WASHINGTON, April 11, 2014—A panel of business policy makers, entrepreneurs and bankers on Friday met during the World Bank-IMF Spring Meetings to discuss ways to boost the creation of large African businesses using homegrown investments.
Moderator of the panel, Hubert Danso, Chief Executive Officer and Vice Chairman of Africa Investor (Ai) Group, opened the discussion.
Based on their policies and their experiences managing private companies and lending organizations, Danso asked panelists to share their ideas for how best to successfully create large firms.
The panel, made up of policy facilitators and business growth and private sector practitioners, included Jean Philippe Prosper, IFC Vice President for Sub-Saharan Africa, Latin America and the Caribbean; Sidi Ould Tah, Minister of Economic Affairs and Development for Mauritania, Dorothé Cossi Sossa, Secrétaire Permanent de l'OHADA; Admassu Tadesse, President & CEO of PTA Bank; and Villa Kulild, Director General of Norad.
Jean Philippe Prosper got the ball rolling by citing the prevailing realities impacting Africa’s needs and the available opportunities to address them.
“There are currently few large African companies to increase employment opportunities and meet the continent’s huge demand for jobs, which is an overwhelming social challenge that seems to be the responsibility of everyone and anyone,” Prosper said.
“Reducing trade barriers and cutting trade costs in Africa is attracting investors to the region,” he added. “In the middle of these demands and opportunities, creating large firms in Africa is the way to go for the private sector in Africa.”
Sidi Ould Tah, Minister of Economic Affairs and Development for Mauritania, cited the enormous home-based skills that Mauritania has built over the years in managing railway transport, skills from which Africa can benefit.
“Railways are the cheapest and safest ways of transporting heavy cargo goods and large populations of traders and passengers across the continent,” he said. “Railways can contribute to Africa’s integration while accruing profits for investors and stimulating the marketing of agricultural and artisanal produce.”
According to Ould Tah, Mauritania has enormous skills in railway but its market of rail users is too small and not sufficient to optimize profit. “This is where transnational partnerships and investment on railways becomes important,” he said.
Admassu Tadesse, President and CEO of PTA Bank, alluded to the importance of the home-grown nature of African companies such as his company the Preferential Trade Area Bank, commonly known as PTA, a trade and development financial institution in Africa and the financial arm of COMESA, but open to non-COMESA States and other institutional shareholders.
Tadesse said his “company is currently a solution to addressing the market size challenge for the financial service sector”, a challenge which Mauritania is currently facing for the rail sector. He further noted that “when companies are home grown their decision turnaround time becomes very cost effective.”
Villa Kulild, Director General of the Norwegian Agency for Development Cooperation (Norad), stressed the importance of countries’ macroeconomic stability and the international competitiveness capacity of large African firms as two important requirements for profitability and sustainability.
Dorothé Cossi Sossa, Secrétaire Permanent de l'OHADA, stressed the importance of compliance and due diligence that private and public investors in Africa should implement in order to benefit from the services of OHADA. OHADA is a system of business laws and implementing institutions adopted by 17 West and Central African nations.
Overall, panelists agreed that the demand for jobs, growth and ending poverty in Africa are as great as the opportunities for addressing them through private investments that are large, profitable, responsible and can produce widespread benefits in terms of economies of scale for themselves and benefits of scale for their populations.