An anticipated increase in demand for goods and services within Africa has the potential to give innovative companies with turnovers of between R300-million and R1,2-billion the opportunity to expand beyond the limits of their own borders, writes Karl Gotte, head of commercial banking at Standard Bank.
Investment between Africa’s regions will also be a crucial driver of financial integration, which at the moment remains too limited.
The latest African Economic Outlook (AEO) 2016 notes banks operating in Africa account for about one-third of Africa’s total value of trade finance, estimated at USD 320 billion. However only 19% of bank trade finance is devoted to intra-African trade and this is not uniformly distributed across Africa.
The key is to be able to benefit from strong consumer demand and financial services have a crucial role to play in facilitating this development.
As the leading bank on the continent, Standard Bank will continue to play a leading role and has already been facilitating major networking events from East to West Africa to encourage cross-border collaboration, business partnerships, trade and development. We believe more “open innovation” and trusted partnerships are needed to open the doors that are needed to bring about change at the regional and Pan African levels.
We will continue to drive this growth, for example, by combining these events with our successful business incubator programmes, which gives businesses the tools and platforms they need to succeed. Entrepreneurs and entrepreneurial activity will be the lifeblood of our regional economies in the future – and they need the financial sector to support them every step of the way.
As a bank which calls Africa home, Standard Bank has already done a lot of the “hard yards” in the past and is well positioned today to drive this growth.
While the opportunities are immense, bringing down trade costs remains a major hurdle. It is estimated for example that intra-African trade costs are around 50% higher than in East Asia, and are the highest of intra-regional costs in any developing region. The result of these high costs is that Africa has integrated with the rest of the world faster than with itself.
However, from a financing perspective, significant green shoots are taking root. Foreign direct investment into Africa has risen from about USD 10 billion in 2000 to about USD 55 billion in 2015, with investment within Africa playing a key role in this expansion – led by South Africa, Nigeria and Kenya in sectors like banking, retail and telecommunications.
With the right commitment and foundations in place so many markets in Africa can become dominant players. For example, only 5% of Africa’s imported cereals come from other African countries. In Europe, by comparison trade between nations typically accounts for more than 50% of all transactions.
Africa’s total exports comprise 80% raw commodities and 20% manufacturing. In contrast, 60% of intra-Africa trade is manufactured products, against 40% for primary commodities. The AEO report rightly points out that manufacturing is a good driver of productive employment and would push Africa further up the global value chain.
By 2050, Africa’s population will rise to over 2-billion people, representing 25% of the world’s population, against 15% today. Both cities and rural areas will grow fast and their interactions will intensify and jobs will need to be created for the youth entering the labour market.
The key for businesses is to have the right processes in place to manage the disruptive nature of the all of these changes. A more agile, versatile and innovative approach will be needed to doing business.
Entrenching a pan-African mindset to business will take time – but it needs to happen. If businesses are to take full advantage of these opportunities, the region needs more companies that develop true scale.
According to McKinsey’s recent Lions on the Move report, the vast majority of Africa’s 100 top companies built growth by developing a strong position in their home market first – only 14 started with Pan-African strategies. Nearly half of the 100 major firms have remained focused on their home market even as they have grown in scale, while the rest have steadily expanded into regional or pan-African markets. Not surprisingly, almost all the companies that have remained focused on their home market are based in Africa’s biggest economies.
The points is that multinationals usually build pan-African business and the experience of multinationals demonstrates that pan-African presence takes time to develop, requiring a long-term vision and a step-by-step approach. Most of the large multinationals operating in Africa have been on the continent for more than 25 years, according to the report, and most are present in more than ten countries, and their longevity and geographic footprint are closely correlated to their revenue base.
It has been found that companies that have moved from domestic to regional strategies have used their “first mover advantage” to build scale quickly at home and then use that as the basis for moving aggressively into other markets. Yet a meaningful presence in one or more of Africa’s largest markets is an essential part of a successful pan-African growth strategy.
Despite recent shocks and challenges, Africa’s household consumption and business spending are both growing strongly, offering companies a $5,6-trillion opportunity by 2025, according to McKinsey.
While Africa’s manufacturing sector today underperforms those of other emerging economies, output could expand to nearly $1-trillion in 2025 if Africa’s manufacturers were to produce more to meet domestic demand from consumers and businesses, and work with governments to address factors hindering their ability to produce and export goods.
It is time for companies and governments, as well as the financial sector, to play a greater role in ensuring more economies can benefit from intra-African trade – the future for Africa shines very brightly if they do.
