Conference Presentation, Panel, Fireside Chat
Growth on the Frontier: Insights From African Executives
Milken InstituteJonathan Berman, Paul Hanks, Mimi Alamayo, Brian Orjiaku, Bassem Haider, Bob Diamond
- Nigerian privatization of power assets and refineries is expected to continue performing well and eventually shift to private ownership to improve efficiency, while the removal of fuel subsidies is anticipated due to their inefficiency for the poorest citizens.
- Economic diversification in Nigeria is forecast to involve shifting export focus from crude oil to product exports for value addition, implementing action plans for diversification in response to oil price collapses, and utilizing natural gas as a critical growth driver with prices expected to rise from under $0.50 to $2.50 per million SCOF.
- Infrastructure and investment in Nigeria are projected to increase in gas and power sectors, while the banking industry privatization is expected to create investment avenues through a migration from public to private ownership.
- Regional integration across Africa is viewed as comprising five or six major markets rather than 54 individual states, with East Africa's integration expected to be emulated by West Africa, though a common West African currency is deemed unfeasible due to Nigeria's economic dominance.
- Intra-African trade is projected to double again within the next five years, reaching $240 billion, while African manufacturing bases require development to reduce reliance on exporting raw commodities and re-importing finished goods.
- Ethiopia is expected to open its banking and telecom sectors to support high growth rates, with infrastructure projects like the Djibouti pipeline planned to meet demand over the next 10 to 20 years and requiring private sector investment as debt financing becomes insufficient.
- The Democratic Republic of Congo (DRC) is considered to have improved stability but remains high-risk for 20-year infrastructure contracts, with investment opportunities concentrated in the Katanga province where pockets of good governance exist.
- Tanzania is expected to continue attracting major investments despite isolated scandals, and Africa's energy deficit is predicted to be the primary driver for growth across the continent's countries.
- Population growth in Africa is projected to outpace infrastructure construction even with stable governments over the next 35 years, potentially leading to chaos and poverty if investments do not grow significantly to match a tripling population.
- Mobile-based education models are expected to successfully scale to a productive workforce by 2050 without traditional school infrastructure, supported by mobile-based lending default rates as low as 0.3% in Nigeria and 0.2% in Uganda.
- Youth unemployment is identified as the primary trigger for potential social unrest or an "Africa Spring," prompting leaders to prioritize it as a top agenda item, while a potential "Africa Spring" scenario was avoided due to Nigeria's election results setting a precedent.
- Investment expectations include the continuation of power plant performance in Nigeria, a warning to the entire African continent regarding pricing and economic strategy following commodity price drops, and the view that infrastructure gaps represent the greatest opportunity for investors.
- South Sudan investment plans made prior to conflict are characterized as miscalculations due to the unexpected onset of hostilities within three months, contrasting with expectations that African leadership transitions will become a norm similar to developments in the United States.