The africapitalist

IDEAS . ACTIONS . PEOPLE . PLACES

theAFRICAPITALIST Volome 1

Moving Africa forward

IMPACT INVESTING Can it work for Africa?

Exclusive interviews : Paul Kagame • Tony Blair • Mo Ibrahim

Contents January 2014

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32

Africapitalism

Focus

Cover Feature: Impact Investing Across the developing world, impact investing has begun to emerge as a sustainable alternative to charity, combining a private sector mindset with a public sector focus. We look at how successful the model has been to date and ask if it can deliver for Africa?

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Letter from the Founder Tony O. Elumelu outlines a new mission encapsulated in this magazine

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90 Days

From new ventures to people we bring you the events that have shaped the continent over the past 90 days

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Africa in numbers

We track the level of intraAfrica trade

Could it be the answer to Africa’s challenges?

18

Africa in pictures

Nigeria’s Andrew Esiebo’s photographic take on everyday life

25

Q&A Mo Ibrahim talks African leadership

Paul Kagame The Rwandan president reveals his winning recipe for reform

Can Obama’s “Power Africa” initiative unlock private sector investment?

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Entrepreneurs

Africa’s young are turning to innovation to solve Africa’s power crisis

Tony Blair On why lessons learned as UK Prime Minister can impact Africa

City guide We take a whistle stop tour of Lagos, Nigeria

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Final word

Harvard’s Michael Porter on competitiveness

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Country feature Liberia

THE AFRICAPITALIST IS published quarterly by the Tony Elumelu Foundation.

1, MacGregor Road - Ikoyi, Lagos, Nigeria. Web: www.tonyelumelufoundation.org Tel: +234-1-2774641-5 Founder: Tony O. Elumelu, CON

Director Corporate Communications: Moky Makura

Project Manager: Kelechi Amadi

Chief Executive Officer: Wiebe Boer

Editor: Allan Kamau Sub–editor: Felicity Heywood

Design & Art direction: Richard Horsford, Dennis Ringo

Contributors: Peter Guest, Laura Brunts Adam Green Cover: Daniel Emeka

“TRANSFORMING AFRICA NEEDS BOLD NEW THINKING” Tony O. Elumelu

W

elcome to the very first edition of The Africapitalist magazine. I thought I would share with you some of the thinking that led me to start this publishing initiative through the Tony Elumelu Foundation.

As a passionate and involved African, I believe, that Africans need to be in the driving seat, determining the continent’s future. I am concerned about the legacy we will leave for the next generation. We have everything we need – the people, the resources, even the vision to get Africa on the right course.

Globally, there is an increasing awareness of the need for a new development model for the continent, which moves beyond traditional philanthropy, aid and short-term, rent-seeking investment. Out of that, a new approach to development is emerging. I call it “Africapitalism.” It is an African-led, private-sector driven approach to sustainable growth and I believe it represents the best solution for Africa’s development.

Today, the scale of Africa’s challenges is so great that the private sector with its enormous resources has a leading role to play in meeting them. And private-sector investment in strategic sectors will create jobs and sustainable wealth over the long term. This is essentially Africapitalism, which has at its heart a mission to create economic prosperity and social wealth – simultaneously.

Philanthropists, development leaders and policymakers are encouragingly aware of the necessary interplay between the private sector, the public sector and traditional development.

And Africa’s governments must play a role in coalescing that private-sector investment. Similarly, public-private collaboration can give Africa the infrastructure and capacity it needs to refine – and profit from – its own natural resources, such as oil, timber and agricultural products.

The purpose of The Africapitalist is to catalyse action towards this goal. Through this medium, we will celebrate individuals who are contributing towards moving Africa forward – through

4 | THEAFRICAPITALIST

LETTER FROM THE FOUNDER

investment, business, policy and leadership. In this first issue, we talk to Rwanda’s President Paul Kagame, who has developed a successful economic formula through civil engagement, selfreliance, and international partnerships. We hear from former UK Prime Minister Tony Blair, who is leading a governance initiative throughout Africa to support effective transparency and capacitize the public sector for delivery. And Mo Ibrahim also shares his thoughts with us about the importance of governance.

These are just some of the people who are contributing towards an Africapitalist approach to development. But I believe there are many more Africapitalists out there who are quietly, through their investments, business ideas, policies and work, making their own contribution towards moving Africa forward.

Through vehicles like this, the Africapitalism website and the other initiatives planned by The Tony Elumelu Foundation to evolve Africapitalism into Africa’s development agenda, I hope this generation of Africans will be able to stand proudly before our children and tell them what role we played in creating the Africa we would like them to inherit.

I hope you will enjoy reading The Africapitalist and that you will find the content both thoughtprovoking and a call to action. I welcome your feedback on how together we can unleash the power of Africapitalism to drive our continent forward.

Tony O. Elumelu Founder of the Tony Elumelu Foundation Chairman, Heirs Holdings

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AFRICA IN REVIEW | NEWS BRIEFS

NINETY DAYS From strikes to elections Felicity Heywood takes a look at the significant events over the past three months plus a look forward.

SALUTING AN AFRICAN ICON

1918 - 2013

SEPTEMBER Rwanda Rwanda leads in women MPs Female MPs have won 64 per cent of the seats in the parliament maintaining their lead worldwide for the most women in Parliament.

This is an increase of 8 per cent on the previous Parliamentary term.

Women now occupy 51 seats out of 80. According to reports, the average female representation in parliaments worldwide is 21 per cent.

OCTOBER Africa wide

HIV infections down New HIV infections in children have halved since 2000, announced in the Global report on HIV/AIDS 2013. AIDS deaths have also dropped significantly, with an estimated 1.6 million people dying of AIDS last year, in comparison to some 2.3 million in 2005. The reduction in HIV in children is due largely to treatment programmes to prevent pregnant women with HIV from passing the virus on to their newborns.

East Africa

East Africa agrees customs area The presidents of Kenya, Rwanda, and Uganda on 28 October adopted the Single Customs Territory (SCT) and agreed to remove all remaining non-tariff barriers with immediate effect. The SCT will see tax on goods imported into the three countries paid at the Kenyan port of Mombasa and trucks weighed only once when crossing the border into each customs territory member.

Nigeria

Nigeria to export oil for the first time Aliko Dangote, the wealthiest man in Africa, has signed a $3.3 billion deal with banks to finance the building of an oil refinery in Nigeria. The country is Africa’s biggest oil producer but lacks the means to refine it resulting in importing most of its fuel. It is to be built in the south-west of the country by 2016.

NINETY DAYS IN NUMBERS 1 million

20 million

$1 billion

270

93%

The number of Chinese migrants to Africa.

Passanger capacity of Nairobi’s planned new airport terminal.

Amount pledged by Nigerian governent to tackle AIDS, TB and malaria.

Number of new hotel projects announced for Africa in 2013. .

Ethiopia’s GDP growth over the past six years. .

THEAFRICAPITALIST | 6

AFRICA IN REVIEW | NEWS BRIEFS

Africa wide

South Africa

Greening South Africa The government of South Africa approved an additional 17 renewable energy projects, paving the way for a further US$3.3-billion worth of investment that will add up to 1 470 megawatts (MW) of clean energy to the country’s national grid. This follows the signing off of 47 projects in the first and second rounds of the programme, for projects already well under way provide South Africa with around 2 400MW of renewable energy.

Continent triples its number of billionaires The number of African billionaires has tripled since the last research was published. Oil remains the surest route to an African billion: one of the youngest men on the list at 38 is a Nigerian oil trader, Igho Sanomi, while several others on the list are Nigerian oil barons. But a sign that sub-Saharan Africans are finding other routes to success is the inclusion of another 38-yearold, Tanzanian Mohammed Dewji, a rising politician, whose family’s small trading company has expanded into everything from agriculture to mobile communications to construction.