Exploring a new model for cooperation between business and society- Nonny Ugboma
Nonny Ugboma is the Executive Secretary of the MTN Foundation (Image source: Nonny Ugboma)
The hand-me-down capitalism models Africa inherited from her colonial masters have failed to yield a prosperous continent despite its vast resources. Therefore, Africa is in desperate need of something different that takes into consideration its unique history, qualities, and context.
Experts have mostly seen the interdependence of businesses and society as transactional, with the society needing business for products and services, for jobs, for government taxes revenues. In turn, business needs the society for the market, sales and profits and public infrastructure, security and the rule of law! According to Amaeshi (2019) businesses, though sympathetic to societal challenges, are reluctant to act positively through their companies as they sometimes see such requests as irrelevant to their objectives.
However, due to the interdependency and interconnectedness of business and society, companies must work collaboratively with the government for a common purpose. That purpose is to build local resources.
There have been calls for western economies to rethink their capitalism model (Jacobs & Mazzucato, 2016). There have also been calls for Africa to develop its model of capitalism, with theorists and entrepreneurs exploring ideas like Africapitalism (Amaeshi, 2015). Africapitalism, coined by Nigerian entrepreneur Tony Elumelu, focuses on the role of business leaders, investors, and entrepreneurs on the continent’s development to create economic prosperity and social wealth. It rests on the following four pillars: a sense of progress and prosperity; the sense of parity and inclusion; a sense of peace and harmony; and a sense of place and belongingness.
Africa does need its model. However, I would argue that this model should be spearheaded by the state in collaboration with willing stakeholders in the private sector and third sector, unlike Africapitalism. A government-led push is especially relevant now that a few 21st century economists are reassessing and rethinking capitalism in its present form. One of such critics is UCL’s Mazzucato (2018) The Entrepreneurial State: Debunking Public vs Private Sector Myths who debunks the mainstream neo-classical narrative that the private sector alone drives innovation but takes the position that the state is the driver of innovation.
Mission-Oriented Innovation Approach (MOIA) could help address some of the identified gaps to ensure state and business work jointly to solve grand challenges, to co-create public value and co-shape a robust and sustainable society that it can bequeath to future generations.
There is, therefore, a need for an alternative model of collaboration for business, society and government. A suggested way forward for Nigeria, and indeed Africa, is to embrace a mission-oriented innovation approach. The concept of the mission-oriented approach that involves government co-creating and co-shaping the market with the private and third sectors has enormous potential for Africa. The four pillars of ROAR, developed by Mariana Mazzucato (2016), is a useful tool-set to anchor MOIA in Africa:
1. Routes and directions– Government and Public institutions and agencies to set
missions. Also, private sector leaders can nudge government agencies to agree to
work collaboratively on national priority areas.
2. Organisational Capacity– Building of dynamic Capabilities within the Public sector through advocacy, capacity building, conferences and training.
3. Assessment and evaluation– Agencies, academia and organisations to determine new
dynamic tools to assess public policies to create new models and markets.
4. Risks and rewards– Government and private organisations need to engage on the
best risks and rewards sharing formats from initiatives to ensure smart, inclusive and
In conclusion, as Western Economies are reviewing and rethinking capitalism and their operating models, Africa must ensure she does the same. The reason is that the future of the development of the continent depends on the economic model that it chooses to adopt, in the future, especially with the growing youthful population.
Aurthor: Nonny Ugboma is the Executive Secretary of the MTN Foundation and has recently returned from one-year Sabbatical studying for a master’s degree in Public Administration from the University of London Institute for innovation and Public Purpose.
The Education Of Our Youth is the Key to Nation Building – Matthew Odu
Matthew Odu (Image credit: Matthew Odu)
Like all of us I was shocked and outraged to learn that unarmed youths were confronted by live bullets on Tuesday evening (20.10.2020) at the Lekki Toll Gate Lagos, Nigeria after almost 2 weeks of a peaceful, relatively successful protest.
Initialy I had observed the start of the #EndSars demonstrations with admiration for the cause. The lamentations of the youth are genuine and difficult to argue against. If we haven’t personally been affected by an encounter with a callous police officer then I am sure we know somebody that has. Calling out police brutality and demanding an end to the extra judicial killing of predominantly young Nigerian males is a moral duty. It is clear that the vast majority of Nigerians had some empathy for the social movement.
Unfortunately what soon transpired in Lagos and across the nation was a display of anger that was about so much more than police brutality. The open agitation exposed a frustration with the system. What we have witnessed over the past week is an extreme manifestation of decades of youth segregation from governance and opportunity which has left millions of Nigeria’s youths unemployed, under employed and absolutely desperate for a way out of poverty and despair.
