World Economic Forum On Africa 2008

World Economic Forum on Africa Capitalizing on Opportunity Cape Town, South Africa 4-6 June 2008

Report

The views expressed in this publication do not necessarily reflect those of the World Economic Forum.

World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 E-mail: [email protected] www.weforum.org © 2008 World Economic Forum All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.

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Contents

Page 3 Preface Page 4 Summary: Capitalizing on Opportunity Page 12 Re-engineering Growth Page 16 Unfinished Business Page 20 Innovate or Perish Page 24 Partnerships without Borders Page 28 Licence to Lead Page 32 Acknowledgements

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Preface

As many of those present were aware, this year’s World Economic Forum on Africa was our 18th year of activity in Africa. It is a continued honour for us to maintain the trust of the community and to contribute to shaping the agenda in the current atmosphere of collaboration, opportunity and partnership. The 2008 World Economic Forum on Africa focused on the power of leadership to bridge the gap between the region’s challenges and opportunities. In keeping with a trend begun a few years ago, the greater diversity of both the African and non-African leaders present meant that we could do more. We explored opportunities in more depth and tackled several difficult conversations on the challenges facing the region. We were particularly encouraged by the spirit of openness and partnership evident in the discussions. We view this year’s deliberations as further confirmation, if more were needed, that Africa’s stakeholders are ready to come together to ensure that the region takes advantage of the opportunities at hand. We witnessed a more confident community, one keen to assert its place on the global stage, one that has come of age. Among this year’s many highlights was the inaugural Africa Circle – a private gathering of members of the community who have participated in our Africa

meeting for 10 years or more. They were honoured by Klaus Schwab, who presented a commemorative gift to each member. A session called “Coming of Age” saw interaction between some of the community’s veterans and several newcomers on the achievements, commitments and aspirations that we share and on what more can be done to improve the community’s effectiveness. We would especially like to thank our meeting CoChairs, who were instrumental in helping us to shape this year’s agenda: Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria; E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA; Wendy Luhabe, Chairperson, Industrial Development Corporation, South Africa; Sadako Ogata, President, Japan International Cooperation Agency, Japan; and Sultan Ahmed Bin Sulayem, Chairman, Dubai World, United Arab Emirates. We expect this 18th meeting nurtured the friendships, insight and conviction needed to improve the state of the region.

Adeyemi Babington-Ashaye Associate Director, Acting Head of Africa

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Summary: Capitalizing on Opportunity

“The opportunities, threats and challenges Africans face require strong partnerships among government, business and civil society. They also require strong African cooperation and engagement with the world.”

“It would be very important if we manage our resources and the wealth they generate so they produce the advances we need.”

Thabo Mbeki, President of South Africa

Klaus Schwab, Founder and Executive Chairman, World Economic Forum

When more than 800 business, government and civil society leaders from 50 countries met in Cape Town for the 18th World Economic Forum on Africa, the optimism generated by yet another year of strong economic growth in the continent was evident. “Africa is becoming an interesting and exciting investment destination,” said Maria Ramos, Group Chief Executive of Transnet, South Africa. Thabo Mbeki, President of South Africa, commented, “There really has been progress in addressing the issue of peace and stability and democratization. This process is irreversible.” Added his Ghanaian counterpart John Agyekum Kufuor: “The opportunities for Africa are immense.” The sense of achievement, however, was tempered by the shared appreciation that the going will only get tougher, given the slowdown in the global economy and rising energy and food prices. Nonetheless participants chose to remain resolute and to look forward for ways in which Africa can bridge the gap between the challenges and opportunities and

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capitalize on the drivers of growth. Africans, said Bingu Wa Mutharika, President of Malawi, “need to change mindset from ‘afro-pessimism’ to ‘afrooptimism’.” Africa, he added, “is probably the richest continent in the world but the people are the poorest. Let us recognize that we have all the wealth to enable us to transform our continent and people from poverty to prosperity.” The meeting began with an interactive brainstorming session during which participants identified the major drivers of change that Africa needs to be most prepared for in the next 12 months. A similar survey had previously been conducted among the general public. The participants’ overwhelming choice: education and skills development. “There is a gap between the skills of those in school and the jobs they would aspire to fill,” remarked Sadako Ogata, President of the Japan International Cooperation Agency and a Co-Chair of the meeting. The other top drivers of change ranked by the group were: visionary leadership, economic growth, robust infrastructure and food security (see Figure 1). The brainstorming

Figure 1: Africa Economic Brainstorming Results of the public vote on the Drivers of Change

Results of the participants’ vote at the Africa meeting on the Drivers of Change

that will most impact Africa in the next 12 months

that will most impact Africa in the next 12 months

session nurtured an appetite for solutions and for action that permeated the rest of the meeting as leaders joined interactive discussions to explore several of these issues in more depth.

"It's important to diagnose the legislative framework of countries that stand in the way of women so we can change it to provide an enabling environment for all to lead better lives."

By identifying education and skills development as the key priority, participants highlighted the need for Africa to develop new leaders ready for a more competitive and closely interconnected world where collaboration, innovation and entrepreneurship are the necessary tools of success. “Business needs to join with government and civil society to improve skills,” advised E. Neville Isdell, Chairman and Chief Executive Officer of The Coca-Cola Company. Public-private partnerships are essential to addressing the skills deficit in Africa, Ogata said. Indeed, “the opportunities, threats and challenges Africans face require strong partnerships among government, business and civil society,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “They also require strong African cooperation and engagement with the world.” As Aliko Dangote, President and Chief Executive Officer of the Dangote Group of Nigeria and a CoChair of the meeting, added: “Progress will not happen by accident. There is much work to do and by collaborating we will have a greater impact.”

Linah Mohohlo, Governor of the Bank of Botswana; Member, Africa Gender Parity Group

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“Business needs to join with government and civil society to improve skills.”

“Unless we get leaders that see beyond the divides that the [colonial] system left us, very likely we will move one step forward and two steps backwards.”

E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA; Co-Chair of the World Economic Forum on Africa

John Agyekum Kufuor, President of Ghana

In stressing the need for strong leadership, participants acknowledged that for too long much of Africa’s ability to prosper was impeded by poor governance. But rather than blame colonial rule for their ills, new African leaders are taking responsibility for their actions and opening up their governance practice to scrutiny and open criticism. “Unless we get leaders that see beyond the divides that the [colonial] system left us, very likely we will move one step forward and two steps backwards,” said President Kufuor.

require. The world is coming to Africa. China and India, for example, have made relations with the region a strategic priority. And the 2010 FIFA World Cup will be a major opportunity for South Africa and its neighbours to showcase the enormous progress that the continent has achieved. There will surely be dividends, but as Colin Coleman, Chief Executive Officer of Goldman Sachs in South Africa put it, “It is up to us to see what we do with it.”

This shift in mindset is critically important at a time when Africa’s abundance of natural resources could prove to be the key to unlocking the wealth that its people deserve, riches that must be managed properly, transparently and efficiently to ensure that growth is delivered equitably. “It would be very important if we manage our resources and the wealth they generate so they produce the advances we need,” Mbeki told participants. Above all, it is important that Africans themselves take action, make the choices and find the solutions they

The continent must find its role in the global village, said President Mutharika of Malawi. “This is a question that we have glossed over but yet is so fundamental. We have a role to play in the global arena.” That role is for Africans alone to shape, he concluded. “Nobody will develop Africa for us.” The 2008 meeting was organized under five subthemes: “Re-engineering Growth”, “Unfinished Business”, “Innovate or Perish”, “Partnerships without Borders”, and “Licence to Lead”. Within these subthemes, the agenda examined Africa’s challenges and opportunities, and the capacity for leadership to bridge the gap between them.

