Can Rwanda deliver on its economic promises?

That's not yet clear. What is clear is that many commentators are enthusiastic about the country.

This New York Times article offers some potentially useful insights for companies and their investors.

As ever journalists can get excited about growth rates that out perform other markets, even from a low base.

The International Monetary Fund believes that economic growth in sub-Saharan Africa will average 6.1 percent this year. That's compared with 3.7 percent worldwide.

Rwanda's commodity exchange, with NASDAQ supplied terminals has held an initial six auctions over the past year. This is all part of an attempt by Rwanda to innovate given the country's lack of natural resources when compared with mineral rich neighbours.

Perhaps this is a blessing in disguise. In any case Rwanda wants to become a high tech trading and financial hub in central/East Africa.

So how are they doing? Pretty well, at least according to the NY times.

Paul Kukubo chief executive of the commodity East Africa Exchange hopes that his commodity exchange "...could serve the region and perhaps be a springboard for the rest of Africa”.

He's not alone in being enthusiastic about Rwanda. The NY times suggests that:

"Rwanda offers an alternative model, analysts say, a country where the economy has grown an average of nearly 8 percent over the last four years because of increased agricultural productivity, tourism and government spending on infrastructure and housing. Despite having a population of just around 12 million, the consulting firm A.T. Kearney last week named Rwanda the most attractive African market for retailers in its first ever African Retail Development Index."

The NY Times piece also notes that:

"So now, more than ever, Rwanda is on the hunt for investors rather than donors. Last April, it sold $400 million in bonds to investors from around the globe, part of a record year for African bonds that underscored how a continent once known for debt relief found a world eager to take a stake in it...

...Rwanda hopes to turn itself into an information-technology hub for the roughly 135 million people in the East African Community, a regional common market. The nation has wired itself with well over 1,000 miles of fiber optic cables, and last year the government signed a deal to build a 4G network that would cover 95 percent of the country...

...Meanwhile, nongovernmental organizations focused on development have praised the country’s economic reforms, with the World Bank giving it high marks for the ease of doing business here, ranking Rwanda 32 out of 189 worldwide. It also put Rwanda above the United States for the simplicity of starting a new business."

It apparently now only takes a day to set up the company, for less than $40, and officials even help via social media channels.

This all makes Rwanda look like an attractive place for the right kind of companies and investors. There are well documented concerns about the authoritarian nature of the Kagame Government, but given the chaos that often surrounds the country, this is unlikely to put companies off.

The key question is whether the current grow rate can be sustained, and whether the country can sustainably attract other big investors than currently. SMEs are all very well, and vitally important, but large companies help create much bigger supply chains and can help prevent future governments making catatrophically bad decisions, something no country seems immune from.

All in all, the picture for Rwanda seems fairly rosy. In the longer term, the constructive lessons can be learned for other African nations from Rwanda's progress will be vital. Will the country just be an island of excellence, or a catalyst for innovation? We'll find out. Kenya was Rwanda's largest investor in 2011 and companies such as Heineken have been working there for years.

For a more detailed analysis of some current trends, take a look here.

Latest agenda and speakers for the Ghana Investment Forum 2014

Here's the latest agenda and speakers for the June 19 conference in London about Ghana.

Contact Oliver.Bamford@innovation-forum.co.uk for more information.

What are the factors in play with regard to Ghana's 2013 20% drop in FDI?

Haruna Iddrisu: Minister of Trade & Industry: One of the speakers at the
Innovation Forum conference in London on June 19

There's lots in the lean markets news about Ghana's 20% FDI drop in 2013 versus 2015. 

According to GhanaWeb:

"Foreign Direct Investments (FDIs)...declined to $3.946 billion representing about (a) 19.5 percent drop from $4.904 billion recorded in 2012."

There appear to be quite a few factors in play here from what I read:

1) Commodity price fluctuations.

(Gold is down, whilst Palm Oil and Cocoa is now up again) 

2) Macroeconomic policy hangovers from the previous administration's time in power.

3) Global volatility generally in investment flows in 2013 (note how the Ukraine situation is pushing money around other unrelated markets very quickly, and may continue to do so if Russia becomes an international investment pariah)

4) The Ghana Government's budget account deficit. (The Financial Times reports that "the government ran a budget deficit of 10.2 per cent of GDP in 2013, and may miss its pledge to reduce this to 8.5 per cent this year"

This blog will be looking into the investment prognosis in Ghana for 2014 and beyond in further posts. We know some big foreign investors are keen that more focus is given to agriculture, and the value chain within it and how it can be developed. Aquaculture also seems to offer some interesting opportunities alongside tourism (the national football team's appearance at the World Cup later in the year may give tourism a boost) and real estate. Of course the recently introduced foreign exchange controls will be a key issue for many. It remains to be seen how that issue will play out over the rest of 2014.

We're bringing together some of the key players in the Ghana Government together with companies and investors on June 19 in London. Check out the event here and let us know if you'd like to come. 

Standard Chartered in Africa - new report shows economic impact and influence

Seeing companies producing socio-economic impact reports is not a new phenomena.