The Next 90 Days World Economic Forum 25-25 January 2014 Davos-Klosters, Switzerland African Union Summit 24-31 January 2014 Addis Ababa, Ethiopia

Mining Indaba

3-6 February2014 Cape Town, South Africa

Africa Energy Indaba 18-20 February 2014 Johanesburg, South Africa

Kenya Investment Summit 2014 26-27 February 2014 Intercontinental Hotel, Nairobi, Kenya Nigeria Summit 2014 24-25 March 2014 Lagos, Nigeria

NOVEMBER Kenya

USA

Museum to get a facelift The Museum of African Art in New York has changed its name to the New Africa Center in a move to expand its remit. There are plans to include a policy institute and members’ club for business executives, cultural and policy leaders. The $60m transformation of the building has meant the museum has closed its doors until 2015. In the interim, pop-up art shows and events are to be held. Hadeel Ibrahim of the Mo Ibrahim Foundation is one of the backers.

Rare solar eclipse A rare solar eclipse that began as a “ring of fire” and transformed into a spectacular total eclipse of the sun amazed skywatchers from around Africa. Hybrid solar eclipses occur when the moon and sun align in a way in which, initially, the moon’s shadow falls short of the Earth’s surface, leaving a bright ring of light (the “ring of fire” or annulus) around the moon’s silhouette. As the eclipse progresses along Earth’s surface, the shadow reaches the surface to create the total solar eclipse. The next one will not occur until 2023.

THEAFRICAPITALIST | 7

PROFILE | PAUL KAGAME

THE REFORMATION

MASTER Rwanda’s President Paul Kagame has engaged a successful economic formula that is putting other countries into the shade. Here he tells Adam Green his recipe of civil engagement, self-reliance, and international partnership.

A

rranging interviews with African heads of state can be a long process characterised by delays, last minute changes and cancellations, often coordinated via the presidential aides’ email account. That is not the case for the Rwandan president Paul Kagame, with staff operating with speed and efficiency and the President arriving only a couple of minutes after the agreed time in a carefully laid out suite.

The process is a microcosm of the Rwandan government as a whole.

Nearly everywhere you look, indicators are improving, from increased school attendance and completion at all three education levels, to increased access to healthcare and sanitation. Mr Kagame has been a central agent, driving forward the reform agenda.

I begin by asking Mr Kagame how the country has managed to create a reform agenda whose momentum seems to penetrate all agencies and ministries, from health to agriculture. The tall, softly spoken leader - who has a reputation as a hard task master - argues that popular engagement is critical.

“We have to involve our people, make them buy into and participate not only in the formulation of these policies but bringing in what they think are the immediate problems, and also make sure they are engaged in activities which actually make these policies meaningful.

Daily communication, working on one thing. If progress is made, you use it as an example. If it has made any impact in their lives, you want them to give that testimony”.

Rwanda’s genocide is always a part of the narrative around this country, although there has clearly been a desire to move away from those days. Mr Kagame points out how the events shaped today’s success. “Our tragic history, and many of the problems we have faced, bad as they are, also constituted a lesson to many. The tragic history has had its own silver lining in the sense that people have internalised it, they have felt pain, we are there to say ‘No, you can’t keep like this, we don’t deserve to be like this. There is a way out of this’.

It also has to come from a mindset that nobody is going to come and take you out of it without your participation”.

The world’s failure to support Rwanda in its hour of need has created an atmosphere of self reliance in government, and Kagame speaks in animated terms about how the West did not take the genocide seriously enough.

While historically an aid-intensive institution, Rwanda’s government has been pushing for a different relationship of late. “We have to break away of this thinking, that has been there for many years,” he says. “Always there has been this standard way of doing THEAFRICAPITALIST | 9

PROFILE | PAUL KAGAME

business – Africa, a poor place, where charity is the norm”. In his UN address in September, Mr Kagame said: “One of the failings of aid has been the lack of attention to country specific context in the agreements. So now is the time for the developing world to make their voice heard, to shape the debate and to ensure policies and programmes are demand-driven”.

Mr Kagame is no doubt shaped by his own experiences as a key leader of the Rwandan Patriotic Army, which sought to retake Rwanda and end the genocide with no outside help. That mindset - of self-reliance - has continued to characterise everything he does in policy today.

It is also been the reason he remains firm in his conviction that his leadership of Rwanda is working well, and people’s tendency to focus on when he leaves is a distraction. “It is a complex thing that people tend to simplify. People get preoccupied with the President of Rwanda as a person even more than as an institution that is supposed to serve people and that should be there on the wishes of people. All of this gets lost”. He adds that while leaders matter, institutions matter more. “All these things have to interplay, you just don’t pick up and say lets find an answer for this, how about others?”

Mr Kagame’s firm views on self-determination, on setting his own priorities, also come through in his recent criticisms of the International Criminal Court, which is perceived by some regional leaders to have an anti-Africa bias. Leaders are particularly concerned at the ICC’s refusal to return the current Kenya investigations to the country, which many in the government have requested.

President Kagame is outspoken on this issue. “There have been serious ethnic tensions in Kenya,” Mr Kagame says.

A political agreement between Uhuru Kenyatta, from the Kikuyu tribe, and William Ruto, a Kalenjin, has helped reconcile long-standing ethnic tensions in a country whose politics still operate along tribal lines. The trial risks reversing those gains, Mr Kagame 10 | THEAFRICAPITALIST

claims. “Here you have leaders who have been elected by these groups and come together, who have a huge possibility of reconciling these populations that have had differences for a long time and created these problems, and then you say: ‘We will go for them and try them’. You may try them, but you are missing a huge opportunity of reconciling them,” he says.

What motivates Mr Kagame’s leadership? Where does he look for inspiration? He is known for his work ethic, and even in spare time he leafs through copies of The Economist.

His hunger for ideas and lessons from other developing and developed countries is clear. “Our thinking is based so much on people, investing in our people, what our people are capable of doing. Many things we do in national budgets, we focus on education, health, we want our people to be healthy, we also look at technology, it is about

skills, innovation, creativity, so we are always thinking about people, people, people. These are the tools, things we have. We look at South Korea, look at what has happened in Singapore, look at different places, we even look at these developed countries, where US or Europe, Scandinavian countries, the way they managed throughout history, their problems, the central role played by people is very clear and what type of investments these places have made in their people is something that is of great interest to us. We try to take all of that to our own needs. We have not been disappointed. You never go wrong by investing in people”.

“It’s our responsibility, we Africans to do something about our situation. We inevitably need support but at the end of the day, we should be in the driving seat”

TRADE | AFRICA IN NUMBERS

REALISING THE DREAM OF INTRA–AFRICA TRADE Africa trails the world in trading across its borders. We look at the state of intra-Africa trade in 12 economies across the continent

Imports Percentage of imports to African Countries Exports Percentage of exports to African Countries

3 1 4 5 2 Top Imports Nation Kenya imports the most goods and services in the continent

6 Top Export Nation Ghana & Ethiopia export the most goods & services in the continent

7 10

9

8

11.3%

Total intra-Africa trade reached $130.1 billion in 2011. This represents 11.3% of Africa’s global trade volumes

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2.8%

Africa accounts for only 2.8% of world exports and 2.5 % of world imports in the decade from 2000 to 2010

12

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FEATURE | AFRICAPITALISM

AFRICAPITALISM A new way of thinking about investment has emerged. Could it be the answer to Africa’s challenges? Sarah Rundell assesses how far Africapitalism has come.

E

times.

very now and again a new era requires a new word or phrase to better encapsulate the changed

Africapitalism first appeared in the lexicon of African investment in 2010 to describe the role of Africa’s private sector in driv-ing not only economic growth but also so-cial change. Now home to six of the world’s 10 fastest-growing economies, Africa has seen investment pour in over the past dec-ade. It is now being held up as capitalism’s final frontier; as such it offers boundless economic opportunity— not just for inves-tors and entrepreneurs to build successful businesses, but also for economic growth to solve many of the continent’s most pressing social challenges.

talism – from the US to China, as well as from Nige-ria to South Africa, people are increasingly asking whether an Africapitalist approach can deliver the kind of transformative and sustainable socioeconomic development that both aid and traditional rent-seeking capitalist approaches have failed to achieve.