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F

T

Africa Circle

In an exclusive gathering, leaders who have participated in 10 or more of the World Economic Forum’s Africa meetings were honoured. Leading the classification, Thabo Mbeki and Trevor Manuel have both been present at 17 of the Forum’s 18 Africa meetings. Other leaders, with the number of meetings to which they have contributed, include: Bertram Lubner (16),

Antonio A. Matos (13), Lynda Chalker (12), Maria Ramos (12), Simba H. Makoni (11) and Abel Mkandawire (10). Klaus Schwab thanked members for their trust and loyalty. He gave each a commemorative gift and asked the community to stay engaged as the region enters a new age.

Re-engineering Growth

Unfinished Business

While Africa has enjoyed strong economic growth in recent years, spreading peace, stability and better governance, the downturn in the global economy and rising food and energy prices will make the going much tougher. This sub-theme explored the need to overcome investment and infrastructure bottlenecks to keep growth on track.

Business as usual will never be enough. What will it take to bring the business environment up to global standards?

• African countries should address deficiencies in agriculture to increase productivity and empower small farmers. • It is critical for African economies to diversify by developing higher value-added products and services to allow Africans to gain more value from their economy. • More investment is needed in infrastructure to develop supply chains and improve efficiency. • Public-private partnerships are necessary to develop education and skills to build capacity. • Deeper regional integration is essential to attract more investment and create market power.

• Governments alone do not have the capacity to devise or deliver the solutions. Business clearly has a role to play. • Of special focus should be ways to tap the spending and investing power of those at the bottom of the economic pyramid. • The agriculture sector should be a key priority, particularly for banks which need to find creative ways to make it easier for small farmers to access capital. • Public-private partnerships can be an important vehicle to unlock growth in key sectors. • Climate change, water management, technology and the African diaspora could also prove to be important sources of opportunities for new investment.

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From left to right: JaimeMoralesCarazo, Vice-President of Nicaragua; EliasAntonio Saca, President of El Salvador; Patrick Manning, PrimeMinister of Trinidad and

Tobago; Susan L. Segal, President and Chief ExecutiveOfficer, Council of theAmericas, USA; Manuel Zelaya Rosales, President of Honduras; ¡lvaro Colom Caballeros,

“There clearly is a crisis of leadership not just in Africa but in the world.” Wendy Luhabe, Chairperson, Industrial Development

“Progress will not happen by accident. There is much work to do and by collaborating we will have a greater impact.”

Corporation, South Africa; Co-Chair of the World Economic Forum on Africa Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria; Co-Chair of the World Economic Forum on Africa

Innovate or Perish From disruptive business models to new frontier technologies, innovation represents and creates opportunity. Economies have to find innovate ways to deliver better products and services to markets and to tackle issues from water management, energy security and health to climate change.

Partnerships without Borders

• To boost water efficiency, new models of usage, management and pricing are needed, as well as stronger linkages across sectors. • The adoption of technology will be a major boost to productivity, allowing economies to unlock value in poorer communities and rural areas. • Political will is necessary to boost public investment in agriculture. • Innovative solutions such as public-private partnerships and the better leveraging of existing distribution and treatment networks could result in the improved delivery of healthcare. • Companies stand ready to work with governments but the latter need to create aligned policy frameworks to make ventures viable.

• Africa needs a consensus on how it wants to deal with both traditional powers and emerging partners. • African countries should focus on how to deepen partnerships among themselves. • Partnerships should not be used to shift blame. African nations should take responsibility for their actions.

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Africa is in a position to build new and meaningful global partnerships based on mutual respect rather than aid and charity. Only Africans will develop Africa and determine the continent’s future.

From left to right at the Opening Plenary Session: Pierre Nkurunziza, President of Burundi; Bingu Wa Mutharika, President of Malawi; Thabo Mbeki, President of South Africa; Klaus Schwab, Founder and Executive Chairman, World Economic Forum; John Agyekum Kufuor, President of Ghana; and Raila Amolo Odinga, Prime Minister of Kenya

Licence to Lead

Democracy Around the World

Leadership is the ultimate force capable of bridging the gap between daunting challenges and unprecedented opportunities. This sub-theme explored how leadership can turn adversity into opportunity. • Mediocre leadership and poor governance have been major impediments to prosperity. • The continent has all too often experienced two of the most extreme forms of the lack of accountability – corruption and the unwillingness of leaders to step down following electoral defeat. • Public institutions including political parties need to be strengthened and made accountable. • The quality of leadership in the middle levels of the public service should be improved. • In general, there are signs that African leadership is improving and accountability and transparency standards are rising.

Note: Democracy index scores range from 0 to 10 (highest) indicating conditions in five areas: electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture. Labels indicate range of scores and are not intended to be descriptive.

Full democracy (score of 8-10) Flawed democracy (score of 6-7.9) Hybrid regime (score of 4-5.9) Authoritarian regime (score <4) No Data

Source: EIU

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Achievements, Commitments and Aspirations

In a world where power is shared and decisionmaking is dispersed across time zones, people cannot be coerced, they must be convinced. The World Economic Forum is proud to play a role in a multistakeholder world and a multistakeholder future. We have selected a few achievements, commitments and aspirations to share with the community. Some are supported by an individual, others by a coalition of members from our community, including the Forum itself. And in yet others, the Forum has simply played a facilitating role to ensure progress. In all these cases, we are gratified to be associated with leaders in business, government, civil society and academia who are committed, through their actions, to improving the state of the world. It is our hope that the aspirations inspire commitments in the coming period and that the commitments this year translate into action and achievement.

Among the Achievements Boosting African Agriculture – At our 2007 gathering, the Alliance for a Green Revolution in Africa (AGRA) announced the appointment of former UN Secretary-General Kofi Annan as its first Chairman. To date AGRA has invested US$ 330 million in African agricultural development. Developing the Business Alliance Against Chronic Hunger – Our initiative tackled the issue of increasing food production in Africa by sharing insights from its existing projects. New strategies being developed include innovative financing mechanisms to drive agriculture-sector growth, sourcing from small scale farmers and expanding the retail distribution networks of goods including seeds, fertilizer, food and fuel. Managing Energy Poverty Action – In 2007, the group unveiled its bricks-and-mortar office housed by the Development Bank of South Africa. The Energy Poverty Alliance Management Unit (EPAMU) will further promote the EPA’s objectives. EPAMU’s midterm goal is to build its institutional capacity to act as a matchmaker between leading companies, governments, local entrepreneurs and communities, as well as national and international finance institutions and donors, to enable project financing and execution to address the challenges of energy poverty.

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Advancing Global Health – The Global Health Initiative unveiled a host of practical tools for companies to use to help tackle tuberculosis. Promoting Social Entrepreneurship – Finalists for the 2008 Social Entrepreneur Award in South Africa were recognized. The Schwab Foundation’s Africa Social Entrepreneurs Meeting marked the first gathering of more than 120 social entrepreneurs and resource providers in Africa focusing on innovative and entrepreneurial solutions to social and environmental challenges. The Schwab Foundation for Social Entrepreneurship’s current network covers more than 40 countries and includes 144 outstanding social entrepreneurs reaching out to a total of 600 million beneficiaries. Business Taking Action against HIV/AIDS – To establish HIV/AIDS workplace programmes: • Eskom has supported 42 suppliers in South Africa, reaching 20,000 people. • Unilever has supported 70 small tea farms in Kenya, reaching 12,000 people. • SAB Miller has supported 400 owner drivers and 160 bars. Incorporating African insights in global deliberations – Mining industry feedback was incorporated into the global response to resource endowment challenges and opportunities. Launching Africa@Risk – The Forum’s Global Risk Network published its first risk report focusing on the global risks that impact the region.

