Simon Walker looks at why good governance will help sustain Africa’s economic growth
The private equity pioneer Sir Ronald Cohen entitled his entrepreneurs’ manual The Second Bounce of the Ball. The metaphor was well-conceived. Many successful businesses are run by people who know which way a ball will bounce initially. It’s the truly visionary who can forecast the direction taken by the second bounce.
This month I read a presentation by a remarkable business leader, Stephen Jennings. Twenty-five years ago, Jennings left his native New Zealand to make his first fortune in Russia, then freshly emerging from decades of communism. What intrigues me is how he has spent the last decade – and where he believes the biggest economic opportunities lie. His pick is sub-Saharan Africa.
For those of my generation, who grew up with images of starving children, military coups, drought and corruption, the idea seems far-fetched. But Live Aid was over 30 years ago and Africa has changed.
The Ethiopian drought of 1984 killed an estimated 600,000 people and wiped out one-sixth of the economy. Ethiopia has again experienced its worst drought in a generation, but this time its mortality rate didn’t rise and the country remained – as it has been for 15 years – one of the fastest-growing economies in the world.
Six of the 10 fastest-growing economies of the past decade are African, and forecasters predict that trend will continue. Life expectancy has improved as deaths from malaria and HIV have halved.
Literacy rates among the young now exceed 70 per cent and African countries lead the surge in adoption of disruptive technologies: by 2020 mobile-phone penetration will be 91 per cent. Post-conflict economies such as the Democratic Republic of Congo are seeing dramatic growth.
A key indicator of expansion is urbanisation: Africa is now urbanising faster than any global region in history. Stephen Jennings’ Rendeavour builds new satellite cities from scratch and has a portfolio of seven projects in Nigeria, Ghana, Zambia, Kenya and the Democratic Republic of Congo.
Each development can create as many as 100,000 permanent and 200,000 temporary jobs over a 20-year project life. Demographics also highlight Africa’s huge investment potential. The median age of European consumers is 41, of Asian consumers, 27 and of Africans, just 18 years.
Perspective is advisable, and it’s true that much remains wrong with many emerging economies. It is vitally important that as Africa grows it develops sound governance models. Last year I spoke at IoD Nigeria’s Convention in Abuja and can testify to the determination of much of the business community to conduct itself honourably and honestly.
Groups such as IoD Nigeria and Russia’s Independent Directors Association are battling hard for a level of good governance we in the UK take for granted. They deserve our strongest support.
Read more on Africa
Free culture? Don’t scare away corporate funding
How sad to see a renewed campaign, led by actor Mark Rylance, to deter BP from supporting culture and the arts as part of its sponsorship activities. Campaigners should be careful what they wish for. Britain is unique in providing free access to many institutions such as the Tate galleries, the National Portrait Gallery and British Museum – access which a post-Brexit government might find challenging to fund.
The principle that anyone can drop in to cultural centres without having to pay is highly attractive. So is corporate support for the Royal Shakespeare Company, the National Theatre and museums, galleries and theatres. The fact that great British companies like BP see themselves as full participants in their community should also be welcomed. Campaigns of this sort must be roundly rejected or large businesses will be harassed away from investing in the arts.
Simon Walker is the IoD’s director general
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