Gaining traction

The model is reaching the levels of government, with the Business Council for Africa, a private sector focused members’ association which assists members in doing business in sub-Saharan Africa recently holding an event discussing private-sector led approaches to development, which included a dis-

So, what exactly is Africapitalism? It is first and foremost an economic philoso-phy based on a single, powerful idea: that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth. It is also a call-to-action for us Africans to take respon-sibility for our own development—and for non-Africans to evolve their thinking about how best to channel their efforts and invest-ments in the region.

The buzz is building around Africapi-

“Africapitalism urges investment in strategic economic sectors including agriculture, infrastructure and power, financial services and healthcare” 12 | THEAFRICAPITALIST

Lagos bank and commercial district

cussion on Africapitalism and how the UK was backing this approach. Lynne Featherstone MP (the Junior Minister for International Development) spoke at the event which was hosted

by Stephenson Harwood. The UK’s influential Guardian newspaper called Africapitalism a “new model of African self-empowerment” and argued that it is part of an increasing trend for building private-sector engagement into development models. The newspaper presents the examples of the formation of United Bank for Africa and Mo Ibrahim’s Celtel telecoms firm as examples of private-sector projects that have benefited the lives of millions of Africans – whether by finally giving them access to financial services, or connecting them to the world through mobile phones and the internet. Kenneth Amaeshi, an academic focused on international business at the University of Edinburgh (UK), has recently highlighted the “positive emotional energy” at the heart of Africapitalism.

FEATURE | AFRICAPITALISM

WHAT THEY ARE SAYING ABOUT AFRICAPITALISM The Guardian (UK)

Afua Hirsch ““Africapitalism”…combines

unashamedly for-profit investment and free-market capitalism with the objective of stimulating economic development. Some proponents say that, properly handled, the model could overtake aid as the main way of alleviating poverty.”

Kenneth

Amaeshi, University of Edinburgh, “Africapitalism is a pragmatic way to rein in runaway globalisation and its discontents, and a platform for refocusing attention on the significance of place in capitalism.”

AfricanLiberty.org As he suggests, thisis an approach that taps into the passion and commitment of African entrepreneurs and citizens – indeed, they are at the heart of the Africapitalist model. Amaeshi talks of Africapitalism in terms of “economic patriotism” – inspiring pride in a generation of Africans that they themselves have the power to drive their continent’s development in a way that makes sense to them and which will deliver the kind of changes that they want to see.

Changing role of business

In a widely published article earlier this year, analyst Nicole Velleman spoke of the growing wave of African business leaders who are trying to create greater prosperity for their continent through their business activities.

Alongside Elumelu, Lucien Ebata and Theophilious Danjuma, among others, are also “embracing a new business paradigm”. Velleman emphasises in particular the importance of publicprivate partnerships, such as Power Africa, will put into action much of the thinking behind Africapitalism.

Recently, Kayonde Komolafe, in his article ‘Africapitalism or Capitalist Africa?’, wrote that Africapitalism “is an appreciable rethink of the role of the private sector in development. It is such a fresh air that we are hearing that

the role of an economic player in the society should be more than unbridled accumulation of profits”. In the African Liberty blog, Chofor Che echoes Afua Hirsh in his belief in the Africapitalism development model, arguing that “‘Africapitalism’ is here to stay and Africans in the diaspora and at home need to join the band wagon to ensure that this model works for the growth and development of our beloved continent. … It is also imperative for African states to give room for the private sector on the continent to be developed. These are measures which may strengthen the ‘Africapitalism’ model.”

The number of tweeters adding the hashtag #Africapitalism to their tweets over recent months offers proof of the appeal of the concept: Africapitalism is a call to Africans to take responsibility for their continent’s development.

Africa’s first generation of business leaders are increasingly giving back.

Intra-African cooperation through the increasingly significant trading blocs, as well as regional infrastructure projects like the West African Power Pool, have the potential to bring multiple countries together. The idea that the private sector can solve more of Africa’s social and economic challenges than development-bank initiatives, aid incentives, or relief programmes is increasingly difficult to ignore.

Chofor Che “‘Africapitalism’ is here to stay and Africans in the diaspora and at home need to join the band wagon to ensure that this model works for the growth and development of our beloved continent.”

Twitter

@AfDB_Group “#Africapitalism = encourage private sector to make investments with long term objectives to help create economic prosperity”

@JendayiFrazer“ #Africapitalism is transforming Africa’s power and agricultural sectors” @grk_19 “@TonyOElumelu Just watched your @ CNN interview, we commend the long term approach to African infrastructure investment. #Africapitalism”

@USEmbassyGhana“MT @wiledsen: HuffPost TonyOElumelu piece ‘Powering Africa’s Progress’. Good insights. #PowerAfrica #Africapitalism http://m.huffpost.com/us/entry/4151670 ”@NChidavaenzi“ Why the world’s technology giants are investing in Africa http://flip.it/RmEK7 #Africapitalism”theAfricApit

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FEATURE | IMPACT INVESTING

IMPACT INVESTING: BEARING FRUIT A commitment to community development is increasingly an investment consideration alongside the financial bottom line. Peter Guest takes a look at current trends and what might be possible.

THEAFRICAPITALIST | 14

FEATURE | IMPACT INVESTING

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acked by John Coors, the billionaire scion of the Coors brewing family, One Thousand and One Voices (1K1V) looked at first glance to be the archetype of the US philanthropic foundation when it was launched at the World Economic Forum on Africa in May 2013.

Coors has a longterm interest in charitable

lows. It’s cause and effect,” The group’s CEO Hendrick Jordaan says, speaking from Johannesburg, where 1K1V has recently opened its first African office.

The organisation is one of a growing number that prioritises investment over charity, the result of a belief in its founder, Coors, that charity is not compatible with promoting economic growth and opportunity in developing markets. This so-called ‘impact investing’ is predicated on a belief that smaller growth companies in regions such as sub-Saharan Africa are the main drivers of economic progress. According to the International Finance Corporation of the World Bank, small enterprises account for 90 per cent of all businesses in sub-Saharan Africa, but they face considerable challenges posed by regulation, a lack of business education and access to capital. Impact investors use commercial models to overcome these challenges, expecting both a financial and a social return on their capital.

Changing models

giving to Africa, and even the name was redolent of the kind of small-scale, worthy foundations which have proliferated on the continent. But then 1K1V announced a $300 million private equity fund.

“We are of the mindset that what we need is business done well, and business done right, and in fact if you do that, then social good fol-

Advocated by leading charitable organisations, such as the Rockefeller Foundation, impact investing has been adopted by international and African philanthropists and organisations as a sustainable mechanism to address the continent’s challenges. Home-grown businesspeople, such as Nigeria’s Tony Elumelu, have become major proponents of the approach. Elumelu’s eponymous foundation made its first impact investment in Tanzania’s Mtanga Farms in June 2013, targeting the agriculture sector, which employs the majority of the country’s population but remains under-developed.

Whether or not impact investing truly delivers systemic development remains unclear.

The lifecycles of the first generation of funds are not yet complete, and the social benefits are harder to measure than financial returns. Trade bodies, such as the Global Impact Investing Network (GIIN), are working to develop reporting and evaluation met-

rics to prove the thesis that most investors believe to be intuitively true: that investment delivers development.

Measuring and monitoring

Many organisations choose their own measures. For example, at the centre of 1K1V’s approach is job creation. In Africa, where much of its early work is focused, that is a major development need. While most of the continent’s economies have experienced positive gross domestic product growth across the past decade, many have also struggled to deepen and diversify their economies beyond primary commodities. Job creation has in many cases been secondary to the development of revenue generating industries; infrastructure deficits and a lack of regional integration make the business environment difficult for entrepreneurs, who also suffer from little access to patient capital—or any affordable capital at all.

This impact investing approach, in its broadest definition, is one that has been attracting a great deal of interest from high net worth individuals and family offices. To truly deliver impact at scale, however, it may need to evolve to meet the needs of large, institutional investors.