Among the Commitments Kenyan and international business leaders committed to engaging with the new government of Kenya to support government efforts to restore Kenya’s economic activity. An energy financing mechanism that draws on a combination of funds from an array of sources (multilaterals, charitable organizations, other donors) and seeks to minimize the transaction costs associated with the financing of rural electrification projects was developed. Our Water initiative committed to developing water forecasts which will raise awareness while simultaneously developing a Sub-Saharan water workstream that will spread best practices. The Africa Gender Parity Group was launched this year, committing to disseminating best practices for narrowing the gender gap across the continent.

To support Zimbabwe, a member of the Young Global Leader (YGL) community has committed to hosting an international delegation of YGLs in Zimbabwe to witness what is happening on the ground. The objective is to focus on investment opportunities that can help support Zimbabwe’s economy. Members of the YGL community have committed their time and expertise to teaching and mentoring young leaders at the African Leadership Academy. The Africa Enterprise Challenge Fund, a US$ 50 million call for proposals to catalyse business innovation across several areas, was launched. The African Development Bank has committed to developing a facility called the African Financing Partnership (AFP) with other partners by 2008-09. The AFP will harmonize procedures and enable the member institutions to increase their operations without increasing processing costs.

Among the Aspirations The Africa community shared the aspiration that Zimbabwe would return to economic prosperity and that the opportunity would arise for Zimbabwe’s many international friends to partake in its reconstruction. The community called for leadership to boost faith in the policing of African societies and for an “all hands on deck” fight against crime. In an effort to increase access to HIV treatment, Unilever, Eskom, Volkswagen, Standard Chartered Bank, SAB Miller and Heineken aspire to support all the small and medium-sized enterprises in their supply chains to establish HIV/AIDS workplace programmes. Together, they could reach over one million people, but will need to partner with government to make this happen. Deeper partnerships among universities, businesses and governments in Africa are needed to ensure that universities are contributing to the continent’s growth. The removal of constraints to intra-African trade to allow capacity, efficiencies and scale to be improved regionally must be sought even as negotiations continue in the global arena. The increased input and engagement of African businesses in global trade negotiations is desired as they can bring knowledge and expertise to strengthen the case presented by African governments.

“Africa has contributed perhaps least to climate change but will suffer disproportionately in coming decades.”

There should be a continued dialogue with Africa’s diaspora, possibly led by the African Union or the New Partnership for Africa’s Development (NEPAD).

Sadako Ogata, President, Japan International Cooperation Agency, Japan; Co-Chair of the World Economic Forum on Africa

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Re-engineering Growth

“We all believe that agriculture is the battlefield for economic growth in Africa.”

“The issue of rising food prices is a time bomb.”

Monty Jones, Executive Director, Forum for Agricultural

South Africa

Jacob G. Zuma, President, African National Congress (ANC), Research in Africa, Ghana

Since 2004, Africa has experienced economic growth of about 6%. The main factors behind this strong performance are evident: the rise in global demand for commodities, especially from fast-charging economies such as China and India, the establishment of peace and stability in areas once plagued by persistent conflict, better governance in the public and private sectors, increased budgets, and rising interest among investors attracted by improved conditions and expanding opportunities. The good news is spreading – this year, 31 countries in Sub-Saharan Africa, six more than in 2007, are expected to report growth above 5%. Figure 1: Africa's Economic Prospects Growth in Africa is expected to remain robust despite a global slowdown 7% Sub-Saharan Africa Africa

GDP growth

6

5

4

World

3 2004

2005

2006

Source: IMF World Economic Outlook, April 2008

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2007

2008F

2009F

But with the global economy slowing due to the downturn in the US and high energy and food prices hurting both developed and developing countries, the continent is likely to find it increasingly difficult to soar (see Figure 1). Africa is entering a period when the strength and resilience of its economies will be put to test. The question is whether the region can turn adversity to opportunity and find new drivers of growth. At the World Economic Forum on Africa, participants identified five key priorities for the continent to sustain economic growth: • address deficiencies in agriculture to increase the productivity of this critical sector • diversify economies into higher value-added products and services • invest in infrastructure to develop supply chains and improve efficiency • focus on education and skills development to increase capacity • deepen regional integration to pool resources and create market power

Africa@Risk 2008 Report Highlights Four Key Risks Facing the Region COMMITTED TO IMPROVING THE STATE OF THE WORLD

Food security, geopolitical instability, economic shocks and climate change all threaten Africa’s development, according to the Africa@Risk report. Released on the occasion of the World Economic Forum on Africa, the report features the latest insights into trends, potential consequences and mitigation relevant to these four key risks facing Africa:

Africa@Risk In preparing this report, more than 20 experts from business, academia, non-governmental organizations and civil society were asked to consider the drivers of the recent period of unprecedented growth in Africa and the opportunities that exist, as well as the threats to Africa’s continuing progress. The report concludes that for Africa – a continent characterized by huge opportunities and ever-increasing regional and global interdependence – the imperative is for collective action to mitigate these shared risks. A Global Risk Network Briefing

1. Food and Freshwater Security – How best can Africa cope with increasing food and freshwater insecurity? What are the risks and opportunities for the region? 2. Geopolitical Instability – Can Africa sustain and consolidate progress on transparent and democratically accountable governance? Can it increase its institutional capacity to prevent, manage and resolve both intrastate and interstate conflict? 3. Economic Shocks – Can African resource rich countries reduce their commodity dependency by diversifying their economies? How can wealth be better distributed? How can African countries increase their trade benefits? 4. Climate Change, the Environment and Challenges to Africa’s Development – How will global warming affect Africa? How best can the region, countries, businesses and communities adapt to mitigate its effects?

Figure 2: Agricultural Prices Major cereals have doubled in price in little more than two years

Index of real prices* (100=January 2006)

350

300 Rice 250

into an opportunity?” asked Obiageli Katryn Ezekwesili, the World Bank’s Vice-President, Africa Region. “Currently, yields in Africa are the lowest in the world. We need a long-term approach.” Added Monty Jones, Executive Director of the Forum for Agricultural Research in Africa: “We all believe that agriculture is the battlefield for economic growth in Africa.”

Wheat 200 Maize (corn) 150

100 Soybeans 50 Jan-06

Jan-07

Jan-08

* Priced in US$; US-inflation adjusted prices with April 2008 as base month

Source: IMF; US Bureau of Labor Statistics; PwC analysis

Overall, Africa needs to assess where its global competitive edge lies. “There is a great potential of growth in areas where we have unbeatable comparative advantage,” said Salim Ismail, Group Chairman and Chief Executive Officer of Groupe Socota, Madagascar, in a session on trade. With a global food crisis emerging, agriculture could be one such sector. “How does Africa convert the food crisis

There is certainly reason to believe that if African countries make the investments needed, agricultural yields can increase. With food prices rising (see Figure 2), there may now be enormous incentive for finally addressing deficiencies in the continent’s farming systems. “While between 70-80% of the population of Africa is engaged in agriculture, an average of only 34% of the continent’s national budgets is allocated to the sector,” said Namanga Ngongi, President of the Alliance for a Green Revolution in Africa (AGRA) in Kenya. “Some countries have committed up to 10% of their budgets but they are few in number.” Steps have to be taken to help small farmers increase output and subsistence farmers access markets. New financing models including subsidies and microfinance

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Trevor Manuel, Minister of Finance of South Africa, and Obiageli Katryn Ezekwesili, Vice-President, Africa Region, World Bank, Washington DC

schemes for small farmers are also needed, as well as ways to bring them together to boost productivity through collaboration. Rural development is critical. “What these people need is a way to make money,” said social entrepreneur Nick Moon, Co-Founder and Managing Director of KickStart International in Kenya.

