No. 37 – 3AMReads: Upside in African Financial Services | Lonmin Moves Ops to Marikana | China Pledges $100B

Investor Highlights African Financial Services Opportunity Despite Headwinds

Kurt Davis surveys the financial services industry across Nigeria, Ethiopia, Kenya, Democratic Republic of Congo, and Cote d’Ivoire as ones where investors will find an upside though the current state of the industry isn’t the prettiest to look at. His projection of Cote d’Ivoire becoming the centerpiece of regional financial services action in West Africa is a really interesting that makes sense given the countries growth trajectory so far. Before that happens, I’m going to need the military to improve its operations, find money to pay soldiers, and decrease the specter of mutiny.

Lonmin Moves to Marikana

My mind immediately went to the Marikana Massacre a few years ago when I saw the news that Lonmin was moving it’s Johannesburg office to Marikana where dozens of Lonmin workers were killed by South African police during a wildcat strike. A couple years after that, the company along with the rest of South Africa’s platinum miners went through a very long strike that really put a dent in South Africa’s already struggling growth rate. Lonmin CEO Ben Magara got his start working in the mines and says that he wants to be closer to the company’s operation. Relations between the company and its employees aren’t getting any better with workers protesting last week. Hopefully this move helps improve relations.

China Pledges $100B to Finance Projects Globally

Chinese President Xi Jinping hosted several global leaders for China’s One Belt, One Road Forum. A year or so ago, China launched this effort as part of its aims to connect 60+ countries through a vast transport and logistics network to drive trade. Kenya and Ethiopia’s presidents were in attendance, and both have already seen hundreds of millions of dollars in investment as part of this effort. China’s trade with African countries is already sizeable at $39B for Q1 2017, and we can expect that number to grow significantly in the coming years if China is able to execute the projects it targets and gets paid back. If not, there could be a lot of debt floating around the world. African countries, particularly the ones that have issued large bonds in recent years, would do well to really ensure they have revenue streams to cover more debt should they pursue it.

Here’s My Issue with the IMF/World Bank Africa Rising Seminar

When I first saw, the agenda for the Africa Rising seminar at this year’s IMF/World Bank Spring Meetings, I posted a tweet:

Probably not the wisest thing to not provide any context. So, here goes.

My issue with the seminar is the makeup of the panels. I believe there could be a greater representation of African academics and practitioners. Currently, 30 percent of the panelists are African nationals. Considering that the topic is Africa, this strikes me as odd.

Consider the following promotion of the Africa Rising Conference slated to take place in Mozambique next month.

The Government of Mozambique and the IMF will convene a high-level conference in 2014 to take stock of Africa’s strong economic performance, its increased resilience to shocks, and the key ongoing economic policy challenges. The Africa Rising conference will be held May 29-30, 2014, in Maputo. The event is intended to follow up on the 2009 Tanzania Conference, which helped galvanize international support for Africa after the 2008 financial crisis. The conference will bring together policymakers from Africa and beyond, the private sector, civil society, academics, and private foundations with the goal of sustaining the current growth and sharing its benefits among African populations.    

I find the statement in bold odd considering the relative struggles much of the rest of the international community faced after the financial crisis. Furthermore, the statement defaults to Africa somehow being dependent on externally driven development. I think the structure of this week’s Africa Rising seminar could potentially do the same.

Afara Global exists to see a world in which African and Western countries engage economically at an eye-to-eye level. To do that, you need the right people at the table. While the majority of the panelists are quite impressive, I think the right people are not all present – at least not in this seminar.

A few candidates come to mind for future reference:

Amadou Hott runs Senegal’s newly established sovereign wealth fund and chairs the development of the country’s new airport.

Rolake Akinkugbe is Head of Energy, Oil and Gas Research at Ecobank.

Alexander Chikwanda serves as Zambia’s minister of finance. As Africa’s biggest producer of copper, the country has had to deal with global copper prices while driving inclusive growth at home.

Yaw Nyarko is Professor of Economics at New York University and is Director of the university’s Africa House and focuses his research on technology and economic development, and has done work on human capital.

Dambisa Moyo is CEO of the Mildstorm Group and has a global view on economics and development from an African perspective.

Rentia van Tonder is Head of Renewable Energy, Power and Infrastructure at Standard Bank.

Akinwumi Adesina is Nigeria’s Minister of Agriculture and has earned a lot of attention for his efforts to grow Nigeria’s agriculture sector. He could speak to inclusive growth and structural transformation and economic diversification.

Who are some people you think would make for good panelists?