world, while we specifically looked at what the SDGs mean for investors and businesses with current or potential interests in Africa.
This event was framed around 2 panel discussions, one with representatives from business and the other with investors, while each panel was preceded by keynote speeches from Lord Mark Malloch-Brown, the former UN Deputy Secretary-General and now Chairman of Smartmatic, the leading electronic voting company that helps hundreds of millions worldwide cast their votes in elections, and Nick O'Donohoe, the CEO of CDC Group, the UK's development finance institution.
Keynote: Lord Mark Malloch-Brown
The keynotes offered deep insight into the opportunities the SDGs offer the private sector as well as the challenges that will need to be navigated, noting that the investment bank UBS states that "the UN's 17 SDGs, each year, cost $5 to 7 trillion to finance, and aim to end poverty, protect the planet, and bring prosperity to all by 2030, though to date, the world is falling well short and needs to raise $2.5 trillion to bridge the gap and this will only be achieved using private capital as well as public investments".
Lord Mark Malloch-Brown emphasised that "meeting social needs are the opportunities of the future" with real prospects in Africa for private sector impact with regards to the SDGs that relate to agriculture, the food chain, communication, renewable energy and healthcare. He highlighted that "the opportunities are enormous for fast movers in Africa" and reflected on his experience of a "real spirit of innovation particularly in East Africa".
Panel with representatives from business
David Croft, the Global Sustainability Director at Diageo, identified micro-power generation as a real opportunity to be grasped in Africa with him forecasting that we're set to see great strides in small-scale, local power generation as investors and entrepreneurs innovate and deploy solutions that address the gaps in access to power across the continent while lowering the cost and price for urban and rural populations across Africa. Yemi Babington-Ashaye, the Head of the World Economic Forum's Global Shapers Community, a network of young community leaders based in cities across the world, echoed this sentiment by highlighting that 600 million Africans do not have access to power while Africans, in relative terms, often pay the most for electricity.
Diageo's David Croft also emphasised that plastics recycling is a huge opportunity in Africa and foresees tensions rising exponentially with regards to plastics waste not least because China is now looking to stop importing that waste. Africa will therefore need to build processing and waste re-use networks to address the consequences and Dougie Brew, the Director External Affairs, Communications and Sustainability for Africa at Unilever, highlighted another driver here being the rapid urbanisation of Africa will mean that the continent is set to rely more heavily on processed food and packaging as consumption grows and expectations of quality food products evolve.
H.E. Dr Hailemichael Aberra Afework PhD, the Ethiopian Ambassador in the UK, observed that Ethiopia's priorities included building local capacity for food processing by, for example, strengthening the links between farmers and processing centres, as well as responding to the demands from urbanisation by, for example, the building of hospitals and clinics across the country equipped with the technology required to better meet growing and evolving public healthcare needs.
Yemi Babington-Ashaye highlighted that in surveys that the Global Shapers Community regularly conducts with its constituents across Africa sees the youth always saying that healthcare and education are the two areas ripe for disruption. Kate Robertson, the co-Founder of One Young World, the global forum for young leaders and former Global President of Havas, agreed, adding that "the primary driver of disruption in education is connectivity, with every form of digital learning being soaked up by the young in Africa".
One Young World's Kate Robertson continued by stating that many are focussed on the issue of transparency in the context of multiple domains across the public and private sectors. Kate stated that there is "real potential for a huge jump in transparency on the continent" with her citing how the youth are passionate about deploying web-based solutions that, for example, provide greater transparency around procurement. Yemi Babington-Ashaye echoed this view by pointing to findings from the 'Global Shapers Survey', a research study conducted with +30,000 young people from more than 180 countries, which shows that government accountability and transparency weigh heavily on the minds of young people.
Unilever's Dougie Brew felt that the defining feature in Africa with regards to the SDGs is the young and the need to create opportunities for those entering the labour market.
One Young World's Kate Robertson emphasised that the SDGs will, ultimately, be delivered by the youth while the Global Shapers Community's Head, Yemi Babington-Ashaye, stated that the SDGs present an opportunity to develop a shared language, between business and development practitioners, in the context of enabling sustainable progress.
Unilever's Dougie Brew outlined how the SDGs link social needs in Africa directly to a business, like Unilever that, amongst other consumer goods, sells toothpaste globally, in that he highlighted that the no. 1 reason why children do not make it to school across Africa is due to tooth decay resulting in truancy and the consequence that has on the quality of education!
Diageo's David Croft observed how the launch, this past few weeks, of the Guinness 'Made of Black' TV commercial that features the female Kenyan Premier League referee Tabitha Wambui has resonated powerfully in an arena, the beer market, that is largely perceived as male-orientated, and the brand return has been overwhelmingly positive while chiming with the narrative surrounding the SDG goal on gender equality.
David Croft continued by stating that "helping and engaging in Africa is critical to Diageo's global growth" given Africa is a key market for the business. He also reflected on the company's supply chain by highlighting that "strengthening Nigerian farmers has a direct impact on Diageo's bottom line", with the Ethiopian Ambassador observing that his experience of Diageo doing business in Ethiopia was that the company "was not making a hit-and-run investment in Africa but was in the continent for the long term and, as a result, winning love from local communities".
Unilever's Dougie Brew stated that distribution and route-to-market were key issues for Africa’s transformation, where logistics and distribution supply chains were often slow while ensuring affordability is important. He also emphasised the need to develop solutions with local communities for local needs and large companies such as Unilever "rests on a supply chain down to the smallest duka (Swahili for 'shop') in Kenya and therefore has an impact not just through its direct employee base but also the many more indirect employees its influences".
