Fostering inclusive economic growth in Africa

Fostering inclusive economic growth in Africa

This blog explores how business can drive inclusive growth in Africa by highlighting the key insights of the Business in Africa Conference organised at the Cambridge Judge Business School.

Africa is a growth story. The continent is home to six of the world’s fastest-growing economies [1] and contains a vast range of untapped resources, from natural minerals to leapfrog technologies and a pool of talented youth eager to build their countries and communities. Most of the economic growth observed on the continent, however, has yet to be effectively translated to the broader population to foster inclusivity and impact on the ground [2]. ‘Re-imagining Growth in Africa’ was therefore the key theme driving the seventh annual Business in Africa Conference, a flagship event held at the Cambridge Judge Business School in the summer of 2018.

The Business in Africa Conference is organised by the Cambridge Africa Business Network, a student society that aims to build and engage a broad community of people interested in Africa’s economic potential. The conference convenes this community on an annual basis to stimulate a robust dialogue about business in Africa, incorporating both practitioner and academic perspectives. This year, the conference concentrated on four broad sectors in discussing growth on the continent: entrepreneurship and technology; social innovation; finance and investment; and energy and infrastructure. This post intends to highlight notable takeaways from the conference on ‘re-imagining growth.’ There is also a complete video recording of the conference.

How can we ensure that all Africans are included in Africa’s growth story?

Discussions about Africa can often revolve around the continent’s challenges. However, the conference panellists emphasised an alternative narrative: Africa is rising above and beyond recognised adversities. The continent is an exciting playground for innovation, supported by a resilient and committed population working towards a better tomorrow. But how can we ensure that all Africans are included in Africa’s growth story?

1. Context is key

Understanding the market is key to pioneering inclusive solutions on the continent. From a financing perspective, successful models are those that adapt to local market context. Panellists Augustine Agyeman-Duah from the Global Fund and Natasha Suchecki from University of Cape Town’s Bertha Centre for Social Innovation and Entrepreneurship have both observed a multitude of innovative financial strategies applied locally such as microfinance, revenue participation agreements, convertible grants, blended finance, counterpart financing, and debt swaps, to name a few.

From a social innovation perspective, structures must be fit for purpose. The franchise model is often viewed as a silver bullet, but this is not always the best approach. Justin DeKoszmovszky from Azao Consulting, a social innovation consulting firm, noted that franchising is useful when working with large organisations to demonstrate a level of standardisation. However, the last-mile components must be adaptive to work within the market.

As for technology, Oremeyi Akah of Interswitch noted that “success in Africa with technology is being able to understand the context and apply technology to the reality of that context. Copy and paste do not work.” For example, the African continent is home to over a thousand different languages, which can be a barrier to technology adoption. Designing inclusive service for the future requires challenging one’s assumptions of what the constraints might be and truly understanding the needs of the end-user.

2. Innovations in banking and technology have a role to play

Dr Adesola Adeduntan

Trade, investment and domestic consumption in Africa is on the rise, as highlighted by keynote speaker Dr Adesola Adeduntan of First Bank of Nigeria. He sees a future whereby economic growth is driven more by innovation and productivity rather than natural resources. More specifically, increased financial activity, affordable financial products and innovations in banking will likely spur economic growth that is inclusive.

African banks are not hindered by investments in legacy technologies, making it easier to leapfrog from an innovation perspective. From mobile technologies reducing the marginal cost to serve customers, to blockchain enabling the verification of medicine supply, innovations in Africa are solving problems differently relative to traditional methods, which can help further inclusion. Infrastructure, however, is a key enabler of innovation and this remains a challenge.

Dr Adeduntan also recognised that “small and medium-sized enterprises (SMEs) hold the key to the growth of the African economy.” The World Bank estimates, however, that 70 per cent of SMEs remain underserved in emerging markets [3]. As a key source of employment in Africa, SMEs have a crucial role to play in wealth and job creation [4]. It is therefore critical that these growth enablers receive the support necessary to develop as a successful contributor to the African growth story.

3. Yes, there are challenges. But with challenges, there are opportunities.

Working with governments to push innovation and inclusivity forward may be considered challenging, however, these partnerships are vital to improving systems and achieving relevant impact and scale. “Without being involved with the health system, you can’t strengthen the health system,” noted Debbie Rogers of Praekelt.org, a tech non-profit organisation.

Development in energy and infrastructure, in particular, remains a pivotal enabler for inclusive growth in Africa. Fortunately, there is “no shortage of liquidity for good, well-structured projects” identified Gabriel Buck of export finance advisory firm GKB Ventures. “So if people start saying to you that there is a shortage of funding, you have to ignore that and look at the data.”

Perhaps to creatively address challenges, we need to re-adjust our approach entirely. Problem-solving solutions in Africa can sometimes involve using a negative lens to consider what may be wrong within a region. DeKoszmovszky encourages more of a positive approach to problem-solving: “Start with what’s there. Understand the assets. Go in looking for what’s already working [and] you can build on [it].”

HE Yamina Karitanyi

Rwanda’s growth story is an apt example of a country working together to achieve success, through a determination to succeed and an inclusive development model that prioritises increasing access to services and reducing inequality. It takes “courageous leadership”, Her Excellency Yamina Karitanyi, High Commissioner for the Republic of Rwanda to the United Kingdom, said pointedly, “the courage and ability to implement what needs to be implemented.”

From the African Continental Free Trade Agreement enabling pan-African scale and integration, to mobile money and mainstreaming of impact initiatives, there is much to be optimistic about in Africa. Indeed, Africa is rising. Now more than ever, we need to foster inclusive growth that brings all Africans into Africa’s growth story.

 

Chiara Kunnie

Chiara Kunnie, Cambridge MBA student (2017), chiara.kunnie@gmail.com.

Chiara was one of the co-organisers of the 2018 Business in Africa Conference, alongside Charles Butler, Sinenhlanhla Zulu and Oladele Olafuyi. Chiara is a South African passionate about ‘tech for good’ and her key field of interest is social innovation in Africa. She undertook the Social Innovation Concentration during the MBA and was also Head of Communications for the Social Innovation Student Interest Group.

Photography by Kevin Xiong


References

[1] Adegoke, Y. (2018) These will be Africa’s fastest growing economies in 2018, World Economic Forum. Available at: https://www.weforum.org/agenda/2018/01/what-does-2018-hold-for-african-economies/

[2] Ncube, M. (2015) ‘Inclusive Growth in Africa’, in Monga, C. and Lin, J. Y. (eds) The Oxford Handbook of Africa and Economics – Volume 1: Context and Concepts.

[3] World Bank (no date) SME Finance, World Bank. Available at: http://www.worldbank.org/en/topic/smefinance

[4] Mwapachu, J. V. (2012) SMEs as strategic drivers of African socio-economic transformations: challenges and policy prescriptions | www.sidint.net, Society for International Development. Available at: https://www.sidint.net/content/smes-strategic-drivers-african-socio-economic-transformations-challenges-and-policy

Chiara Kunnie

Chiara Kunnie

Chiara Kunnie

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