Quite a few companies now do this. From Heineken to Imperial Tobacco to Nestle, to SAB Miller to Standard Chartered, I believe these kinds of reports represent a growing trend.

Looking at the news on tax and disclosure over the last few days (here's a sample), companies are going to have to spend more time demonstrating where and how they add value given perceptions on how they extract value.

CSR reports have not delivered on that.

They represent a demonstration of useful management processes and overall performance (to a degree) but lack credibility for much else, as things stand.

So reports such as this new one from Standard Chartered represent, I believe, a significant future trend of reporting on country, region, or sector impacts.

There's also a more niche trend, beyond country or region, to look at areas such as m-health. I can see more and more of these coming out in the next few years too.

Methodologies, whilst differing, are evolving, and the WBCSD offers a guide.

Ethical Corporation also published a report looking at methodologies and strategy.

Here's a couple of the stats from the Standard Chartered report on what their report writers feel they the company has achieved for social/economic good:

• Supporting 1.9 million jobs in Sub-Saharan Africa through direct and indirect impact - that's around 0.6% of the region's total workforce
• Contributing 1.2% of the region's GDP - USD10.7 billion of value added to the economy
• Providing financing support to African trade, to help connect the region with world markets: in 2013 we supported trade worth USD7.2 billion

These reports represent a good start. They are an evolving combination of science and art, and we'll soon be seeing a lots more of them, particularly where emerging markets are concerned. 

If interested in emerging markets, one of my new ventures, Innovation Forum, may be worth taking a look at. We are hosting a Ghana investment and sustainability event on June 19 in London.

(some related blog posts are here)

Success in Africa - Five questions for Jonathan Berman

A must-read for anyone interested in Africa

Here below are a few questions and responses from Jonathan Berman, author of "Success in Africa".

It's an excellent read. Below gives you a few insights into what it covers. 

1) Is there a central argument or point to your book? If so, what is it?   

Africa is forging a growth economy that is both sustained and widespread. It’s doing so not so much because of natural resources, or aid, or the Chinese. (though these are all topics mentioned in the book) Rather it is doing so because of internal drivers like better education, communication and governance. Africa is succeeding because Africans, and especially the African companies, are making it succeed.

2) Why is Africa so misunderstood as an investment opportunity and what can African countries do to correct this?  

As we come into 2014, there are probably as many people over-estimating the opportunity as under-estimating it. For about a decade, great businesses in Africa fought an uphill battle to get global corporations and investors to see the emerging growth story. In some corners, and especially in the US, that’s still the case. In other areas of the world, like China and the UK, many are aware of Africa’s rapid growth. Here, the real risk is that companies and investors will anticipate that returns will come quickly or without a substantial alteration of their business model. Both views are misguided.

The fix to both misperceptions is the same. If you want to know what succeeds in Africa, talk to people succeeding there. 

I find it remarkable how few successful African CEOs are on the global business stage. These are daring, capable business leaders pursuing opportunities on a scale unseen since the likes of Rockefeller and Carnegie. Speaking with them (or reading their views in Success in Africa and elsewhere), you can learn a lot about what it takes to win in Africa, and around the world.

3) In researching the book, which companies and CEOs impressed you the most, and why?  

In the book as in my work, I sought out business leaders who were running productive, innovative enterprises capable of competing on a global scale (even if some are start-ups today). I avoided rent-seekers or companies that grow solely by virtue of ties to government. 

I was also drawn to companies that are delivering social wealth in one form or another – not because they are a charity, but because that is the path to commercial success in Africa over the long term.

4) If we asked you to pick three countries in Africa where you thought there were significant business opportunities for investors, which would you pick, and why?   

The specific countries today will be different than tomorrow, but the fundamentals will be the same.   Sound macoeconomic policy of course, but beyond that countries that are pursuing a sound education policy and supporting those minds with strong infrastructure planning. 

Finally, size matters. There are a lot of small countries getting their internal policies right, but if regional integration is not achieved, most corporations and investors will bypass them.  

5) You met and interviewed dozens of CEOs of African companies. Were there any particular characteristics of good CEOs in Africa, any trends that stood out? 

Success in Africa describes five traits common among the business leaders succeeding in frontier markets around the world, including Africa. I’ll focus on just the first of there, an appetite for uncertainty. 

Most business leaders can manage risk, because it has known probabilities. It’s an actuarial calculation. Uncertainty is different, in that you cannot foresee the conditions in which you’ll be operating.  

That takes a special kind of business leader, usually an entrepreneur or a someone who has an entrepreneur’s spirit, even if she is leading a company centuries old. Neville Isdell at Coke and Jeff Immelt at GE both have that spirit (and both cut their teeth in frontier markets before becoming CEO). 

James Mwangi at Kenya’s Equity Bank and Funke Opeke at Nigeria’s MainOne do as well. All these men and women have more than a tolerance for uncertainty; they have an appetite for it. That’s one of the traits that marks winners across Africa.


Jonathan Berman is a senior fellow at Columbia University’s Vale Center and senior advisor to Dalberg, a strategic advisory firm focused on frontier markets with ten offices worldwide.  He previously served as partner and director of Dalberg’s corporate practice. Follow him at: @jonathan_berman or take a look here.