“How does Africa convert the food crisis into an opportunity? Currently, yields in Africa are the lowest in the world. We need a long-term approach.”

Obiageli Katryn Ezekwesili, Vice-President, Africa Region, World Bank, Washington DC

“Intellectual property and innovation allow Africa to compete internationally. We don’t necessarily need abundant energy but rather need to figure out our competitive advantage on the international market.” Millard W. Arnold Jr, Executive Director, Murray & Roberts, South Africa

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The plight of Africa’s farmers is inextricably linked to the continent’s infrastructure challenges. Better water distribution and management, for example, will increase irrigation. Only 4% of African farming is irrigated. The construction of roads and transport links will improve producers’ access to markets. “Farmers get just 12% of the proceeds from agricultural produce, with 88% lost to transportation, middlemen and other links in the supply chain,” explained Joseph Daniel Taets, Managing Director and President, Europe, at Archer Daniels Midland International. “This inequity requires remedy to encourage greater productivity and diversification in the sector.” Africa’s growth, argued Austine O. Ometoruwa, President and Chief Executive Officer of the Africa Finance Corporation in Nigeria, is constrained by poor infrastructure, particularly electricity and transport. Freight from Africa typically costs twice as much as it does for competitors in Asia and Latin America, while

Kenya’s Call: “Yes, we can.” Kenya’s new leadership hailed their country’s revival following last year’s violent general elections. Participants at a dinner session, including the new Prime Minister, Raila Amolo Odinga, echoed the campaign slogan of US presidential candidate, Barack Obama, who is of Kenyan extraction, “Yes, we can.” Following the historic agreement between the two rival political parties, the Party of National Unity and the Orange Democratic Movement, the panellists affirmed that “a new Kenya has been born” and “Kenya is now moving forward.” The establishment of a new ministry for the metropolitan area of Nairobi was discussed, aimed at the development of the city. A new ministry has also been established for the northern province of Kenya, an area that has been neglected historically but that the panellists affirmed has great potential, particularly in mining and agriculture.

product delivery times are as much as three times longer. Only 5% of Sub-Saharan Africans – and just 3% of South Africans – have access to broadband Internet; an African typically has to sacrifice up to 64% of his average monthly salary to afford it. While tourism could be a valuable new driver of growth for the region, limited transport links across the continent are a major impediment. The lack of infrastructure also hinders the continent’s ability to diversify its economies. New growth will certainly be driven by higher value-added businesses and enterprises. There is no reason why Africa should simply export cashews overseas and not handle the processing of the nuts to gain more value. The development of organic prawn farming in Madagascar, coffee packaging in Ethiopia and diamond cutting and polishing in Botswana illustrate what can be done if the skills are available and the right investments are made. In one session, Baledzi Gaolathe, Botswana’s Minister of Finance and Development Planning, proposed that Africa’s cattle industry could diversify into by-products such as hides and leather goods. But, he warned, even if Africa develops new valueadded products, they might not be competitive in the global market, given tariffs and other trade barriers in the developed markets, as well as logistics and supply-chain costs.

A commitment was made to create a “cobweb” of telecommunications connectivity while another undertaking, to provide free secondary education, has been advanced by the new unity government as part of “Vision 2030”, a wideranging development plan. A roadmap to a new constitution in Kenya has been established, which Kenyan ministers said is likely to be in place by the end of the year. Electoral reform is also being tackled. The issue of income disparity is being addressed partly through the devolution of power. An Ethnic and Race Relations law has been passed to establish a permanent commission to address ethnic disputes, while a Truth and Reconciliation Commission had also been set up to address post-independence disputes.

Such challenges make it imperative that African countries focus on making the right decisions to enhance competitiveness. Investing in skills development and education is critical. “We must harness the resources and skilled manpower and involve our people more in development,” argued Raila Amolo Odinga, the Prime Minister of Kenya. “That way we will be able to catch up with other parts of the world.” Said Millard W. Arnold Jr, Executive Director of South African construction group Murray & Roberts: “Intellectual property and innovation allow Africa to compete internationally. We don’t necessarily need abundant energy but rather need to figure out our competitive advantage on the international market.” Finally, for Africa to develop new drivers of growth, the continent must deepen integration. As many participants pointed out, the small size of several of the continent’s economies makes them unattractive to investors. Regional integration and the creation of an authentic continental single market would be a major boost to Africa’s competitiveness. Concluded President Kufuor of Ghana: “Africa needs more cooperation through the African Union to organize and coordinate how Africa relates with the rest of the world.”

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Unfinished Business

“We need to approach people as untapped investors, not just as untapped consumers.”

“I think the biggest obstacle in Africa is infrastructure. The most important are roads as well as power. It's very important for business.”

Nick Moon, Co-Founder and Managing Director, KickStart International, Kenya Sultan Ahmed Bin Sulayem, Chairman, Dubai World, United Arab Emirates; Co-Chair of the World Economic Forum on Africa

As African companies rise to the challenge of finding creative ways to exploit the multiplier effect of their economic activities, business as usual will not be enough. What will it take to bring the business environment up to global standards? Africa requires fast-track solutions to reduce poverty and make the continent more competitive. Governments alone do not have the capacity to devise or deliver these. Since 1980, economic growth has accounted for 80% of global poverty alleviation. This suggests that investment and entrepreneurship, typically driven by the private sector, are the most effective ways to reduce the number of poor people. The business sector, in creating wealth for itself, has a major role to play in generating wealth downstream in the communities in which it operates. “Business is good at making things work,” said Pat Davies, Chief Executive of one of Africa’s most successful companies, Sasol.

private institutions increasingly offering better alternatives to state facilities that suffer from poor quality due to lack of funding, mismanagement and skills shortages. Given the slow pace at which African countries have moved to address poverty, the concept of public-private partnerships to find solutions to enduring problems is becoming more popular.

Figure 1: Private Sector Health Services Nigeria and Malawi have high rates of private-sector health services provision Nigeria Malawi Uganda Zimbabwe Ethiopia Angola Rwanda Kenya Tanzania Zambia Namibia

Already half of healthcare in subSub-Saharan Africa is being delivered directly by the private sector (see Figure 1). Education is going the same way, with

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0

10

20

30

40

Percentage of total health services provided by private sector Source: National Health Accounts, WHO; McKinsey analysis.

50

60%

Strengthening the Alliance Against Chronic Hunger

At the 2008 World Economic Forum on Africa, leaders of global and regional business, government, civil society and international organizations met to define concrete business strategies to help address Africa’s growing food crisis. Convened by the World Economic Forum’s Business Alliance Against Chronic Hunger (BAACH), corporate leaders from multiple industries defined strategies for scaling up business-led solutions for food production and entrepreneurship in hungry regions. William V. Hickey, President and Chief Executive They presented Officer, Sealed Air, USA, and David Mureithi, these strategies to Managing Director, Unilever East and Southern heads of state Africa, Kenya and government as well as to other high-level public leaders, and discussed priorities for public-private collaboration to maximize private-

More and more governments are setting up the frameworks for such partnerships, while the private sector is proving a ready partner if the benefits are well defined. Such partnerships provide a vehicle for business and governments to address the impediments to growth and investment resulting from unsupportive policies that constrain growth and reduce the ability of the private sector to unlock it.

sector partnerships to increase food security. BAACH partners also took part in plenary and panel discussions to highlight priorities for action to improve African food security. BAACH was founded in 2006 by the Forum’s Consumer Industries community with the support of Kofi Annan to develop business-led solutions to hunger. The Alliance is now a vibrant cross-industry network of globally-leading companies and partner institutions which is breaking new ground in defining and catalysing action on business strategies to increase sustainable food production, particularly in Africa. At the global level, the Alliance engages a wide scope of leaders to build partnership and collaboration for improved food security. At the local level, BAACH established a Kenya Alliance led by 20 companies and organizations that are working in a pilot district to develop and test business-led approaches to improving food production and incomes. This year, Kenya Alliance partners are undertaking 14 pilot projects in the district. In 2008, the Alliance has partnered with the Bill and Melinda Gates Foundation to conduct a global assessment of scalable business models that contribute to sustainable food production, engaging a wide range of industries and stakeholders.

