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Why Africapitalists Will Build a Continent’s Future

Africa is not a single country but a continent, one that is a place of real business opportunity that the world should be alive to. I know, having built businesses that now operate in 20 African countries and through creating a programme over 10 years that is funding and mentoring 10,000 African entrepreneurs.

I have witnessed first hand the infectious enthusiasm of African entrepreneurs, and my businesses demonstrate the potential of Africa if you invest for the long term and act strategically. In 1997, I had a vision of democratising African banking, seeing financial services not only as a vehicle for financial inclusion, but as a critical enabler of cross-border trade and value creation on the African continent.

Diverging fortunes

Since the end of the commodity supercycle, growth paths in Africa have diverged. Oil-exporting countries, such as Algeria and Angola, and non-energy mineral exporters, including Botswana and Zambia, have experienced substantially weakened growth. Economic giants Nigeria and South Africa have entered recession. However, economies not based on commodities have continued to demonstrate robust expansion. Côte d’Ivoire, Ethiopia, Rwanda and Tanzania enjoy gross domestic product (GDP) growth rates of 6% and above.

This diversity teaches us the important lesson that Africa should not be treated as a single economic unit and also shows how governments must create the enabling environment that will allow the private sector to act as the engine of economic and social growth.

The economic progress of the latter countries is unsurprising. Their growth is a result of patient investment in infrastructure to grow the real sector of the economy, and a sustained focus on institutionalising that enabling environment – with business incentives, transparency, safety and policy stability – to allow the private sector to flourish. These factors foster the growth of local value creation, which resolves Africa’s historical over-reliance on raw material and commodity exports that leave their economies susceptible to cyclical boom and bust.

In 2015, Ethiopia launched a light rail project in Addis Ababa, the first metro service in sub-Saharan Africa. As it is now building a $5bn Grand Renaissance dam with a generation capacity of 6000 megawatts and a projected $1bn in revenues from electricity sales, the World Bank recently named it as the world’s fastest growing country. Ethiopia’s big investments in infrastructure have resulted in pay-offs, including double-digit economic growth (averaging 10.8% since 2005).

Tanzania has also made significant investments in infrastructure – particularly in power – strengthening its manufacturing and construction sectors. Construction alone accounted for 13.6% of GDP in 2015, further fuelled by investments in transport and port developments.

The diversity of economic outcomes on the continent illustrates my belief that three interdependent ‘pillars’ for economic and job growth are required: policy reform and a commitment to the rule of law; investment in infrastructure; and a commitment to developing Africa’s manufacturing and processing industries. All three pillars reinforce each other, help to unleash the African private sector and increase both foreign and local investment.

Private sector importance

I firmly believe that only a developed and well-capacitated private sector can unlock economic prosperity and widespread opportunity in Africa. To advance bottom-up economic development, and create jobs and employment for Africa’s exploding population, the private sector must flourish, with a focus on supporting entrepreneurs and small and medium-sized enterprises (SMEs). After all, governments and corporates alone cannot create the millions of jobs that the continent desperately needs; only small businesses can.

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