Date: 2009-10-07
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Washington — Africa is changing faster than many realize, and there is definite momentum for economic reform and development in several African countries, says longtime investment banker Thomas Gibian.
(Media-Newswire.com) - Washington — Africa is changing faster than many realize, and there is definite momentum for economic reform and development in several African countries, says longtime investment banker Thomas Gibian.
Speaking to the Seventh Biennial U.S.-Africa Business Summit in Washington on September 30, Gibian said it is more important to look forward and anticipate opportunities than to look backward in this fast-changing environment. “I think the challenge for those of us who work in Africa, and certainly for those of us who pay any attention to Africa, is that Africa is simply changing faster than our perception,” he said.
Participating in a discussion on “Africa Beyond the Global Financial Crisis,” Gibian was joined by Russell Loubser, CEO of the Johannesburg Stock Exchange; Robert Hormats, U.S. under secretary of state for economic, energy and agricultural affairs; and Saki Macozoma, chairman of Stanlib, a major investment company with a focus on Africa.
Gibian, the CEO and managing director of Emerging Capital Partners, who has extensive experience in Asia and Africa, reminded his audience that emerging markets change very quickly. The challenge for both international and local investors, he said, is to anticipate where and when changes will take place so they can position themselves accordingly.
In the early 1990s, Gibian said, China had no private property. “There was no incoming investment; there was no title to anything; there were no legal firms to offer [legal] opinions; there were no courthouses to file legal papers in.”
But beginning in the early 1990s, he said, everything required to support the private sector as an engine of growth was put into place. Those same trends, he added, were allowed to take place in India around 1999–2000, and ended an era of socialism, allowing the private sector to become the country’s engine of growth.
“Now we see … how important … the private sector is to the success of not just economies but to the whole civil society in emerging markets,” Gibian said. Reforms in banking, insurance, and pension and capital markets point to important momentum in Africa, in enough places to make a difference.
The best example of that momentum in Africa, he said, is telecommunications. “Now you see … before the plane lands [in many African countries], half the people on the airplane have both of their telephones on and are downloading messages before you even hit the gate.”
Gibian said two key platforms, in particular, will supercharge economic growth across Africa: telecommunications, whose development is already well under way across the continent, and financial services and banking reforms.
Gibian predicted that the next “game-changer” for Africa will be affordable high-speed Internet coming around both coasts, a change that is also already under way. SEACOM has recently begun operating a submarine fiber-optic cable off the east and southern coast of Africa connecting southern and eastern Africa with Europe and India.
“Liquidity is the oxygen that economies require,” Gibian said, and good governance is a prerequisite for such liquidity. The goal for reforming African governments, he said, should not be perfect governance but the perception of sustained improvement in governance. “That will drive incoming investment and provide the oxygen that is required.”
“We are at that cusp in Africa where I think it has a bright future,” Gibian said, but transparency is vitally important. “Observing and getting ahead of the patterns of what happens in emerging markets as they reform and [allow businesses to develop] drives transparency,” Gibian said, and transparency in business eventually finds its way into the political arena as well, he added.
Russell Loubser, of the Johannesburg Stock Exchange, told the summit that financial markets and stock markets must be able to operate efficiently under all conditions, even adverse conditions. And he said investors need to know that wherever they are in the world, even in Africa, efficient financial markets are functioning there and can maintain their investments and liquidity.
Under Secretary Robert Hormats said investors are looking for transparency and predictability, and expecting that “when you make ... profits you can take them out and that the rules do not change arbitrarily — that governments don’t intervene on a constant basis and in an arbitrary way,” and that the markets are transparent so that everyone knows what is going on and is operating on a level playing field.
Economic governance and regulatory rulemaking are very important to foreign investors, Hormats said. He praised South Africa and other markets for making progress in these areas. And he said agricultural reforms and access to credit also play a critical role in economic development.
South African Macozoma, of Stanlib, highlighted the importance of education and an educated work force.
The three-day summit — organized by the Corporate Council on Africa (CCA) — attracted at least four African heads of state and approximately 1,500 investors and businesspeople, who attended more than 50 specialized sessions focusing on U.S.-Africa business relations. The previous summit was held in 2007 in Cape Town, South Africa.