A growing area of attention for the private sector in Africa is finding innovative ways to tap the spending and investing power at the bottom of the economic pyramid. This requires a new way of looking at consumers. Said Nick Moon of KickStart International: “We need to approach people as untapped investors, not just as untapped consumers.” Closer attention, for example, needs to be paid to consumer spending habits. The assumption that lowincome consumers make purchases based solely on price is overstated and other issues such as relevance to people’s lives, long-term investment and prestige value are also driving factors. Large companies can spur growth by creating linkages with and investment in small and medium-sized enterprises, thereby developing the capacity of businesses to participate more profitably in the supply chain.

“Business is good at making things work.”

Retailers and manufacturers are also unlocking value at the bottom of the pyramid through their multiplicity of suppliers and inputs in addition to direct and indirect employment. Mobile phone companies have indirectly generated thousands of jobs simply through the introduction of prepaid cards for users.

Pat Davies, Chief Executive, Sasol, South Africa

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“The environment has totally changed because we have better political stability.”

“Water is the new oil.” E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA; Co-Chair of the World Economic

Aliko Dangote, President and Chief Executive Officer, Dangote

Forum on Africa

Group, Nigeria; Co-Chair of the World Economic Forum on Africa

The agriculture sector could also turn out to be a timely opportunity with enormous potential. The private sector has the ability, with the right incentives, to enable Africa to make a quantum leap in food production. Such a leap would both eradicate hunger locally and capitalize on opportunities presented by the current world food crisis. Public-sector funding of agriculture, however, remains low and despite pockets of commercial agriculture, African farmers have not moved much beyond subsistence farming. Still, there has been progress in private-sector initiatives such as the use of small-scale farmers contracted by large commercial enterprises in cotton and tobacco and in the production of fresh produce for large supermarket chains. The development of agriculture needs to be supported by two areas that are still problematic in African countries – finance for small farmers and land tenure.

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Banks generally consider small farmers to be high risk. This is exacerbated by the fact that most land in Africa is owned by the state and thus does not qualify as collateral for bank loans. Given African governments’ resistance to private land ownership, banks need to consider innovative ways to unlock private funding for agriculture based on unconventional collateral options such as warehouse receipts for stored food and a track record of output. More creative use needs to be made of land leases and property titles to realize value. Babatunde Raji Fashola, Governor of Nigeria’s populous Lagos State, said his government understands that there is wealth to be unleashed at the bottom of the economic pyramid by making use of idle land. It was looking at ways to unlock this potential by formalizing home ownership and property title regulations.

Nik Gowing, Main Presenter, BBC World News, United Kingdom, leading the discussion on food insecurity

Climate change is another possible business opportunity. The continent faces losses estimated at between 1.9% and 2.7% of GDP unless new strategies are found not only to mitigate the effects of it but also to adapt to it in the long term. Companies stand ready to work with governments but the latter need to create aligned policy frameworks to make ventures viable.

Technology is a key area of private-sector intervention in development, given its potential to drive education and growth. But for it to spur growth, African governments have to look at how they can help to bring down the cost of providing it. If the costs of access are lowered, there will be significant spin-off effects in key areas such as education, healthcare and small business.

Water management is yet another area where business is becoming involved. As increasing scarcity pushes the price of water up, there is a good business case to be made for the better use of water. Meeting Co-Chair E. Neville Isdell, Chairman and Chief Executive Officer of The Coca Cola Company, said his company has pushed for the introduction of water efficiencies through the supply chain. For example sugar producers have been asked to find way to reduce water in the growing process. “Water is the new oil,” he said.

Another challenge for business and government is to harness the massive inward investment from the African diaspora, which in 2007 significantly surpassed development assistance inflows. A great deal of the money goes into consumer spending. The main hope is that the development of strong, private sector-driven economies will draw back not just money from the diaspora into productive investment but also badly needed skills.

African Multinationals

South Africa's Business Sentiment Business confidence has fallen to its lowest level since 2001 100 90 South Africa Business Confidence Index

Number of companies in the Forbes Global 2000*

Number of African multinationals on the Forbes Global 2000 list has grown, but not as quickly as companies from India and China 75

50

25

Morocco Egypt South Africa

South Africa 2004

2007

0

80 70 60 50 40 30 20 10 0

Africa

India

China

Dec-98

Dec-99

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

* based on an index of sales, profits, assets and market values

Source: Forbes magazine

Source: Rand National Bank/Bureau for Economic Research

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Innovate or Perish

“You can have many mineral resources, but if you have no peace, there is no way to develop your country.”

“In many countries you can track growth directly to broadband.” Ajai Chowdhry, Chairman and Chief Executive Officer, HCL

Pierre Nkurunziza, President of Burundi

Infosystems, India

African countries have made progress towards tackling the significant problems that continue to impede the continent’s development but the scale of the challenges requires innovative solutions to really move the continent forward. Such solutions require breaking the mould of traditional applications and models and finding new ways of doing things to fasttrack development in ways that are also sustainable over the long term.

issue, rather than a sector-specific problem. This simple mindset change has allowed the problem to move out of the ambit of health officials and into a much wider engagement across many disciplines.

Figure 1: Water Consumption, by Use Sub-Saharan Africa's agricultural sector uses a lower proportion of water than other regions, because of less irrigation 100%

Areas that are key to the development agenda, such as water, energy, health and education, have suffered some degree of neglect over several decades. This has affected the quality and quantity of delivery. But the pressures of globalization, climate change and competition for scarce resources are now pushing these to the forefront of thinking about sustainable solutions.

Percentage of water consumed, by use

Domestic 80

Industry 60

40

Agriculture 20

0

World

Europe & Central Asia

East Asia & Pacific

South Asia

Latin Middle East America & North & Caribbean Africa

SubSaharan Africa

Note: Estimates exclude use of rainfed water for agriculture.