Attracting investors

While still nascent, the asset class has grown dramatically since the term began being widely used in the mid2000s. Research from the GIIN, suggests that there is $9 billion in planned impact investments in 2013, up from around $8 billion in 2012 and $4 billion in 2011. Some projections, including a 2013 JPMorgan report, “Impact Investments: an emerging asset class”, put the total size of the industry at between $400 billion and $1 trillion by 2020, although even at the conservative end of this estimate, that would mean that it would need to grow by more than 50 per cent per year until that point.

To come close to the scale being forecast, impact investing would need to start attracting capital from mainstream investors and move beyond its associations with philanthropy. While THEAFRICAPITALIST | 15

FEATURE | IMPACT INVESTING

the “double bottom line” accounting approach does emphasise the financial return associated with impact investing, alongside social metrics, there remains an association of worthiness that does not sit well with some purely profit-driven investors. Some institutional investors say they struggle to understand how they would be able to integrate the social metrics into their existing portfolio management. They also often assume that attaching social obligations creates a performance drag, something that impact investment companies strenuously deny.

Impact vs return

“Most private equity funds have institutional LPs, which are driven by asset allocation risk profiles that typically result in a five-year investment period and a 10-year fund life. It typically results in a narrow investment mandate and typically [there is] no or very little involvement by the institutional LPs, who are not in the business of growing companies. They’re in the business of allocating assets for return,” Jordaan says.

“It matters because unlike your traditional fund, our fund is evergreen in nature, we can be as patient as we want to be. Our model is built around the active involvement of the leading families.”

THEAFRICAPITALIST | 16

The high-touch approach taken by impact investors does have its advantages. It obviates the concerns around corporate governance that often dog investments in emerging markets. By being far closer to their investee companies and demanding far more intricate reporting, impact investors typically know more about the people and the businesses in their portfolios than their traditional equivalents. This, in turn, helps to mitigate the political and reputational risks that investors are often concerned about when looking at high-growth markets—and investors are looking at high-growth markets. With continued stagnant growth in the industrialised world, and larger emerging markets, such as Brazil and India, showing signs of slowdowns, even relatively conservative investors are now looking into frontier markets.

An eye on impact

They are also, research suggests, increasingly concerned about the social impact of their capital. A September report from the World Economic Forum noted that more than 11 per cent of US assets under management

were invested using socially responsible investment practices. “SRI” funds emerged over the past two decades from a niche asset class to a mainstream set of principles through which many funds are managed. Institutions signed up to the United Nations’ Principles for Responsible Investment represent around 15 per cent of the total global investable assets. Social responsibility is not a niche concern.

“All the major banks are building their internal [high net worth] service departments to build products for people interested in impact investing,” says Cathy Clark, Adjunct Professor and Director of CASE i3: Initiative on Impact Investing at the Duke Fuqua School of Business. “The demand side is clearly

FEATURE | IMPACT INVESTING

“We believe that the best way ultimately to have impact, is to do good business, make successful investments, help SMEs to grow and make returns for our investors” Simon Merchant, CEO of Jacana Partners growing.” Clark is wary about calling impact investing an asset class in its own right, seeing it, like SRI, as a filter laid over other types of investment, such as private equity or venture capital. Negative filtering is far easier to scale, however: excluding certain types of investments based on environmental, social and governance criteria does not fundamentally change how performance is reported. Impact investing

is by its nature more active, meaning that investments have to be not only screened, but assessed for an additional set of performance metrics. For philanthropic organisations or family offices, that is easier; they are typically making smaller investments and can be more flexible around their investment objectives. Impact funds tend to be small, too, relative to mainstream private equity. Because many invest in relatively small companies in frontier markets, their transaction costs are relatively high in proportion to their total fund size. The World Economic Forum’s report noted that the industry is still characterised by small, specialist boutiques. When it comes to institutional investors, these are significant barriers.

As Simon Merchant, CEO of Jacana Partners, a social impact fund that invests in small- and medium-sized enterprises in Africa, says: “Pension funds want to write large cheques to private equity funds, they don’t want to be doing $10 million investments into a $50

million fund. Because when you’ve got a multi-billion dollar balance sheet it doesn’t make sense from a cost and time point of view to be making small investments.”

Profit trumps impact

Jacana invests in African markets, using strictly commercial metrics for its backers, who are mainly international development financiers. The firm believes in the potential of the markets, Merchant says, and hopes to prove that to larger, more mainstream investors. The only way to attract them is to show that the firm can be commercially successful. “We believe that the best way ultimately to have impact, is to do good business, make successful investments, help SMEs to grow and make returns for our investors,” he says. “Because only then can we and our investors, who are development finance institutions, go to commercial investors like pension funds and insurance companies and say look at what we’ve achieved, look at what is possible in these markets, and you really should think about allocating a portion of your capital to these markets.”

THE IMPACT INVESTMENT MODEL Impact investments are investments made into companies, organisations, and funds with the intention to generate measurable development impact alongside a financial return. This impact investing approach, in its broadest

Global Impact Investment

2011 2013

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definition, is one that has been attracting a great deal of interest from high net-worth individuals and family firms. However, to truly reach scale, it may need to evolve to meet the needs of large, institutional investors.

Impact Investment Global Projections 2013 – 2020

$1b

$1b

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$1b

While still nascent, the asset class has grown dramatically since the term started to be widely used in the mid-2000s. Research from the Global Impact Investing Network (GIIN), suggests that there is $9 billion in planned impact investments in 2013 up from around $8 billion in 2012 and $4 billion in 2011.

To come close to the forecast, impact investing would need to start attracting capital from mainstream investors and move beyond its associations with philanthropy. The double bottom line does not sit well with some purely profit-driven investors. Some institutional investors say

= $400 BILLION

$1

TRILLION

Some projections, including a 2013 JPMorgan report, Impact Investments: an emerging asset class, put the total size of the industry at between $400 billion and $1 trillion by 2020. Even at the conservative end of this estimate, it would need to grow by more than 50 per cent each year to reach that point.

they struggle to understand how they would be able to integrate the social measures into their existing portfolio management. They also often assume that attaching social obligations creates a performance drag, something that impact investment companies strenuously deny.

THEAFRICAPITALIST | 17

AFRICA IN PICTURES | ANDREW ESIEBO

Life less

Ordinary We celebrate the work of an up and coming African photographer. In this photospread, Andrew Esiebo provides a dazzling view of Nigeria’s heritage and rich culture.

A

ndrew Esiebo started out in photography by chronicling the rapid development of urban Nigeria as well as the country’s rich culture and heritage. His work has been exhibited at the Havana and Sao Paulo biennials, the Guangzhou Triennial in Beijing, the Chobi Mela V Photo Festival in Bangladesh, the Noorderlitch Photo Festival in The Netherlands, African Photography Encounters in Mali and the Lagos Photo Festival among others. His works have been published in books, magazines and websites such as guardian.co.uk, Marie Claire Italia, Time Out Nigeria, Mail & Guardian online, Laia Books, Geo-Lino, KIT and African style magazine Arise .

Andrew has completed a number of artistic residencies including a five-month stay in Paris under Cultures France’s Visa Pour Creation, a threemonth residency at the Gasworks in London as part of the Africa Beyond programme and a three-month residency at the Gyeonggi Creation Center in South Korea from December 2011. He is the initiator and co-organizer of “My Eye, My World”, a participatory photography workshop for socially excluded children in Nigeria. www.andrewesibo.com

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AFRICA IN PICTURES | ANDREW ESIEBO

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AFRICA IN PICTURES | ANDREW ESIEBO

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AFRICA IN PICTURES | ANDREW ESIEBO

THEAFRICAPITALIST | 21

GLOBAL FIXER Tony Blair tells Peter Guest about how he wants to use the lessons learned as the Prime Minister of the UK to build a better Africa.

PROFILE | TONY BLAIR

“There’s a lot of footloose capital at the moment that can find its way to Africa if the right rules and the right governance is in place.”

T

he Gleneagles summit in 2005 is remembered for its rock star grandstanding and its grandiose promises on aid. Amid huge public pressure, drummed up during a period of economic self-confidence, the summit is often cited as a turning point in what had been a diminishing global support for overseas development assistance.