According to Nairametrics, data from the National Bureau of Statistics reveals Nigeria’s unemployment rate as at the second quarter of 2020 is 27.1% indicating that about 21.7 million Nigerians remain unemployed. The highest unemployment rate was recorded for youths between 15 – 24 years at 40.8%. This is followed by ages 25 – 34 years at 30.7%. To put things into context, Nigeria’s unemployed youth of 13.1 million is more than the population of Rwanda and several other African countries. Youth Population is also about 64% of total unemployed Nigerians suggesting that the most agile working-class population in the country remains unemployed.
I am a firm believer in the economic future of Nigeria and the catalyst to this future is our young people. Youth engagement and youth inclusion in governing arrangements is paramount if Nigeria wishes to succeed. As 2020 marks the 75th anniversary of the United Nations, Armida Salsiah Alisjahbana the Under-Secretary-General and Executive Secretary of the UN’s Economic and Social Commission for Asia and the Pacific recently acknowledged:
“Young entrepreneurs have been a source of innovation and economic dynamism, creating jobs and providing livelihoods to millions. To achieve and accelerate action on the Sustainable Development Goals (SDGs), we urgently need their expertise and voices on creating solutions to social and environmental challenges, as well as economic opportunities. First, we need to ensure that the next generation of business leaders think about social purpose as well as profit. To achieve this, education will be critical. Governments play a key role.”
Alisjahbana is right to call out the government’s role in ensuring their youth are sufficiently educated, however private investment is also needed to solve the problems that the education sector is currently facing in Nigeria.
A lack of access to quality education and the sluggishness in adopting new methods of learning has immediate and long-term effects. The immediate effects have been playing out on the streets of Nigeria over the past few days. The long-term consequences are almost
HESED Learning is an initiative and my own personal contribution to providing quality education to Nigerians, as a borderless structure with an unrestricted curriculum. The e-learning platform compliments the current school system by using a national curriculum with the option of studying an international syllabus.
It is time for our youth to become more competitive. Not a select, fortunate few but the vast majority. Increasingly in the sectors where our children do excel – in medicine, science and finance – they sadly leave the country for better prospects abroad. Who can blame them?
Education is the key to nation building. A quality education propels industry. In countries where the children are educated the likelihood of civil unrest is reduced.
We cannot afford to under educate our youth.
Aurthor: Matthew Odu, A Fellow of the Chartered Accountant of Nigeria
Making Peace with Nigeria – Sanyade Okoli
Sanyade Okoli, Chief Executive Officer of Alpha African Advisory Limited.
Sometimes countries hurt us, whether we are conscious of it or not. And we, in our own way,
respond accordingly. We respond from a place of hurt. Usually unconsciously.
Let me use myself as an example to explain what I mean. I “have” three countries – Sierra Leone, the UK, and now Nigeria. As at today, I have spent approximately a third of my life in each of these countries in the order listed. And each, in their own way, has hurt me. To varying extents, but hurt me nevertheless.
For now, I would say that Sierra Leone has hurt me the least. I left as a teenager and have such wonderful memories of my growing up there that the pain it caused me is not as evident. Having said this, as I write this, painful memories of experiences post leaving home (e.g. family members having to leave as refugees in the 1997 troubles) are slowly bubbling to the top. Hmmmm….. A story for another day.
If I am honest with myself, I think that there are also some walls I have built around my heart concerning Sierra Leone (See Just As I Am). As I said to my mum a few years ago, I only have enough emotional bandwidth for one set of West African politics and intrigues and so I have chosen to “face” that of where I live today – Nigeria. As we say here, “I beg, I can’t come and die!”
Then, there is the UK, where I finished my education and started my professional and family lives. Again, in the spirit of honesty, I think I only appreciated the extent to which the UK had become “my home” when I moved to Nigeria . But it hurt me. Because I was older when I lived there its wounds are more obvious to me. I was saying to a close friend just the other day how I didn’t miss that feeling of “Is it because I am black?” when a random stranger does something to upset you. Sometimes the question is founded, sometimes it is completely unfounded. It stems from that low-level lingering angst as a result of feeling that you don’t fully belong and knowing that there are many others who also see you that way – “a foreigner”.
And last, but no means least, there is Nigeria. I will camp on Nigeria to illustrate my point, but I invite you to swap Nigeria for the country that is most relevant to you as you read my reflections.
Nigeria, my new home! Hmmm… I call Lagos, where I live, an “acquired taste” and I acquired
the taste many years ago. Let’s just say that I can now “say with my chest”, “Naija for life!”
But oh how “Naija” has hurt me! The cuts of Nigeria run deep and have felt unrelenting.