Broader participation by multiple stakeholders, rather than just governments and donors, is key to tackling development issues effectively. The capacity to tackle problems of healthcare, for example, has been increased by redefining health as an economic-growth

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Source: World Bank, 2002

The same change in thinking is now required for other areas, including water, which is quickly becoming the new oil as climate change heightens concerns about

Learning journey to the Green Point Stadium under construction, one of the venues of the 2010 Football World Cup

sustainable supply across the continent. It is estimated that nearly one in two people in Africa will live in water stressed areas within 25 years, a region that already uses a lower proportion of water for agriculture than the rest of the world (see Figure 1). Thus water insecurity risks need to be mitigated now in a manner that is beneficial to all stakeholders. New models of usage, management and pricing are required as well as stronger linkages across sectors. Regional cooperation must play a greater role in future planning. About 60% of water sources in Africa are shared, making the continental dimension critical. But is there sufficient political will to move forward? “While politically the continent talks about the need for regional solutions, the important steps that need to make it happen are not happening,” the World Bank’s Obiageli Katryn Ezekwesili, warned. “Governments talk regional when they act national.” Innovative thinking is required to ensure the sustainability of water and other resources, particularly among poor communities that must be given responsibility for the management and sustainability of supply. In agriculture, for example, crops need to be adapted to make them more resistant to threats posed by climate and disease. More sophisticated farming methods are required to increase food supply. But political will to exploit the situation is also needed here. High costs of doing business due to government

intervention in the economy are a constraint to innovation in food production as is the lack of official spending in agriculture required to attract investment and move production beyond subsistence levels. An average of only 3-4% of most countries’ national budgets is allocated to the sector. Technology is an important component of the innovation that is required to push development. The very lack of development in most of Africa has allowed new technologies to be applied rapidly and effectively. Mobile telephony is a case in point. Yet over-regulation in many countries is constraining the use of technology, making it expensive for the private sector – and governments – to deliver. The high cost of broadband access in African countries as a result of unsupportive policies has resulted in very low penetration rates, severely limiting the development benefits to be gained from building a critical mass of IT use. The actions of governments in this regard flies in the face of success stories in other parts of the world where technology has been key to economic growth. Apart from more obvious applications such as health and education, cheap Internet access is a tool for the growth of micro and small enterprises, which unlock value in poorer communities and in rural areas. Governments need to release more spectrum and make it available in big enough chunks to make it cost effective. Ajai Chowdhry, Chairman and Chief

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During "The Rising Billions" session on the new consumers across Africa

Executive Officer of HCL Infosystems in India, said the supply of broadband should be a national priority, given its importance as a driver of growth in countries such as Brazil and South Korea. “In many countries you can track growth directly to broadband,” he said.

Figure 2: Carbon Markets Take Off

Annual volume of project-based transactions* (MtCo2e)

European Emissions Trading Scheme went into effect in 2005 700 600

creative financing schemes for more traditional energy provision, have to be developed to address the problem at the scale that is required. Crucially, energy savings will also need to come from modifications to individuals’ behaviour in energy use and in preventive methods such as improved energy efficiency standards in new buildings and appliances, backed by legislation. Ideas from the youth, who will be the main entrepreneurs and energy users in the years ahead, can also be adopted.

500 400

Joint Implementation and Voluntary other compliance schemes

300

Clean Development Mechanism

200 100 0 1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

* vintages up to 2012

Source: World Bank, State and Trends in the Carbon Markets 2008

Allied to the widespread provision of technology is the need for innovative energy solutions, for example, carbon trading (see Figure 2). A coalescence of developments in African countries, including economic growth, poor governance, inadequate long-term planning and climate change, has led to power shortages in every region, which has serious implications for development. Innovative off-grid energy solutions, particularly in rural areas, as well as

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Health, and particularly the enduring problems of HIV and malaria that are robbing Africa of skills and productive labour, is another development challenge requiring innovative solutions. These can be developed through the more effective use of publicprivate partnerships in terms of drugs, insecticides, interventions and investment. Better leveraging existing medicine distribution and treatment networks, rather than focusing on narrowly defined interventions, would be a creative innovation. Existing schemes to treat river blindness, for example, could be extended to rolling out bed nets and treating other diseases such as bilharzia.

A Watertight Future in the Balance Significant disruptions to business due to water insecurity – across all sectors, and with all the associated technical, economic, political, environmental and social implications – are a reality today and are projected only to worsen in the future. Forty percent of Fortune 1,000 companies agree that the impact of a water shortage would be severe, but only 17% are prepared for such a crisis. Corporate leaders, government officials and experts came together in a workshop to examine the political and economic implications of water insecurity for the region. They also developed ideas for a regional Sub-Saharan Africa workstream to contribute to the three overall objectives of the World Economic Forum’s water project: Raising Awareness: • Facilitate a platform for business to respond to emerging water resource management plans in the SADC region and key river basins in particular, and discuss the implications of these plans with governments and other stakeholders.

Leveraging Business Competencies: • Encourage water intensive companies operating in the region to sign the CEO Water Mandate. • Create a resource tool listing the various water management initiatives and innovations that companies are undertaking and the impact they are having; a platform will enable stakeholders to access this information and to suggest other activities to undertake to improve water resource management. Multistakeholder Dialogue: • Support existing innovative public-private initiatives that facilitate the development of win-win water projects – for example, the NEPAD Business Foundation Water Initiative – by using the Forum’s regional platform to help bolster and scale up these efforts to stimulate the implementation of a greater volume of bankable, public-private partnership water projects.

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Partnerships without Borders

In the session “Taking Control of Global Partnerships,” moderator Siki Mgabadeli, Senior Business News Anchor at CNBC Africa, asked whether the title reflects reality. Is Africa really in control of its partnerships? The immediate answer from Al Sayed Mohd Sharaf, Chief Executive Officer of DP World in the United Arab Emirates, was a simple “not yet.”

“Africa needs a consensus on how it wants to deal with emerging partners and traditional powers.” He Wenping, Research Fellow and Director, African Studies, Chinese Academy of Social Sciences (CASS), People's Republic of China

Figure 1: Africa's Trading Partners

in-hand is better than one who has to be carried. Africa is not willing to be carried anymore.”

Trade is shifting away from Europe 100%

Percentage of Africa's external trade

Other 80 Japan Middle East** China (incl. HK)

60

US 40 EU12* 20

0 1990

2005

* EU12 consists of Benelux countries, Denmark, France, Germany, Greece, Ireland, Italy, Portugal, Spain and UK ** Middle East includes Libya and Egypt

Source: IMF Direction of Trade Statistics

While it might have seemed glib, Sharaf’s response echoed the consensus in the meeting that Africa is ready for a more prominent part on the world stage. “Africa must be stronger to be a better trading partner for the North,” said Bingu Wa Mutharika, President of Malawi (its trade with partners beyond Europe is growing - see Figure 1). “A partner who walks hand-

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The private sector seems poised to play a growing role to help Africa become more competitive and forge international alliances that extend beyond the customary handouts that have long characterized the region’s relationship with rich countries. “We have a unique combination of developed world business skills and having learned how to do business in emerging markets,” said Sasol’s Pat Davies. “This needs to be emphasized more, and we can lead the way.” Tony Elumelu, Chief Executive Officer of United Bank for Africa in Nigeria, added: “We need to realize that nobody is going to develop Africa except us. To fix Africa we need partnerships. I would like to call on African businesses to build the readiness needed to compete in the world. Externally people will realize that Africa is a good destination for investment and we need to be prepared.”

“To fix Africa we need partnerships. I would like to call on African businesses to build the readiness needed to compete in the world.”

Figure 2: Africa's Trade with China A few countries hold large trade surpluses

Trade balance with China/Hong Kong, 2007* (US$, billions)

$7.5

5.0

2.5

Tony Elumelu, Chief Executive Officer, United Bank for Africa,

0

Nigeria -2.5 Africa overall

Angola

Sudan

Libya

Senegal

Kenya

Morocco

Mozambique

* through 3Q

Algeria

South Africa

Nigeria

Egypt

-5.0

Source: IMF Direction of Trade Statistics

Participants from outside the region agreed that Africa should solidify its base to take advantage of international opportunities. Instead of worrying about the existence or not of a Beijing Consensus on Africa as trade and investment with China blossoms (see Figure 2), “Africa needs a consensus on how it wants to deal with emerging partners and traditional powers,” said He Wenping, Research Fellow and Director of African Studies at the Chinese Academy of Social Sciences (CASS) in the People's Republic of China. For starters African countries might want to focus on breaking down barriers among themselves. President Kufuor of Ghana described the difficulties of getting

through customs at his country’s border with neighbouring Togo despite the fact that a single tribe straddles both sides of the boundary. “Africa needs more cooperation through the African Union to organize and coordinate how Africa relates with the rest of the world,” said the president. Added Obiageli Katryn Ezekwesili of the World Bank: “Regional solutions are very important for Africa, especially when you look at the large number of landlocked economies.” Priorities should include regional infrastructure, notably cross-border railways, she said. Of course not all cooperation need focus on joining together to meet foreigners. For instance, partnerships will be key to any solution to the continent’s food crisis, panellists in the session on food security agreed. Monty Jones of the Forum for Agricultural Research in Africa called for “empowering smallholders to make sure they can access information and outside inputs and have their voices