More than eight years later and in straitened economic times, its convener, Tony Blair, is not focusing on headline promises on aid.

Instead, it is the experience on the home front from those later years in government that Blair is now taking to African governments through his Africa Governance Initiative (AGI).

“I was 10 years’ as prime minister and the truth is I was far more effective on domestic policy in the last half of my term than I was in the first half,” he admits, during an early-morning interview in the Mayfair townhouse that serves as the London headquarters of AGI. “In the first half I was still in many ways learning how prioritisation and performance management had towork.”

IMPLEMENTATION Starting in Sierra Leone and Rwanda, the initiative has now expanded to six African countries. Blair also works with a number of other nations around the world, advising on the practicalities of making government work for investors and for their people. “Nearly all these emerging market countries have the same problem. Someone will do them a report that says: ‘Here’s how you sort out your country.’ The report will be, in theory, absolutely fine.

But it doesn’t give you any sense of prioritisation or implementation. “[These countries] have so many challenges and the scale of those challenges is so huge, and unless the government when it comes in prioritises ruthlessly and focuses on getting those priorities implement-

ed, then you can end up trying to achieve everything and achieving nothing,” he says.

“Incidentally, this is a lesson I learned in a highly developed country like the UK.”

It was Gleneagles that set the stage for Blair’s work on governance. The summit is often remembered for its focus on increasing the aid commitments of Western governments by creating the target of 0.7 per cent of gross national income (GNI) dedicated to overseas development assistance. At the same time, the Commission for Africa report highlighted many of the challenges to African development, including infrastructure and governance. It was based, Blair says, on a new approach that emphasised partnership over donation.

“In other words you ended up with this set of obligations on the developed world, but a recognition that unless the developing world put its own house in order, then this money was not likely to go far.”

Some of the challenges across the continent have become very public issues; transparency, security and government accountability have made headlines. Blair, however, is quick to reel off the improvements in life expectancy and the reductions in the death rates from malaria and HIV/AIDS, as well as the GDP growth figures.

Transparency and accountability are major aspects of good governance, he says, but the larger challenge is efficacy. A lack of political and economic accountability of governments in the Middle East and North Africa provided the motivation for major and sometimes violent political change.

Leaders who had previously been praised for opening their economies and driving investment-led growth were unseated. These are salutary lessons for other governments.

STABILITY “The Arab upheavals were in my view as much to do with the failure of governments to deliver as they were to do with issues of democracy and human rights.”

Blair, who also works as a Middle East peace envoy, continues: “The best way to attain stability through a period of change is that you are step-by-step improving the lives of the people.”

For Africa, this means basic services and utilities. Electrification has to be high up any government’s agenda, he says, as has other infrastructure.

“The other thing is good quality inward investment. You’ve got a lot of good African businesses, but getting good quality foreign investment in; investment that actually adds intellectual capital, [and] is socially responsible is of huge importance. There’s a lot of footloose capital at the moment that can find its way to Africa if the right rules and the right governance is in place.”

The general environment for corporate social responsibility has improved, and international legislation, such as the UK’s Bribery Act and the US’ Dodd-Frank has forced transparency onto companies coming into emerging markets. But there also remains an unfortunate imbalance in capacity between smaller host governments and their large investors—something that Blair and his colleagues are trying to redress.

“You need the investment—particularly when it’s resources—to be done in a responsible way,” Blair says. “Very often there’s completely unequal bargaining power between the big resource companies

BLAIR IN AFRICA The six countries where the Africa Governance Initiative operates, to support “effective governance”: 1. Guinea 2. Liberia 3. Malawi 4. Rwanda 5. Sierra Leone 6. South Sudan

1 5 2

6 4 3

THEAFRICAPITALIST | 23

PROFILE | TONY BLAIR

and the governments, because these companies have very highly paid lawyers and financial experts. We come across countries where literally you have some civil servant within a ministry trying to deal with some of the best and smartest financial and legal people in the world. There was a completely unequal struggle. So the other thing we do is provide support for that kind of contractual bargaining.”

A NEW OPENNESS Making sure that resources are properly managed to create longer-term, sustainable economic benefits is central to achieving the goals of Gleneagles. The outcome of the mid-2000s expansion of aid was supposed to, rather counter-intuitively, be an end to aid, as governments in Africa were expected to deploy the money to build infrastructure and deepen their economies. Nevertheless, the evolution of new thinking and a greater openness within the international development community has also created new possibilities for sharing solutions to common challenges.

What works in China could, ultimately work in Nigeria; what reduces poverty in Brazil could be deployed in Mozambique.

“We live, by-and-large, in

a post-ideological world. This is the great opportunity for Africa,” Blair says, praising the new World Bank president, Jim Yong Kim, who has stated his aim of delivering solutions over ideologies. That – alongside a growing cohort of smarter, more socially engaged business leaders – give cause for optimism.

“Public opinion hasn’t caught up with where we are today. When I was coming into politics, you looked on aid as a gift. It was an act of charity for poor people, but you didn’t ever really expect those people to stop being poor. You did what you could to assuage their poverty. That’s not the case anymore,” Blair says.

“Change is happening. Twenty years ago, Latin America was still a basket case.

It’s not today. What people have got to understand today is that it’s not all hopeless. On the contrary, there are many, many reasons for optimism. The scale of the challenge is still very big, that’s true. But where we are and where we were are very different places.”

BLAIR ON TRANSPARENCY Corruption in some parts of the continent also remains in sharp focus.

Sierra Leone, one of the countries that Blair has worked closely with, scored badly on the 2013 Transparency International Corruption Perception Index, a widely used benchmark for graft. Blair thinks that the West African country has been harshly judged.

“I know it almost sounds ridiculous to distinguish between different types of corruption, but people who work in these countries know the difference between a major contract being given on the basis of a corrupt payment, and low-level, endemic, bureaucratic corruption that you’ve got to drive out,” he says. “My view is that Sierra Leone has advanced hugely in the past few years, and I think that sometimes these measurements are a little ... open to question.”

“What works in China could, ultimately work in Nigeria; what reduces poverty in Brazil could be deployed in Mozambique”

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the GOOD GOVERNOR

Mo Ibrahim talks about the impact his foundation has had on the continent and what needs to be done to effect future change.

What inspired you to create the index of African governance and the prize?

Mo. Seven years ago I chose to establish a foundation with the aim to promote good governance and leadership on the continent. The Ibrahim Index of African Governance was created to provide a framework for citizens, governments, institutions and businesses to assess the delivery of public goods and services, and policy outcomes across Africa.

The Ibrahim Prize was established to honour former heads of state or government, who, during their mandate, have demonstrated excellence in leading their country, and serve as models for the next generation of leaders Since its launch, the Ibrahim Prize now has three Ibrahim Laureates Presidents Chissano of Mozambique, Mogae of Botswana and Pires of Cape Verde - who have set high standards of excellence in African leadership and are role models for leaders-tobe.

What have the Index and Prize achieved so far?

Mo. Our 2013 IIAG results show that since 2000, the countries that have experienced overall governance improvement are now home to 94 per cent of people living on the continent.

The Foundation is pleased that a number of leading organisations have embraced the Ibrahim Index as a primary resource for measuring governance. To take one example, the 2013 African Economic Outlook [an African Development Bank and UN report], which focused on structural transformation and natural resources, identifies the quality of governance as measured by the Mo Ibrahim Foundation, as ‘the first driver behind positive structural change.’ What have been the key lessons learned so far?

Mo. Governance is not just about corruption or transparency, human rights, democracy or infrastructure; it is about all of these things. Governance is a basket of deliverables which any 21st century

government is responsible for delivering to all citizens. If it is about deliverables then it is measureable.

Another key lesson is that good governance in the public sector is a prerequisite for development but it is not enough. We cannot have it without good governance in the private sector. These two must really go hand-in-hand.

What is the best way to promote good leadership in young people?

Mo. Right now the most important challenge is African youth.

The Foundation engages regularly on these issues through our programmes and at university platforms and youth forums. Given the exponential rise in the use of mobile phones and social media, there is much to leverage when it comes to transparency, accountability and participation.