Keynote: Nick O'Donohoe
Nick O'Donohoe, the CEO of CDC Group, stated that "there has never been a time when development finance has been as front and centre in the debate as it is today and the SDGs have played a key role in focussing attention on the role of business and the private sector". He continued by saying the audience, as UK tax payers, should be very proud of the work CDC Group has done to date, citing recent examples where it has invested in a company in Malawi offering affordable nutrition and one in Kenya providing low cost, quality education, and all this through investments, not grants, which earn market leading returns and which will endure for the long term.
The CDC Group's Nick O'Donohoe acknowledged the challenges such as the funding gap of $2.5 trillion needed to finance the SDGs. He observed that while you would have thought investment into Africa is growing, sadly foreign direct investment (FDI) flows to Africa have been in decline as a result of economic headwinds and the retreat of banks and Private Equity, with investors feeling that Africa lacks scale. Recently when asked by the Secretary of State for International Development what needed to be done to address this his answer was the need for:
- Better governance and more consistent economic policy on the continent
- More risk appetite amongst investors
- Greater innovation (in financial services and technology)
On the subject of governance, Nick O'Donohoe felt that no country in Africa was currently more focussed on attracting private capital than Ethiopia while the Democratic Republic of the Congo was, at the moment, an almost impossible place to do business. Zimbabwe, after +30 years of turmoil, was now "one of the best investment opportunities available if the country were to do what Ethiopia was doing". Ghana has been moving forward while, recently, developments in Tanzania would suggest it was moving backwards.
With regards to risk appetite the CDC Group's Nick O'Donohoe observed that while looking back to the 1980's when hardly anyone made significant investments internationally, things have changed as, today, we have better data to enable us to understand risk. However, whenever the risk status shifts adversely investors will tend to move out fast. He felt CDC Group is in a position to play a major part in disseminating data while it can also help build local capital pools which tends to be more patient capital that's more likely to be in long term equity rather than debt with that capital coming from the likes of pension funds.
With respect to innovation the CDC Group's Nick O'Donohoe highlighted developments relating to finance such as impact bonds, volume guarantees and blended finance models while technology transformations have been seen in mobile, solar (citing M-Kopa) and the application of Artificial Intelligence (AI)-related technologies in, for example, healthcare diagnosis. However, all must recognise that some things are challenges that are more pronounced in Africa than they may be elsewhere, with Nick O'Donohoe citing water sanitation, house building and credit bureaus / finger printing technology as some examples. The funding of innovations to meet such challenges will require people and partnerships to come together to build the necessary solutions that are relevant to communities on the continent.
Panel with investors
Shami Nissan, the Head of Responsible Investment at Actis, a leading investor in growth markets across Africa, Asia and Latin America, highlighted that Actis saw opportunities in Africa where it already has a strong track record and this includes: energy; power; electricity; healthcare; education; financial services; and infrastructure. She observed that whereas 3-5 years ago Actis and its clients did not talk about investments in terms of the SDGs, it does do so now.
Geetha Tharmaratnam, a Partner at T5 Africa Capital Partners, a venture capital firm focused on investing in early stage innovative and disruptive technology companies, emphasised that "the focus now needs to be about more than just capital" and that there was a "need to address the capital stack" as the current industry fund structure was, arguably, not fit for purpose, and "needed to focus on the way and quality of investing with the SDGs critical here in giving us a common language". Her view was that the real opportunity and challenge lay in establishing an enabling environment for investing in small and medium-sized businesses while the fundamental challenge was matching the opportunities with the risk appetite.
Tracey Austin, the Global Head, Impact Investments, at Palladium, a global leader in the design, development and delivery of Positive Impact, highlighted that the key is for any investor to, from the start, have a point of view and value system that is in tune with the SDGs, otherwise one risk's simply "green washing" traditional investment approaches. In looking to engage in this arena "it is key that you hire policy and governance experts and put your own money into the game".
T5 Africa Capital Partners' Geetha Tharmaratnam championed the need for Africa to nurture local capital pools that invest in local businesses as that is ultimately what led to transformation in Asia. She also advocated for the Diaspora to return home to help build the human capital base of the continent.
Christoph Scaife, an Environmental, Social and Governance (ESG) analyst at Investec, the international specialist banking and asset management group, emphasised that impact investing needed to be benchmarked against other forms of investing as a means of positioning it as an attractive and competitive model. He also proposed that investors needed to tell their stories better in order to help dispel the myths that investors were just in the game for profit and enriching those that are already rich, inferring that the SDGs provide such an opportunity.
All the investor panel agreed that the SDGs provided a shared language and vocabulary around which to frame the investment of capital and pursuit of sustainable returns.
The opportunities for the private sector to transform our world by operating and investing through the lens of the SDGs are clearly myriad and an event like this can only scratch the surface in playing its part to propel discussion into action and collaboration.
For me the discussions throughout this event and in our well attended drinks reception afterwards really brought into focus the key opportunities and challenges facing the private sector today. Namely how to exercise its responsibility to pursue profit with purpose, as well as being a means of stimulating productivity that is sustainable for not only their immediate stakeholders (e.g. shareholders, customers, supply chain or employees) but also wider society. Any growth or progress will need to go hand in hand with investments that strive to nurture or responsibly use/re-use our natural resources, not deplete them, for the common good.
Many thanks to Aly-Khan Jamal, Noa Gafni, Adesoji Solanke, Amine Bendriss, Sheila Ruiz and Shushan Tewolde-Berhan, and to the latter two it was a real honour to have been asked to make the brief opening remarks to welcome our eminent keynote speakers, panellists and the full house of inspiring Africa-interested and Diaspora delegates that joined us!
Boko Inyundo is a Council Member at the Royal African Society as well as a member of the Board at the African Foundation for Development, a Non-Exec Advisor to the Africa + Tech-focused consultancy De Charles and a Senior Business Development professional aligned to the Technology Sector at the global law firm DLA Piper.