Nuru Kane & Kobo Town on the Southbank rooftop
Posted on 22nd July, 2014 in RAS News
Food for thought from the Africa Business Summit
1. Beyond the Hype: The Not-For-Tourists Guide to Investing in Africa
The London Business School’s 13th Africa Business Summit was jam-packed with talks and panel discussions, catered to an audience of business professionals and students with an active interest in investing in Africa. The aim of the summit was to go beyond the media catch phrases and sound bites that have flourished with the Africa rising story, as the Summit Chair Nieros ‘Roro’ Oyegun pointed out it seems like everyone has become an expert of Africa, overnight.This summit succeeded in providing a platform for in-depth discussions on the challenges that faced investors in Africa such as the skills gap and weak linkages between the public and private sectors. More importantly, summit participants went deeper to give concrete examples of ways investors could rise to this challenge by working to be part of the solution. There was recognition of the big returns that could be gained in Africa, Goldman Sachs forecasts that the economy in Sub-Saharan Africa will grow by 6.5% until 2050, enjoying the second fastest growth rate in the world after China. However an important theme that came out of the summit was the responsibility that investors have to share these high returns with society.
2. Practical advice for future investors
The summit gave the floor to several business professionals who shared their insights and experiences with the audience and helped form a nuanced understanding of the realities of investing in Africa. In the first keynote address, Okechukwu Enelamah, CEO of the leading African private equity firm, Africa Capital Alliance, explained that investors should ‘be part of the solution when working in emerging markets’. In his view, the best way to do this is to take a long-term view when planning to invest in an African context, by choosing carefully the context you invest in, the people you work with, the sector and timing. In terms of strategy for investing, Mr Enelamah advocated for a ‘value investing’ approach with a more focused portfolio in the short term reducing the risk of loss, and diversifying the company portfolio over time.
We learnt of the experiences of James Mwangi, CEO of Equity Bank, the large financial services provider in East Africa. Equity Bank’s vision is ‘to be the champion of the socio-economic prosperity of the people of Africa’. Mr Mwangi advised future investors to build a mutually beneficial and sustainable business model, one which keeps in mind the high proportion of youth in the country contexts that investors may be interested in. Equity Bank has a number of scholarship programs, one which sends East African students to study in top universities around the world, as well as financial literacy programs for its clients. Colin Coleman, Head of Investment Banking in Sub-Saharan Africa for Goldman Sachs, emphasised a need for a better relationship between the public and private sectors in order to address this skills gap and align education systems with the needs of industry. Souad Benbachir, CEO of CFG Group, a Casablanca-based firm which provides investment banking services, reiterated this skills-gap. Ms Benbachir explained one way CFG Group worked to address this gap, is by subsidising the training of 10,000 engineers a year to match current industry priorities in the Moroccan context.
3. Investing in the Creative Industries
During concurrent panel discussions, the audience had the opportunity to zoom into specific sectors. At the Creative Industries panel, Naana Orleans-Amissah, Brand and Communications Strategy Consultant, moderated a dynamic discussion, drawing out some of the challenges that face the Arts in Africa and possible solutions. Salima Haddour, Managing Director of Hopscotch Système, a communication agency dedicated to Africa, advocated the use of alternative business models to attract investment in the Creative Industries. Ms Haddour highlighted Burkino Faso’s Ouagadougou Film Festival as an example of a credible business model which combines Film with the country’s Tourism Industry. Dr Lindiwe Dovey, Senior Lecturer at SOAS and Co-Founder of Film Africa, brought our attention to the type of investment needed to support artists. Dr Dovey emphasised that the funding needed to be ‘no strings attached’ derived from venture capital rather than financial aid. Charles Ajidahun, Head of Licensing and Digital Ad Sales at iROKOtv, explained that there was no ‘one size fits all’ business model but investors should look at the best ways to support artists by working on a case-by-case basis.
Richard Mkoloma, Fashion Designer and Creative Consultant, highlighted that creative industries are not just an economic force, but can also be a political force. By building strong individual brand identities, African aritsts can present a nuanced idea of the continent, to a global audience.
4. The Student Challenge
One of the most interactive and lively sessions of the summits was the Tranforming Africa through Innovation Challenge (TACTIC). During this session four Venture Entrepreneurs, students and recent alumni of universities such as the London School of Economics, Imperial College and the University of the Arts, received feedback on their business plans from a panel of Venture Mentors. The audience held up placards to vote for their favourite idea from this selection which included Health Care and Fashion. The winning idea was Imperial College alumni, Gbeminiyi Onabanjo’s Abiye Maternal Savings Card, a payment savings card linked to mobile phones, enabling pregnant women to have health insurance.
5. Leadership in Africa is too obsessed with ‘self’
The fact that a venture plan with a clear aim of improving services for local people won the competition, linked nicely with the finale of the LBS Africa Business Summit. Lord Hastings, Global Head of Corporate Citizenship at KPMG International, criticised African leaders in the public and private sector for their lack of vision and obsession with ‘self’. Lord Hastings advocated a collective commitment to sacrifice and stressed that the point of business was not profit-making but making profit-making communities. Dolika Banda, Regional Director for Africa at the Commonwealth Development Corporation, also emphasised the ethical responsibility of African leaders, asking how leaders can justify their extravagant lifestyles with poverty on their doorsteps. Ms Banda explained that Africans must start this change on an individual level; by voting for political leaders according to their achievements rather than their backgrounds or ethnicities.
6. African economies do not need aid, but a vibrant and responsible business community
The LBS Africa Business Summit explored the practical challenges that face future investors, more interestingly however, it highlighted the ethical responsibility of the business community to empower the contexts it invests in. Mr Coleman, of Goldman Sachs, described aid as the ‘last dying gasp of colonialism’, he stated that African economies should be developed just as other economies have; on the back of investment, not aid. The attendees of the summit are well aware of the shortcomings of financial aid and the development sector for the growth of African economies. The in-depth discussions left attendees with an idea of the competencies required to harness the full investment potential of the continent, however the summit also inspired a sense of commitment to the development of the continent.
London Business School – Africa Business Summit – took place on Saturday 26th April