CSR in Africa: How moving beyond window dressing is now strategic

John Dramani Mahama: Fewer CSR stunts please

Guest post by Wayne Dunn

Ghana’s President John Dramani Mahama recently told mining companies operating in Ghana not to use corporate social responsibility (CSR) as a populist stunt just to gain public applause. (see article here)

Companies and industry will be thinking ‘but we are spending tens of millions of dollars on CSR’.  

Many NGOs will be thinking ‘it’s about time the Government called them out’.  

Others will be thinking ‘the companies we are working with are doing well’. 

Communities will be thinking ‘yes, companies need to take care of all these things for us’.

They are all right. And they are all wrong. CSR is a new phrase with many different faces and too often little common understanding. 

And the tendency is often to put all of the responsibility on industry to make it work. 

(My keynote to the U.N. Global Compact Awards Night in Ghana in Sept 2013 spoke to the need for business, community, government and NGOs to share responsibility for the success of CSR – you can see it on Slideshare here)

Businesses in Ghana and globally are generally getting better at being good corporate citizens, trying to work more collaboratively with communities and support meaningful local development (of course, there are always some that are not doing good and this reflects poorly on the rest).  

But, while they are getting better, many industries, including mining in Ghana, do not have a good long-term history of CSR.  And communities where the industry has been active for decades are still impoverished and living with poorly functioning infrastructure. (there is an important discussion around where industry’s responsibility ends and government’s begins but that is for another post)

Images and memories of years/decades of little or no social investment by industry stick around and influence thinking, even when industry starts to be much more responsive. 

The mistakes of the past can undermine the good works of the present.

Sometimes governments pull back services and budget in areas where industry is active, leaving a vacuum in the provision of public services and infrastructure.  Often industry is blamed if the vacuum isn’t filled.

Often government and industry are both spending on public goods like health care, education, roads, etc. but are not working together and are ending up with very sub-optimal impact.

Sometimes advocacy organizations, industry, governments and communities end up in positional stances and can’t break through to reach common ground or find ways to collaborate and maximize social and community value.

But, increasingly there are good examples (and yes, there are still bad examples too)

Golden Star Resources, who operate two gold mines in Ghana, recognized that facilitating non-mining related livelihoods was important for long-term community development. It set up an Oil Palm business development venture, provided several millions in start-up funding ($1.8 million by 2009), committed to ongoing funding of $1.00 for every ounce of gold produced.  

The venture works with the community to support and develop local palm oil producers, by providing capital, infrastructure, training and support. The end result is many families have a sustainable livelihood and the ongoing investment commitment by Golden Star means that it can keep expanding and supporting more producers and families.  

In this and in various community health care programs they are working with the German development organization GIZ, which has a clear and responsive process for partnering with the private sector to optimize development impacts from private sector investment and operations.

Responsible mining is becoming more mainstream

Newmont Ghana recognized the importance of expanding the skills of its employees and engaged an international training firm (SIAST) to train local workers to an international standard, and to provide the workers with an internationally recognized welding certificate.  

While less progressive firms may have seen this as risky (would the internationally certified workers leave to work elsewhere) Newmont recognized that the overall value created by this project was good for Newmont, good for the workers and their families and good for Ghana.  

Twenty-three local employees at the Ahafo Project graduated with an internationally recognized certificate and an improved ability to contribute to Ghana’s growth and development. Here's the Ghana Web Write-up on it.

There are other examples of successes, and, of course, many examples that didn’t work as well.

Even when businesses have been spending increasing funds on CSR it has often not spent it with an eye to creating community and shareholder value.  

Too often it is simply throwing money at social and community issues without strategy, collaboration with governments or effective management and monitoring of results and impacts.  

I am often amazed that the same businesses, the same people that are diligent and focused in managing ‘normal’ business investments and operations; setting up reporting and management systems, tracking progress, improving efficiency, etc. can forget all of this when it comes to their CSR investments.  

Thus, CSR spending can often be very inefficient in terms of producing results, for companies or for communities.  Lack of strategic collaboration with other stakeholders compounds this inefficiency.

Creating value from CSR, value for communities, value for shareholders and value for governments doesn’t just happen. It takes effort and commitment from all stakeholders.  

Responsibility does not lie solely with business but with all stakeholders.  

You can’t tax CSR into creating value. It takes a strategic and systematic approach that facilitates collaboration and optimizes value for all stakeholders.

Wayne Dunn is a Professor of Practice in CSR at McGill University in Canada. He is currently the Executive Director of the CSR Training Institute and is developing and delivering Executive Programs around the world.  He is running an Executive Program in CSR Strategy and Management in Ghana in April (more here). He can be reached at wayne@csrtraininginstitute.com

Wayne is also a senior associate and advisory board member at Innovation Forum, the emerging markets publisher and events business founded by Tobias Webb in 2014. The first Innovation Forum event, focusing on Ghana and sustainable investment opportunities, takes place on June 19 in London.

Click here for the event website and here for the high level speaker list.