New social media platforms that engage, empower, alert and amplify voices outside of traditional power circles, might help to reach audiences by making information available in as many formats and platforms as possible.

THEAFRICAPITALIST | 25

FOCUS | ENERGY RESOURCES

Power to the People US initiative provides opportunities for investors in Africa’s power sector

T

he lack of reliable electricity access in sub-Saharan Africa is a continent-wide problem that hinders every aspect of life, from education and economic growth to health and safety. The 550 million people in the region who lack access to electricity are denied advantages that many in the West take for granted: life-saving vaccines and other medical care, safe cook stoves, and safe streets after dark. According to survey data of African businesses, reliable energy access is a bigger hindrance to economic growth than corruption, access to capital, or sufficiently trained labor.

For these reasons, power generation is the single biggest infrastructure need in Africa today. Government initiatives both in Africa and internationally have recognized this need, and have recently enacted new policies to encourage private investment in the power sector. These policies open up many new opportunities to invest in the sector – investments that will prove both profitable to shareholders and hugely beneficial to all those living without power.

initiative, a new $7 billion U.S. commitment to the energy sector in Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania. The initiative aims to increase electricity access by 20 million households and businesses and electricity generation by 10,000 megawatts over five years. The key to Power Africa is the way the program leverages U.S. government funds with private sector investment – almost all of the funding is aimed towards encouraging and supporting private sector companies to go in and do the actual investment in the sector. The program also includes efforts to improve energy governance systems and national energy plans.

Investments from the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), the Millennium Challenge Corporation (MCC), U.S. Trade and Development Agency (USTDA) and the U.S. Agency for International Development (USAID) will provide financing and insurance of energy projects in Africa, while also providing technical assistance for the implementation of these projects.

MCC compacts will also target policy and regulatory reforms and US INITIATIVES institutional capacity building. ReIn July, President Obama visited newable energy projects and offAfrica to launch his Power Africa grid solutions will also be a focus of

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the initiative.

In addition to this program enacted by the Obama Administration, the U.S. Congress in June introduced legislation prioritizing U.S. government resources to assist the power sector in Africa. The bill seeks to encourage the installation of at least an additional 20,000 megawatts of power, promote first-time access to electricity for at least 50 million people, and promote institutional changes to improve electrical service to rural and underserved areas.

Together, these form a bold new vision for U.S. engagement in the energy sector in Africa, and provide myriad new opportunities for private sector investment in power.

“POWER AFRICA” IN ACTION

While the Electrify Africa Act is still under review by the U.S. Congress, the Power Africa initiative has already garnered significant private sector support. So far $9 billion has

American President Barak Obama meets African business leader Tony O. Elumelu of Heirs Holdings, July 2013.

been committed from energy companies and investment firms such as General Electric, Heirs Holdings, Symbion Power, Aldwych International, Harith General Partners, and Husk Power Systems.

Heirs Holdings alone has committed $2.5 billion of investment and financing in energy, making it the largest investor in Power Africa.

The first major project to come online following President Obama’s rollout of the initiative is the $300 million Ughelli power plant in Delta State, Nigeria, which is being financed by Transcorp, a conglomerate managed by Heirs Holdings. The project, which has Symbion Power as a partner and was co-arranged by the Africa Finance Corporation (AFC), plans to increase the power generation of the plant by over 700 megawatts over the next five years.

This project was made possible not only by the partnerships supported under Power Africa, but by the gov-

ernment of Nigeria’s privatization of the Power Holding Company of Nigeria (PHCN).

Landmark agreements in renewable energy projects, like the Corbetti Caldera geothermal project in Ethiopia, have also taken place as a result of Power Africa. The government of Ethiopia and US-Icelandic developer Reykjavik Geothermal (RG) signed an agreement in September to construct a 1,000 megawatt geothermal plant, the largest yet in Africa. A USAID-sponsored risk mitigation facility will provide the project with grant funding to defray the costs and risk of exploratory drilling. The $4 billion plant in Corbetti Caldera was identified

by USAID as a priority contract to showcase the Power Africa model, because it combines private sector expertise and investments with US government tools to mitigate risk and build local capacity.

MORE INVESTMENT NEEDED

These initiatives are only one small piece of the puzzle. Closing the power deficit in sub-Saharan Africa would mean a massive increase in power generation capacity – 300,000 megawatts – which would require an investment of $300 billion by 2030, according to the International Energy Agency.

Although the Power Africa Initiative only aims to cover a small fraction of the total need, it is meaningful because of the new philosophy it introduces to infrastructure development in Africa: that bilateral donors need to work together with international lending agencies and the private sector. This philosophy opens up many more opportunities for the private sector than traditional aid, and has the potential to usher in a new wave of investment in Africa, starting with one of the continent’s deepest needs: power.

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BUSINESS | ENTREPRENEURS IN ACTION

GREEN INNOVATIONS Africapitalism is all about inspiring action. As Africa grapples with an energy deficit, young enterpreneurs are rising to the challenge. From solar power to cleaning products, four young entrepreneurs tell us about their inspirations and aspirations to improve the environment.

Sunny Morgan Enerlogy Ltd How I got started

Access to energy is the lifeblood of any economy and is an enabler of production, manufacturing and development. Without it, it is simply impossible to talk about growing an economy or meeting the development goals in any society.

Evidence

Country

Founder

South Africa

Sunny Morgan

Website www.enerlogy.co.za

Some 600 million Africans lack access to a reliable and sustainable source of energy.

It is a travesty that a continent endowed with some of the most valuable strategic resources on the planet still has over half of its inhabitants without energy.

Enerlogy Ltd., based in South Africa but with continental-wide aspirations, aims to offer energy solutions that are affordable, sustainable and scalable.

We are specialists in all types of clean and renewable energy, especially in the solar arena.

Enerlogy offers turnkey systems for utilities, industry and commercial. We are currently tendering for solar plants in South Africa and have been approached by two other African countries to provide proposals for solar energy installation.

Human rights Enerlogy firmly believes that access to energy is a basic human right and we will work with stakeholders in government, industry and in the social arena to make a contribution to this important activity. Key to the success of the sector will be close collaboration with other African entrepreneurs and Enerlogy is keenly pursing this.

Patrick E Ngowi Helvetic Group – East Africa How I got started

I started out as an entrepreneur at 15 and learned that social impact in business remains key. An entrepreneur has to take a hard look at the challenges existing within his society or community and tackle them.

Country Tanzania Founder Website

Patrick E Ngowi

www.helvetic-group.com

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At Helvetic Group, we aim to provide an alternative source of power for both urban and rural areas. Urban clients are easy to reach but the greatest demand for power is in rural parts of Tanzania and like most African countries, access to rural areas remains an important challenge.

We took a hard look at our business model

to find the best way to reach that market, and we have now succeeded in developing a strong network throughout rural Tanzania.

We have agents in all regions and continue to sign up more every day. This allows our brand – ‘East Africa’s Renewable Energy Hub’ - to have local footprint.

For me, businesses that have strong social benefits ingrained in their operations tend to be progressive and sustainable.

BUSINESS | ENTREPRENEURS IN ACTION

“I realised that many of the cleaning products we import into Ghana have very detrimental effects on both our bodies and the environment” Richard Kwame Donkor

Richard Kwame Donkor Biobase Africa Limited How I got started

Biobase Africa was born following a terrible reaction to my laundry product. I started to investigate what was in the product and others that we use in Ghana and wider Africa. I was amazed to find how harsh some of the ingredients were. I realised that many of the cleaning products we import into Ghana have very detrimental effects on both our bodies and the environment.

Country Ghana Co-Founder

Richard Kwame Donkor

Website www.biobaseafrica.com

Evans Wadongo

Sustainable Development For All-Kenya Country Kenya Founder

Evans Wadongo

Project

Use Solar, Save Lives

Website www.sdfa-kenya.org

How I got started I was one of the lucky ones. Most homes in my village could not afford kerosene, but my family used the oil lamps for lighting.

I learned quickly that lack of lighting can affect education with some children dropping out of school. In 2004, I designed the MwangaBora solar lamp as a simple localised lighting solution. The lamp is made from mostly recycled materials using simple tools; keeping costs low.

