tapping africa’s potential

As promised here’s a brief note on the conference on Africa at Stanford.

Most of the speakers (esp. Fred Lwaniker of the Africa Leadership Academy and former HP CEO Carly Fiorina) reiterated Achebe’s take that the trouble with Africa is simply and squarely a problem of leadership. There is hope though. People like Lamido Sanusi, Nigeria’s central bank governor and the current central banker of the year. Mr. Sanusi has played a major role in cleaning up the Nigerian banking sector in the aftermath of the financial crisis.

Chris Udry of Yale talked about the all important agricultural sector in Africa. Over 60% of Africans depend on agriculture for their livelihood. The sector has however been largely ignored on the Continent over the last three decades. In personal conversations with Chris he pointed out that this is illustrated by the number of Agricultural Economics PhDs graduating these days. His takeaway point was that African agriculture can be strengthened by having strong land tenure systems, adoption of fertilizer and other farm implements and by availing finance to farmers. All these efforts will, however, require consolidation of farming. Mechanization on a small scale is expensive. Plus no bank will finance a farmer with one acre and two cows.

The third and last broad theme of the conference addressed the investment opportunities in Africa. Business leaders from fields as diverse as ICT, consulting, finance and social entrepreneurship talked about the high margins and potential for return on investment. Most importantly, these business leaders noted that the challenges to investment and growth in the region can be overcome. MTN is operating a successful mobile operation in Nigeria despite the country’s power woes. Finance is thriving in Kenya despite high levels of corruption. For the most part the high margins more than make up for these high operating costs.

africa is open for business

There has been a lot of positive talk about business in Africa lately.

Mckinsey came out with its big report in June 2010. That was followed by the release of Steve Radelet’s Emerging Africa, a story of the 17 African countries that have the political and economic fundamentals right. Most recently the Economist has highlighted the fact that among the top ten fastest growing economies in the world over the next decade, seven will be African.

Keeping in the same vein the innovative African Leadership Academy has organized a conference at the Stanford Institute for Economic Policy Research (SIEPR).

The keynote address this morning was by Jeff Sachs via skype. Sachs noted that microfinance was oversold to the global south and that the current backlash is sort of warranted, but that it is overblown.

He also pointed out, rightfully, that pro-poor growth as currently understood “cannot refashion the economy.”

I oftentimes disagree with Sachs’ proposals for ending poverty, but on this point (and as I have written before) he is right. The eradication of poverty in Africa is contingent on sustainable job creation by SMEs and big business.

Other big names at the conference include the Bank’s Devarajan, Mckinsey’s Leke, Africa.com’s Clarke, Chris Udry of Yale, Paul Romer of Stanford, among others.

The conference website is here.

More on this later tonight (west coast time).