The vision of the 2011 World Economic Forum on Africa

From Vision to Action: Africa’s Next Chapter” is the theme of this year’s World Economic Forum (WEF) on Africa; and with the continent’s resilience in the face of global economic straggling, platitudes are increasingly being traded for real business-based engagement with the continent.

“Africa has demonstrated greater than expected resilience through the global economic crisis and has become one of the fastest growing regions in the world.

Improved political and macro-economic stability, strengthened political commitment to private sector investment, and better access to basic education and social services are drivers behind this trend,” note the organisers behind this year’s annual gathering at the Cape Town International Convention Centre from 4 to 6 May.

While business may be booming and investors smiling, given the benefits of African investment, the translation of growth into inclusive and sustained development remains complex and is a challenge upon which civil society, business and the government have been exchanging thought for some time.

How are all Africans being included in the mainstream of the market economy that has performed with shine in recent years?

Founder and chairperson of the WEF Charles Schwab says the answer will depend on the leadership capacity and political will of its governing institutions to direct taxes, profits and donor funds to much-needed infrastructure investment, better urban design, and critical health and education services.

But not all is lost on the state of infrastructure, governance and regulation. In fact, ahead of this year’s Africa meeting, Qualcomm chief executive officer Paul Jacobs says his global company is choosing Africa and emerging markets as the first point of entry for the rollout of a new mobile healthcare diagnosis application.

The California-based CEO, who shared the panel at the WEF Annual Meeting in Davos in January this year with United Nations Secretary-General Ban Ki-moon, pointed out during a special high-level plenary on non-communicable diseases that Africa has not developed the regulatory barrier present in developed markets that have now slowed the process of delivering innovation such as mobile healthcare applications, which allow for diagnoses using cellular devices.

When Opportunity reported on the company in our last edition, it was evident that the idea of building a sector in Africa first, before expanding into the developed markets, formed part of a trend showing Africa is high on the business agenda.

The continent is certainly nowhere near out of the woods: much still depends on the ability to create innovative partnerships between business and civil society and not least the empowerment of small and medium enterprises (SMEs).

SMEs continue to be the main providers of income across the continent. Former Transnet executive and now Absa CEO, Maria Ramos, has not hidden the fact that easing the regulatory burden would make it easier for SMEs to succeed.

According to economic commentator Temba Nolutshungu, SMEs have played a central role in the economies of numerous countries across the world, and he echoes Ramos’s belief that Africa should not embrace the opportunities of global trade capitalism without reference to local innovators.

“SMMEs [small, medium and micro enterprises] are vital points of entry into the labour market for young and unskilled people, at both entrepreneurial and employee level,” he says.

“The SMME sector, including the informal sector, in most countries is the primary job creator, according to EU [European Union] studies. A 1990 study showed that SMMEs accounted for a large percentage of the jobs in Spain (91.9%), Italy (82.8%), Portugal (80.3%) and Luxembourg (75.7%).

“A further study, in 2002, revealed that more than two-thirds of all jobs in the EU were provided by SMMEs employing zero to 249 employees, 93% of them in firms employing 10 or fewer people,” adds Nolutshungu.

Ramos’s point about making entrepreneurship easier is backed up by recent independent findings of the Small Business Project, namely that it costs formal sector companies in South Africa R105 175 per year, on average, to comply with national business regulations.

The organisation notes that compliance costs are pure “red tape” costs – the costs that accumulate because forms have to be understood, filled in and submitted.

This compliance cost does not include the efficiency costs of regulation, nor the payment of taxes, levies or rates.

The example of South Africa is not lost on the rest of the continent in the debate on how inclusive growth can be fostered through partnerships and the promotion of Africa’s SMEs. The importance of SMEs to development rests on their role in driving up innovation, living standards and the wealth of the consumer – all factors that increase the economic viability of nation states.

In a world of integrated global trade relations, Africa can enjoy its status as a high-return destination for canny investors, but the continent is not immune to trends outside its reach. Prolonged global market instability may be with us for a while; market instability, commodity price volatility and climate change are recurring issues on the WEF’s agenda, and which are unlikely to fade any time soon.

Trade alone is not sufficient, according to some; and with the reality of global factors that are not always in Africa’s favour, relying on international trade partners is not always good business sense. Hence the reason the likes of Ramos and Nobel Peace Prize winner Muhammad Yunus continue to call for a more enterprise-centred global approach to Africa.

“Despite Africa’s huge potential, it suffers from lack of integration in the global economy. If there is any predicament to African development, it is this state of affairs,” argues Jakaya Kikwete, president of Tanzania.

One would be hard-pressed to find an attendee at the WEF who disagrees with this sentiment.

While local media and some foreign broadcasters have actively anticipated this year’s WEF meeting, the focus on the African continent will be largely on those who have already been converted to the reality that the continent is a final frontier in global markets.

However, there are still “deep misconceptions” about Africa in the world, says Schwab. “The media has a great responsibility to highlight the progress made so far.”

It may be that business sense ultimately makes the case for Africa.

“This is a wonderful place to make money,” asserted entrepreneur Mo Ibrahim during a keynote speech at the Fortune Global Forum last year. “The African continent is ripe and ready for huge profits to be reaped.”

That sentiment will continue to inform those who see Africa’s latent enterprise potential and prospects for global investment as a winning set to drive overall improvements in life for the common good of its people.

Garreth Bloor