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From Left to right: Jendayi E. Frazer, US Assistant Secretary of State, Bureau of African Affairs; Sadako Ogata, President, Japan International Cooperation Agency, Japan; Pat Davies, Chief Executive, Sasol, South Africa; Douglas Alexander, Secretary of State for International Development of the United Kingdom

heard. If that happens, I foresee a considerable increase in production.” The private sector is already working with small farmers to move in this direction and can do more in partnership with governments, multilateral agencies and civil society organizations, said Gareth M. Ackerman, Chairman of Pick ‘n Pay Holdings, South Africa, and Aliko Dangote, President and Chief Executive Officer of Dangote Group, Nigeria, a CoChair of this year’s World Economic Forum on Africa. Ackerman recommended more partnerships between large and small retailers to help “shorten supply lines”. Dangote described efforts by his company to provide loans, supply fertilizer and build silos for small farmers. “I suggest that we give them loans,” he said. “If not, they will not survive.” One of the most promising cooperative initiatives outlined at the meeting addressed a pressing health problem that respects no border – malaria. With the backing of regional health ministers through the Southern African Development Coordination Conference (SADCC), a team of specialists from civil society organizations, private companies and public agencies recently completed an expedition along the Zambezi River by boat to examine medical, organizational and practical issues related to controlling the disease. The effort was coordinated by the Geneva-based Roll Back Malaria Partnership (RBM) and included hands-on support from the Exxon Mobil Corporation in addition to sundry private-sector sponsors.

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Finally, the meeting included a healthy warning about not reducing the term “partnership” into a buzzword designed to avoid responsibility and divert blame. “A lot of people talk about partnerships because they want to duck tough decisions,” cautioned a panellist in one session. “All too often it means ‘We’ll make the decisions and you come and pay the bill’.”

“A partner who walks hand-in-hand is better than one who has to be carried. Africa is not willing to be carried anymore.” Bingu Wa Mutharika, President of Malawi

A Toolkit for an Integrated Approach to TB

For Health Professionals

For Management

COMMITTED TO IMPROVING THE STATE OF THE WORLD

Protecting Your Workforce from Tuberculosis

COMMITTED TO IMPROVING THE STATE OF THE WORLD

Protecting Your Workforce from Tuberculosis

Fact Sheets for Health Professionals

and HIV for Businesses in South Africa

World Economic Forum

World Economic Forum

Global Health Initiative

Global Health Initiative

In cooperation with

In cooperation with

May 2008

May 2008

New Toolkit Boosts South African Companies’ Response to TB Threat South Africa is facing an emerging threat of TB/HIV coinfections and fatal drug-resistant strains of the disease. With a staggering 70% of TB patients in South Africa infected with HIV, the importance of an integrated approach to care is clear. The Global Health Initiative of the World Economic Forum and the Lilly MDR-TB Partnership launched a new toolkit that aims to boost the involvement of South African companies in tackling the TB/HIV crisis, providing these companies the opportunity to catalyse effective public-private partnerships to facilitate successful patient and programme management. Combined with the technical expertise and knowledge available under the Department of Health in South Africa, companies can provide a critical mass of resources for the successful integration, management and care of TB and TB/HIV co-infections. This could eventually lessen the

economic impact of TB, which results today in a decline in worker productivity estimated at US$ 13 billion annually. On a practical level, the toolkit will help companies leverage opportunities and increase activities in the prevention and management of TB/HIV in the workplace. These measures will in turn help alleviate the burden and costs associated with absenteeism, disrupted workflow and reduced productivity. By engaging proactively with the community, which forms a key component of the overall business environment, businesses can offset the marginal cost of partnering with local stakeholders with the huge benefits they will reap through greater efficiency in the workplace and the good will in the community.

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Licence to Lead

“There is a lot of talk about accountability to the people. And, yes, there is still a lot to do. But there has also been a huge amount of progress.”

Mike Hart, Chief Executive Officer, Africa Region, Standard Chartered Bank, United Arab Emirates

That assessment set the tone for the meeting. Indeed no term was repeated more frequently in Cape Town than “leadership”. Even some of the leaders themselves got into the act. According to Prime Minister Odinga of Kenya: “What we see is a continental problem – the problem of bad governance. We always blame colonialism. But the mediocrity with which Africa has been ruled has been responsible.” He called on leaders to speak plainly and openly about the continent’s shortcomings: “Let us say what we mean and mean what we say when we talk about African development.”

“There clearly is a crisis of leadership not just in Africa but in the world,” said Wendy Luhabe, Chairperson of the Industrial Development Corporation of South Africa, and a Co-Chair of the World Economic Forum on Africa. Luhabe decried what she called “the conspiracy of silence among African leaders” that hinders efforts to “translate challenges into what we would consider to be unprecedented opportunities”.

Leadership is one of those slippery terms that are hard to define but easy to identify. Nelson Mandela had it; others clearly not. While no one attempted to define the term, a number of key elements in leadership development emerged from the discussions: accountability, public institutions including political parties, the civil service and youth.

At the same time, participants in the interactive session “Africa Economic Brainstorming – Drivers of Change” ranked “visionary and selfless leadership” second only to “education and skills development” as key to economic progress in Africa over the next 12 months (see page 5).

The region has all-too-often experienced two of the most extreme forms of lack of accountability: corruption and an unwillingness of leaders to step down following electoral defeat. “Corruption is everywhere [around the world],” said Jendayi E. Frazer, US Assistant Secretary of State, Bureau of

28 | World EconomicForum on Africa

“Corruption is everywhere [around the world]. The issue is to establish the rule of law so that those corrupt individuals can be held accountable.”

“What we see is a continental problem – the problem of bad governance. We always blame colonialism. But the mediocrity with which Africa has been ruled has been responsible.”

Jendayi E. Frazer, US Assistant Secretary of State, Bureau of African Affairs

Raila Amolo Odinga, Prime Minister of Kenya

African Affairs. “The issue is to establish the rule of law so that those corrupt individuals can be held accountable.” President Mbeki of South Africa discussed the succession issue. “Practices include the possibility of defeat in elections and that you leave power if you lose,” he said. “I think everyone understands what needs to happen.”

Institutions, including political parties, can sometimes determine the effectiveness of leadership for an entire nation. For instance, in democratic countries where a popular political party holds a de facto stranglehold on power, a ruling party crisis can evolve into a national one. The debate in one session hinged on whether a certain African country with a strong ruling party had two centres of power or none. Either way, participants seemed to agree that the effect of the party’s crisis on public governance has been detrimental.

Accountability was also discussed in terms of personal traits. Leadership depends crucially on integrity, said Jonathan B. Majiyagbe, Chair of the Rotary Foundation Trustees at Rotary International, USA. He noted that this is of great importance when people tend to tell their leaders only what they want to hear.