At Biobase Africa, we produce domestic and industrial cleaners from natural bio-based products like trees, plants and fruits. Our aim is to promote the use of non-toxic, nondetrimental domestic and industrial products which do not contain corrosive chemicals.

I partnered with my cousin, who was familiar with natural bio-based cleaning products in

Impact My company, Sustainable Development For All trains young people with an informal education to make the lamps. We then distribute the lamps to rural women’s groups who we train in microenterprise development and help them to set up small businesses from the money they would have otherwise used on kerosene. Our model is a very innovative way to not only provide clean energy, but create opportunities for youth and women in rural Africa.

the United Kingdom, and we set up Biobase Africa to produce alternative cleaning products for Africa

Challenge The main challenge has been the mindset of the market. Many Ghanaians do not understand the concept of bio-based cleaning products. Education and bringing awareness to the market is the key to the success of our business.

Our vision is to lead a green revolution in Ghana to preserve our immediate environment, country and continent.

HOW MUCH IS THE BANK FINANCING FOR ENERGY? The World Bank Group committed $8.2 billion to support energy finance in 2012.

The Bank Group approved a total of $3.6 billion in financing for renewable energy projects in fiscal year 2012, a record 44% share of its annual energy lending. Looking only at power generation projects approved in 2012, renewables accounted for an even larger share.

So far we have distributed over 35,000 lamps in Kenya and impacted directly over 180,000 people. We have already started working in Malawi where the response has been overwhelming and we hope to continue venturing into other countries in Africa. We shall continue to make designs that are customised to every country, to ensure local ownership of our project.

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COUNTRY PROFILE | LIBERIA

I

n August, Liberia marked 10 years of peace with church services, prayers and celebrations. This once troubled West African nation, which began life as a republic for liberated slaves, suffered the harshest conflicts in Africa - as well as the worst governance - under the governments of Samuel Doe and Charles Taylor.

When the conflicts ended in 2003, all aspects of the country were run into the ground. The infrastructure was wrecked, the government’s fiscal buffers nearly dry, and the country was politically and economically isolated.

When the first elections were held, Ellen Johnson Sirleaf was the victor. She recalls the challenges on arrival. “We had to start with the need to address peace and security, and so we started with security sector reform,” she says.

“We dismantled the entire army to build a new army, to start a process of training the rest of our security forces”.

Fast forward to today, and the difference is palpable. No longer viewed as an off-limits war zone, Liberia is now hosting investment forums around the world, seeking to attract foreign companies to set up long term in the country. The Monrovia road network has been completely redone. “There is an enormous difference in Liberia today compared to 2005 when I first arrived,” says Steven Radelet, a US economist,

and long-term adviser to the government. “Then, there were very few institutional rules”.

PROBLEM SOLVING Liberia slowly moved from the deployment of peacekeepers, to a programme of disarmament, demobilisation and reintegration. The security environment, as with nearby Sierra Leone, is vastly improved. A recent Liberia study found that police-society relations are ‘cordial’, with increasing engagement between the police and community members in solving problems. But the strength, funding and visibility of the Liberian Police Force is low and the Justice Minister is under pressure to strengthen the judicial system. A 2013 report by Human Rights Watch alleged that the police force is still ‘riddled with corruption’.

But security has at least improved enough to support the economy. In 2012, GDP growth hit close to 11 per cent. Rubber and timber exports have shown growth, and a flurry of FDI agreements have seen increased inflows into palm oil, iron ore and offshore crude.

Many companies with both regional and global presence, including Ecobank, Access Bank, BHP Billiton, China Union and ArcelorMittal, are now present. Higher net capital inflows have in turn stabilised the Liberian dollar and led to an increase in official reserves.

Liberia has transformed from a failed state to a burgeoning continental economic power.

Adam Green assesses the country’s progress.

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COUNTRY PROFILE | LIBERIA

hands, we must own our agenda and our processes, but we don’t see that to the exclusion of partners. We’ve already established a Liberian Development Alliance in which a coordinating mechanism, which I chair, brings all the partners around the table”.

The demands of reform appear dizzying. But President Johnson Sirleaf, now in her 70s, has only one more term to run. Having spent decades trying to shape Liberia’s fortunes, she does not plan on going quietly when she hands over the presidency as a constitutional requirement. “I’ll never retire from anything, except the presidency. I intend to be active in Liberia. I will be there to work with organisations that are promoting development.”

Liberia’s rise in figures.

President Johnson Sirleaf - with economics and public policy degrees from three US universities - is well placed to oversee a deepening of the economic reforms.

The country has performed well in the World Bank Ease of doing business report.

African ranked 149

REFORM But there is further to go. Liberia’s key trade sectors are vulnerable to commodity price fluctuations. And corruption remains a challenge. A recent report by the Liberian branch of the Extractives Industry Transparency Initiative found major governance lapses.

Court reform is set. “We’ve changed the jury law with less chance that jurors can be compromised. We’ve changed all the magistrates, because they were not qualified lawyers. And we put graduates from the law school through special training and they are now manning all the courts,” says President Johnson Sirleaf.

“Corruption became a way of life, we

are changing that now. [Because corruption has been] the talk of the town it gives us an opportunity to continue to forcefully address it. [As a result] the courts are now beginning to win cases”.

External donors have been essential in Liberia’s ambitious reform programme, both in the early stages of its recovery by providing balance-of-payments support, and later through debt relief.

The President believes external partners, notably the IMF and World Bank, were critical in rescuing Liberia from the edge. But she also believes the relationship needs to be carefully managed, and agendas harmonised and better coordinated. “We do share the view that we must take our destiny into our own

From beginning perhaps the most difficult enviroment in the world to do business in 10 years ago especially for small and medium sized enterprises, Liberia is now ranked 149 with the average greater Africa (sub-saharan) average at 140.

Global rank - 38 • Its best performance metrics are in starting a business and paying taxes, at which it ranks 38 and 45 globally.

• For ease of business formation, it ranks higher than Ghana and Kenya.

• The most challenging areas are reinforcing contracts and registering property, ranked at 163 and 178 respectively THEAFRICAPITALIST | 31

CITY GUIDE | LAGOS

Fast and furious

in Lagos

Discovering Lagos is an exciting adventure with new restaurants, shops and lounges opening regularly.

T

Restaurants

he literary titan of the 18th century Samuel Johnson famously said; “If a man is tired of London, he is tired of life”. Had he been to Lagos more recently, he might well have said; “If a man is tired of Lagos, he just needs a break”. Because Lagos is fast, it’s furious and when the bug bites, it will keep you coming back for more.

It is also probably not the most obvious of holiday destinations. It’s a city with an Atlantic coastline and lots of beaches, but that’s about all it has in common with coastal cities like Rio and Miami. There is an energy and vibrancy in Lagos that you don’t get in many other places.

City officials labelled Lagos the ‘city of excellence’ and the slogan is proudly carried on the number plates of its cars. But a few moments spent there will soon tell you it’s more of a ‘future promise’ than a current reality – and that is part of the city’s charm.

Something for everyone

Bistro 7

Bistro 7

Casa D’Lydia

Casa D’Lydia

On the one hand, some of its restaurants are world class, its ever growing number of malls are exclusive and expensive. There are clubs that cater for almost every upmarket lifestyle choice; you can watch a game of polo at the aptly named Polo club; play tennis, squash, golf or swim at the Ikoyi Club; and catch a movie at the recently developed multi-screen cinema complex.

But like every city it has it’s challenges. The traffic jams are legendary. Its crumbling road system is devoid of road signs and traffic lights.

The lawlessness of the road users puts New York taxi drivers to shame. The constant power cuts and the accompanying buzz of generators are living proof that a city can and does run without electricity!

A new bistro in Ikoyi, this lovely little place may become a favorite spot. They have huge glass windows framed with pinewood giving it a rustic feel, but with modern décor, looking out onto their courtyard. Barely a barrier between you and their visible kitchen, you can watch your meal being prepared right before your eyes. They have a nice selection of dishes from burgers and sandwiches to a very well presented seafood platter. Worth a visit.

