Conference Presentation, Panel
Africa: Opportunities for Business and Investment
Milken InstituteErnest Wilson, Paul Hinks, Jay Ireland, Sam Nuwanzi, Mr. Shankar, Minister Turkpour, Paul Tullis, Mark Kahn
- Major institutions including the Milken Institute, GE, Symbian Power, and Standard Chartered are executing strategies to expand operations into Africa, with GE shifting its global center of gravity toward developing regions and Symbian Power beginning to admit African companies to its Corporate Council in January.
- Financial outlooks project Africa's working-age population will exceed that of China or India by 2035, while Dangote Cement's market capitalization is expected to surpass $50 billion within five years, and Standard Chartered reports 19% and 25% CAGRs in top and bottom lines respectively over the past five years.
- Infrastructure development requirements are estimated at nearly $100 billion annually over the next several decades, with specific projects like Ghana's gas infrastructure facility estimated to be self-financing within four to five years via tolls or escrow mechanisms.
- Regional integration is predicted to strengthen through power pools, trade groups like ECOWAS and SADC, and self-financing public-private joint ventures for highways, creating a demand for sovereign debt evidenced by Rwanda's recent bond issuance being eight times oversubscribed.
- Investment strategies emphasize the necessity of "feet on the ground," local partnerships, and integrated solution packages including financing and engineering to address the informal economy, which accounts for 60% to 70% of GDP, and to overcome perceived corruption risks.
- Economic growth is characterized as a long-term trend exceeding five years, with Ghana citing uninterrupted growth since 1984 and an 8% current rate, while policymakers in Ghana, Nigeria, and Rwanda are actively transforming the investment landscape.
- Capital markets in South Africa, Botswana, and Nigeria are anticipated to grow more robust with improved regulation, and there is a recognized need to develop regional equity markets to achieve necessary scale and alleviate pressure on financial markets.
- A rising competition with China is noted, whose trade with Africa reached $200 billion last year, though Western aid and loans from the EU and US remain dominant in countries like Ghana, with some leaders explicitly refusing Chinese contracts.
- Significant challenges persist regarding skills gaps, necessitating a shift in education policy toward employability and greater investment in management talent rather than solely technical roles, while diaspora engagement is expected to drive the transformation of small enterprises into medium-sized ones.
- Risks and barriers to entry include the misconception that doing business in countries like Nigeria is impossible due to corruption, the need to avoid managing African markets remotely from London or Dubai, and the historical lack of robust capital markets requiring regulatory improvements.