Leadership is needed not only at the top but also in the middle levels of public administration. In one session, panellists tried to explain why talented young people fail to go into public service. One reason is that they see little link between the efforts civil servants make and the results of their agency or department,

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Wendy Luhabe with Cosmas Okoli, Founder and Chief Executive Officer, Mobility Aid Appliances Research and Development Centre (MAARDEC), Nigeria, and Vincent Maphai, Chairman, BHP Billiton, South Africa

“There clearly is a crisis of leadership not just in Africa but in the world.” Wendy Luhabe, Chairperson, Industrial Development Corporation, South Africa; Co-Chair of the World Economic Forum on Africa

said Leslie W. Maasdorp, Vice-Chairman at Absa Capital, South Africa, and a Young Global Leader. He added that the public service has not marketed itself well among recent graduates. Daniel Kaufmann, Director for Global Governance at the World Bank Institute, cited several other factors: • low salaries compared to the private sector • a selection process that does not necessarily favour the best people • the lack of clean government – no good swimmer wants to dive into dirty water • the lack of meritocracy • poor training programmes • the lack of prestige in comparison to private-sector jobs Even if they have a leg up on the public sector, private companies are not satisfied with the volume of young executive prospects entering their ranks. “We see quality but there are just not enough of them,” said E. Neville Isdell of The Coca-Cola Company, a Co-Chair of the World Economic Forum on Africa.

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Despite the widespread concern, some participants made a forceful argument that things are indeed getting better on the leadership front. “There is much better clarity in the political leadership on the continent about where we need to go,” Mbeki observed. “There is greater clarity on how to respond to economic challenges. And there is an appreciation of the need to deal with conflict.” Added Mike Hart, Chief Executive Officer, Africa Region, at Standard Chartered Bank, United Arab Emirates: “We need to give Africans and African countries more credit. There is a lot of talk about accountability to the people. And, yes, there is still a lot to do. But there has also been a huge amount of progress.” Sultan Ahmed Bin Sulayem of Dubai World and a CoChair of the meeting said: "Kenya gave a good example of reconciliation – the leaders have decided that the country and the well-being of the people come before their political ambitions.” He added, “This is positive news for investors because they will see that at the end of the day what is better for the country and the people will stay." The openness, frankness and resolve with which leadership was addressed by all stakeholders were widely appreciated. “This is the first Forum,” noted Luhabe, “that is looking at how we can understand the role, relevance and quality of leadership in Africa and use it as a bridge to capitalize on the opportunities the continent offers.”

Africa Gender Parity Group Works to Close the Continent’s Gender Gap Top female and male leaders from across the continent launched an Africa Gender Parity Group at the World Economic Forum on Africa. The group of business, government, media, academic and civil society decision-makers are collaborating on ways for companies and countries to eradicate gender inequality and better engage women in the economy. Members of the Africa Gender Parity Group include Phumzile Mlambo-Ngcuka, Deputy President of South Africa; Linah K. Mohohlo, Governor of the Bank of Botswana; Jay Naidoo, Chairman of the Board, Development Bank of Southern Africa, South Africa; Elisabeth Tankeu, Commissioner, Trade and Industry, African Union, Addis Ababa; Reuel Khoza, Chairman, Nedbank Group, South Africa; Mandisi Mpahlwa, Minister of Trade and Industry of South Africa; William Mzimba, Chief Executive, Accenture, South Africa; Ndi Okereke-Onyiuke, Director-General and Chief Executive Officer, Nigerian Stock Exchange, Nigeria; Gisele Yitamben, Founder and President, Association pour le Soutien et l’Appui à la Femme Entrepreneur (ASAFE), Cameroon; Nyasha P. Zhou, Chief Executive, PG Industries (Zimbabwe), Zimbabwe. At their first meeting at the World Economic Forum on Africa, the Group called for: • Greater government commitment and funding for primary, secondary and tertiary education, focusing in particular on increasing the retention rates for girls • Better legislation to fight discrimination against women, including in the area of property rights, and effective implementation of this legislation • A comprehensive overview of the policies and programmes that have been effective in narrowing gender gaps in the region’s best performing countries and a transfer of these best practices to low performing countries

Africa lags behind most parts of the world in closing its gender gap on education and health, but is well ahead of many emerging regions on closing the gap in political empowerment. In the World Economic “Women account for a Forum’s Global Gender Gap sizeable portion of Report, which ranks 128 countries according to the Africa’s economies and size of their gender gaps, could contribute the performance of Subconsiderably more if Saharan African countries is there were greater gender greatly varied. South Africa, equality. The Africa ranked 20, is a leader in the Gender Parity Group region, boosted by its scores on the political believes both women and empowerment of women. men need to work However, the region also together to close the contains some of the lowest gender gap, and thus ranking countries in the better leverage women’s world, including Zimbabwe talents to increase (88) and Nigeria (107), hampered by particularly productivity and poor performances in the prosperity in all of areas of education and society.” health. Saadia Zahidi, Head of the Gender Parity and Women Leaders Programme, World Economic Forum

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Acknowledgements

The World Economic Forum wishes to recognize the support of the following companies as Partners or Supporters of the World Economic Forum on Africa:

Strategic Partners ABB AMD ArcelorMittal Audi CA Cisco Citi Dubai World EDF Ernst & Young Goldman Sachs HP HSBC Intel Corporation JPMorgan Chase Merck & Co. Merrill Lynch Microsoft Corporation Nike Standard Chartered Unilever

Regional Partners Absa Capital Eskom Holdings

Meeting Supporters African Rainbow Minerals (ARM) CNBC Africa First Bank of Nigeria Magna Carta Murray Roberts Oando Sasol

Service Providers Telkom Transnet

The World Economic Forum also thanks CNBC Africa as host broadcaster, and City Year for its support. 32 | World EconomicForum on Africa

33 | World EconomicForum on Africa

Contributors

Børge Brende is Managing Director, Regional Agenda Teams, at the World Economic Forum. Adeyemi Babington-Ashaye is Associate Director, Acting Head of Africa at the World Economic Forum. The World Economic Forum on Africa was under his direct responsibility, with Stéphane Oertel, Community Manager, Africa, responsible for Programme Development; Sophie Bussmann-Kemdjo, Community Relations Manager, Africa; Alex van Praag, Community Relations Manager, Africa; and Nadine Bonard, Associate Director, Events, the meeting Coordinator. Samantha Tonkin, Senior Media Manager at the world Economic Forum, worked with Alejandro Reyes, Dianna Games and William Hinchberger to produce this report. The World Economic Forum would like to express its appreciation to the summary writers for their work at the World Economic Forum on Africa. Session summaries are available on our website at: www.weforum.org/africa2008/summaries Editing: Fabienne Stassen Fleming, Senior Editor Design and Layout: Kamal Kimaoui, Associate Principal, Production and Design Photographs: Eric Miller and Matthew Jordaan

The World Economic Forum would like to recognize the support of PricewaterhouseCoopers in compiling data and statistics for this report.

34 | World EconomicForum on Africa

This publication is also available in electronic form on the World Economic Forum’s website at the following address: World Economic Forum on Africa Web report: www.weforum.org/pdf/summitreports/africa2008 (HTML) The electronic version of this report allows access to a richer level of content from the meeting, including photographs and session summaries. The report is also available as a PDF: www.weforum.org/pdf/summitreports/africa2008.pdf Other specific information on the World Economic Forum on Africa in Cape Town, South Africa, on 4-6 June 2008, can be found at the following links: www.weforum.org/africa2008 www.weforum.org/africa2008/interviews www.weforum.org/africa2008/programme www.weforum.org/africa2008/partners www.weforum.org/africa2008/summaries www.weforum.org/africa2008/regionalupdate www.weforum.org/africa2008/private www.weforum.org/africaprivate/knowledgeconcierge2008 www.weforum.org/africa2008/webcasts www.pbase.com/forumweb/africa08 www.twitter.com/davos

35 | World EconomicForum on Africa

The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org)