Fireside Chat, Panel
African Century: Engaging the Continent's Great Opportunities
Milken InstituteStaci Warden, Clare Akamanzi, Joaquim Alberto Chissano, His Excellency Salaheddine Mezouar, Josh Sandler, Salaheddine Mezouar, Veronica Nyamwaya, Miguel, Mark Desario, E, Iyad Malask
- Strategic Shift to Integration: African leaders are moving from isolated national development to continental integration to overcome small individual market sizes, aiming to build scale for foreign direct investment (FDI) and portfolio investment.
- Resource Sovereignty: The African Union prioritizes self-sufficiency over external aid, focusing on generating domestic resources to fund intra-African trade and infrastructure.
- Building Block Approach: Rather than attempting immediate continent-wide unification, the current strategy involves strengthening regional economic communities (SADC, ECOWAS, East African Community) as foundational blocks to eventually link into a unified continent.
- Policy Milestones (Addis Ababa Summit): Three critical protocols were passed to support integration:
- A continental free trade area agreement to remove tariff and non-tariff barriers.
- A protocol for the free movement of people, with over 15 countries already permitting visas on arrival for African nationals.
- A single air transport agreement to create a unified aviation space across the continent.
- Market Reform Context: Africa was identified by the World Bank as the most reformed region globally in recent years, with five of the top ten reforming economies being African nations; Rwanda was the single most reformed country over the last 15 years.
- Intra-Regional Trade Potential: While Africa exports commodities, 80% of its manufactured products are already sold within the continent, indicating a massive untapped opportunity for regional value chain development.
- Infrastructure Investment Gap: Africa requires $150 billion annually for basic infrastructure (energy and transport) but currently receives only $110 billion, creating a $40 billion annual deficit.
- Africa 50 Role: The Africa 50 infrastructure fund operates to bridge this investment gap by providing private capital, risk mitigation (guarantees), and technical support for pan-African projects, particularly in renewable energy and logistics.
- Logistics Cost Reduction: Private sector initiatives, specifically Lorry Systems, have demonstrated that coordinated logistics can reduce port loading times by 65% and border crossing times by 25%, significantly lowering the cost of goods.
- Logistics Cost Impact: Logistics currently account for 25–40% of product prices in East Africa and up to 75% of the cost of a Rwandan export due to landlocked status and lack of coordination.
- Capital Markets Integration: The East African Community (EAC) is working to integrate capital markets among Kenya, Rwanda, Burundi, Tanzania, and Uganda (totaling ~$150 billion GDP) to attract larger foreign investment and facilitate cross-border listing of bonds and equities.
- IPO Strategy: Citi is preparing four major Pan-African IPOs in 2018 (telecom towers, petrol stations, fiber optics, microfinance) with transaction values exceeding $500 million, targeting companies valued between $1 billion and $10 billion.
- Investment Platforms: While Johannesburg remains a key local exchange, international investors often utilize London or Amsterdam as the primary platform for Pan-African listings due to regulatory familiarity and currency risk management, though intra-African FX volatility is lower than against the dollar.
- Human Capital Gap: Investors and entrepreneurs identify a critical shortage of skilled operators and engineers as a primary bottleneck; companies like Andela and Carnegie Mellon's partnership in Rwanda are cited as successful models for training local talent.
- Private Sector Engagement: Former Mozambican President Chissano advocates for a "smart government" model where the private sector actively co-designs regulations with the state, shifting from government summoning private firms to private sector-led dialogue.
- Creative Deal Structuring: Rwanda's success story involves innovative public-private partnerships, such as co-funding technical training with the Marriott Group and drafting bespoke drone regulations with Silicon Valley's Zipline to enable market entry.
- Demographic Dividend: Africa's median age is approximately 20 years, compared to 30 years in developed nations (US, Europe, China), representing a significant demographic advantage if capital and skills are effectively mobilized.
- Future Outlook: Panelists expressed strong bullishness on the continent's potential, emphasizing that while operational challenges (border delays, skills gaps) are severe, systematic private sector coordination and smart government policies are driving measurable progress.