Location: No. 19 Glover Road, Ikoyi Phone: 018209239 Email: info@casalydia.com

Nightlife Club Toxic

Club Toxic

Hidden behind the façade of Jade Palace, in the middle of VI, Club Toxic is a popular spot, especially if you like to see a lot of bling. The funky and modern décor at Club Toxic is what attracts the party-goers, that and the great music. But be warned it can get quite crowded even though the space is huge.

Location: No. 61, Adeola Odeku Street, Victoria Island Phone: 07098766966

New Afrika Shrine

Here’s our guide to some of the city’s top restaurants, night spots, spas and shopping.

Listings thanks to Tanaz Bahnam, Founder of Lost in Lagos www.lostinlagos.com

New Afrika Shrine

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The soft and cozy atmosphere of Bistro 7 offers gourmet style foods that you love to enjoy, from Italian pastas and pizzas to hearty sandwiches and well thought out continental dishes, all made fresh on the premises, including their breads. Flanked on one side by the Beanary and on the other by the Rose Garden, this is going to be a definite must on your restaurant list.

Location: 273b Kofo Abayomi Street (Look for the Gold 7 on a white gate), Victoria Island Phone: 018776622, 08076687777

The New Afrika Shrine in Lagos was built and operated by Femi and Yeni Anikulapo Kuti, the eldest son and daughter of cultural icon, Fela Anikulapo Kuti, who built the original Shrine in the Seventies. The spiritual home of Afrobeat, Fela Kuti’s original Shrine was burned down, but this replacement is run by his son Femi, who plays on Fridays and Sundays when he’s in town (cover charge payable).

It’s a huge shed, but the music blows the roof off.

Location: 1 Nerdc Road, Agindigbi, Ikeja Phone: 08184633481, 08037125939

CITY GUIDE | LAGOS

favorite scented soap or scrub, it’ll keep you relaxed, at least until your next treatment.

Location: No, 21c Akin Ogunlewe Street, Off Ligali Ayorinde Street, Victoria Island Phone: 07068779977, 08122279999 Website: www.bodytemplespa.com Email: bodytemplespa@hotmail.com

bnatural Spa

Ermenegildo Zegna

Shopping Alter Ego ALTER EGO is dedicated to offering accessible luxury that captures the spirit of the modern woman with a unique African perspective. ALTER EGO creates feminine pieces, perfect for the modern African woman, which is characterized by unexpected contrasts in shapes, prints and unique detail.

Location: 127B Eti-Osa Way, Dolphin Estate, Ikoyi Phone: 07042245895 Website: www.alteregolagos.com Email: info@alteregolagos.com

Alter Ego

Ermenegildo Zegna The exquisite men’s designer, Ermenegildo Zegna, has opened their flagship boutique in Lagos. When you step in you will be transformed into a world of high end men’s wear, with a special made to measure chamber for those of you who need something extra special. They carry everything from the formal suits to the casual jeans and shirts. They also carry a range of shoes and accessories for the sophisticated man.

Location: 175 Akin Adesola Street, VI Phone: 07037371101, 08079212421 Email: customercare@zegnalagos.com

This oasis in Ikeja, and now VI, is a unique place of peace and serenity in a city filled with chaos. They have a beautiful location on both the mainland and island, dedicated to making sure you walk out without a worry in the world. They have all types of spa treatments, including laser hair removal, and other laser treatments. They are the first place in Lagos with a Moroccan Hamman, and possibly the only place that does colonics! They also have a nail center and hair salon, so take your time and enjoy this little paradise. Their new VI location also has a beautiful pool that members of their gym/studio classes can enjoy. Then take some time out for yourself at Villa Maroc, their own cafe on the rooftop.

Location 1: No. 11 Oduduwa Way, GRA Ikeja Location 2: 14, Abagbon Close, off Ologun Agbaje Street, off Adeola Odeku Street, VI Phone: 08098028772, 08098038772; 08150498772, 08150488772, 08150278772 Website: www.bnaturalmedspa.com Email: lagos@bnaturalmedspa.com; info@bnaturalmedspa.com

Body Temple

Spas Body Temple This cozy and attentive spa caters simply to you and your needs alone. Their vast range of services all focus on making you the center of their attention. Offering all different types of spa treatments, you will be spoilt for choice. And more tempting are their unique services, to add to your beauty: Botox, laser hair removal and treatments to help get rid of those stubborn areas that the gym can’t. The most unique centerpiece to this beautiful spa is the Oxygen Bar. The only one of it’s kind on the continent, the Oxygen Bar gives a whole new meaning to a breath of fresh air in Lagos. Walk into the peaceful reception and relax by their aquarium, or wonder in their tea-room and treat yourself to any flavor of tea. If you want to take a piece of the spa home with you, pick-up your

bnatural Spa

33 | THEAFRICAPITALIST

FINAL WORD | MICHAEL PORTER

NATION-BUILDING

Blueprint Global business adviser Michael Porter talks to The Africapitalist about the opportunities that African states must seek through competitiveness and strategy.

“The definition of competitiveness is where you have a business environment that is sufficiently productive that you can support high and rising wages.

Competitive countries are the ones that are more productive, they have better skills, therefore the workers’ incomes rise and the currency is able to appreciate. Many people think of competitiveness as zero sum: ‘If I cut wages and I get more market share then I am succeeding.’ That’s not the way we should see competitiveness today.

That’s the old-style competitiveness that got us into a lot of trouble.

Any kind of trade-off between improving competitiveness and the standard of living of the average citizen is a reflection of a mistaken view of what competitiveness really is.

Ultimately, prosperity needs to spread to all citizens over time. If you have the wrong rules of the game, the wrong regulatory environment, a very small number of people can end up capturing a disproportionate share of the benefits of improving competitiveness or foreign direct investment (FDI).

The more you have an open and transparent legal environment, the more the benefits of FDI and other kinds of investment will tend to spread outwards.Countries in difficult situations, such as poor, landlocked countries

in Africa, have to start up the ladder of having a productive economy. To do that, you have to start with whatever you have—you have to start with meeting the needs of local citizens. If you just have subsistence agriculture, you could make your small farmers more efficient and effective. Whatever endowments or resources you have, you have to build on those and try to learn how to take advantage of them more effectively or efficiently, and then you build from there.

I’ve been working for more than a decade in Rwanda. The country experienced genocide, and had everything destroyed. Rwanda has no capital, and has very limited natural endowments. But by chipping away at the fundamental things that you need to put in place to have a productive and growing economy, even a tiny, landlocked country like Rwanda is growing at close to 10 per cent per year.

They’ve had tremendous improvements in every single metric in terms of education, skills, safety, security, housing, water, electrification, because they’ve had a plan, they’ve been efficient, they’ve used their limited resources efficiently to get at the underlying fundamentals.

Competitiveness and prosperity is not a zero sum game. We see many countries able to improve their competitiveness simultaneously. That has happened in many countries over the past 50 years. Not every country makes it. But the more you can produce local goods and services, improve quality and expand the market, you can win. People’s incomes grow, they can afford more things to meet their needs, demand expands and more opportunities open up.

It’s that positive reinforcing cycle that we see at work in many countries. China’s success does not mean that the US doesn’t succeed.”

President Kagame addresses Michael Porter’s class on Rwanda’s economic transformation at the Harvard Business School Boston, 11 March 2013.

34 | THEAFRICAPITALIST

MICHAEL PORTER Michael Porter is recognised as a leading authority on competitive strategy: the competitiveness and economic development of nations, states and regions, and applying that strategy to improve social needs.

He was born in Michigan, USA and as a boy travelled the world with his army officer father.

Porter received a BSE in aerospace and mechanical engineering from Princeton University in 1969, an MBA from the Harvard Business School, 1971, and a Doctorate in business economics from Harvard University in 1973.

His ideas are taught on business programmes around the world. Harvard’s Institute for Strategy and Competitiveness was created to further those ideas. He is currently the Bishop William Lawrence University Professor based at Harvard Business School, and advises governments worldwide.