As much as I have come to love Nigeria, it often feels like it has been a one-sided relationship; unrequited love. As some people put it in a WhatsApp group I am on, “Nigeria feels like an abusive husband. He keeps hurting you, but you stay nevertheless.” Sigh….
After years of frustrations, disappointments, discouragements, and unmet expectations I
concluded that “Nigeria does not yield its fruit easily”.
But then again, why should he? Though I say I love Nigeria, have I always treated him with love.
Do I forgive him quickly and easily when I feel he has “let me down again” or do I hold on to
grudges? Do I harbour feelings of low-level resentment that colour how I see the country? Do I speak about Nigeria with positive uplifting words or do I pull the country down with my
Are my day to day actions part of the solution or part of the problem?
Could it be that Nigeria is a wounded giant? Wounded by his past experiences; not least
colonisation, civil war and successive military governments. Could it be that how I continue to treat Nigeria rubs salt on his wounds instead of the much-needed healing balm? Could it be that, like any wounded giant would, Nigeria lashes out to protect himself?
So, if I say I love Nigeria, I had to ask myself the question, “What would love do?” I could think of no better standard to use to reflect on this than the biblical scripture, 1 Corinthians 13:4-7:
“Love is patient and kind. Love is not jealous or boastful or proud or rude. It does not demand
its own way. It is not irritable, and it keeps no record of being wronged. It does not rejoice about injustice but rejoices whenever the truth wins out. Love never gives up, never loses faith, is always hopeful, and endures through every circumstance.”
When I look at God’s standard of love, I realise that Nigeria has failed me no more than I have failed him. I haven’t loved him the way I should, and in turn, he too has not shown me the love that I desire.
A few years ago, as I joined a group to pray for Nigeria the Lord showed me that I was holding unforgiveness towards the country. As a result, my bitterness towards the country was hindering me in many ways, not least my prayers for the country.
I repented at that time and forgave Nigeria for all the ways he had hurt me. Unfortunately, despite me forgiving the country, he is still “grappling with some issues” and has hurt me a bit more since then . But guess what, I am sure that I too have hurt him in that time as well.
What to do? I must forgive Nigeria again and make peace with him. I must keep forgiving Nigeria and making peace with him until we stop hurting each other or I go to be with the Lord – whichever is soonest . You see, I know that I am called to be in Nigeria at this time. I therefore have no desire to step out of my call and leave because if I do so, I not only leave Nigeria, but I step out of my destiny. God forbid!!
If you too feel like you need to go through the process of “making peace” with whatever country you are in, some suggested steps are outlined below. It’s a combination of reflections and actions. Like so many healing processes, it is a journey and not an event. Take your time through this. Don’t rush the process, and keep revisiting it as, sadly, you are bound to hurt each other again . There is a Krio saying that speaks to this: “teet en tongue mus jam”. That is to say, by virtue of the fact that the teeth and tongue are permanently in such close proximity, from time to time the teeth will hurt the tongue.
As you go through the suggested process, I need you to remember that a nation is the sum total of its parts – you and me and the structures, systems and policies we institute and implement – explicitly or implicitly.
1. Forgive your nation
Ask yourself the following questions:
• What lies have I believed about my nation?
• How do I really feel about my nation? When I think of the country, what feelings are
• Why do I feel like this about my nation? What have been the negative experiences that
have brought about these feelings?
• In what other ways do I feel my nation has let me down or hurt me?
• Forgive your nation for all the ways He has hurt you.
• Let go of all the lies you have believed about Him and the negative emotions you’ve held
2. Seek your nation’s forgiveness
• What seeds have I sown into my nation through my thoughts, words, and actions?
• How does my nation feel about the way I have treated him?
• What are the fruits of the seeds that I have sown into my nation?
• What are the fruits in my life and in the lives of others?
• Apologies to your nation for all the ways you have hurt him and ask him to forgive you.
3. Move forward together
• What do I need to do differently with respect to my nation – in thoughts, words, and deeds?
• Ask God for a picture of how He sees your nation and write down the vision that comes
to your mind.
• Draw up a SMART* action plan for how you will better engage with your nation going
• Specific, Measurable, Attainable, Relevant, Timely.
My reference to some people feeling like Nigeria is an abusive husband that they choose to stay with by no means suggests that I subscribe to the view that those who find themselves in abusive marriages should “forgive and forget”. Absolutely not! That, is a story for another day. It merely expresses the depth of pain some people feel with reference to Nigeria.
Author: Sanyade Okoli is a senior finance professional and the Chief Executive Officer of Alpha African Advisory Limited based in Lagos, Nigeria. She is also an Analyst on Arise TV’s Global Business Report show and recently started an inspirational blog, Just As I Am.