Q&A: What is the greatest challenge facing Africa?

By focusing on job creation and sustainability we can create African economies and cities capable of competing in the global marketplace, says Frannie Léautier, Chief Executive of Mboka Private Equity Fund, Tanzania. She talked to us as part of an interview series for the Summit on the Global Agenda.

Is the Africa Rising narrative still valid?

Africa has seen a number of challenges in the past year including the collapse of commodity prices, hardening external conditions in finance, and the Ebola outbreak. But I believe that Africa Rising still holds true.

The region is home to seven of the 10 fastest growing economies in the world and has a number of strong fundamentals in its favour; sustained macroeconomic policies which favour growth; greater economic diversification; a huge wealth of human capital; and increasing political stability. This last point holds true both domestically – recent events in Burkina Faso and Nigeria have highlighted that people are no longer satisfied with poor governance – and internationally, with Africa increasingly being able to adopt a common position in critical areas such as the recently adopted Sustainable Development Goals. This maturity has helped to ensure an African voice at the table in key international decision-making.

What is the greatest challenge facing Africa in 2015?

I think there are two. The first is maintaining stability. Improvements in governance bring new pressures of their own, around elections for example, while there remain fragile states in Africa where institutions still badly need to be strengthened.

The other is migration. Most of this is happening peacefully; more Burundians have settled peacefully in Tanzania than Africans have left these shores for Europe, for example. Nevertheless, it’s important that destination countries for migration of refugees are supported and that economic migration is allowed to continue to support growth without becoming so excessive so as to damage social stability.

What one event over the past 12 months has had the most reaffirmed your belief in Africa’s potential?

The creation of a trade corridor from Cairo to Cape Town this year has been a real turning point in demonstrating a new-found political willingness for further integration. Africa has seen a 60% increase in intra-regional trade between 2010 and 2015, but there are still many bottlenecks preventing the creation of regional supply chains. One of these is visas: liberalizing visa regimes has enabled countries in ECOWAS [Economic Community of West African States] to keep growing even through the Ebola crisis and other sub-regions need to build similar resilience.

What is the most exciting innovation you have seen come out of Africa in the past 12 months?

Two areas that are key to Africa’s growth are agriculture and mobile communications, so my choice is going to be a business that combines both. Farm Capital Africa is a Kenya-based enterprise that provides essential financing to smallholder farmers, helping agro-businesses grow and providing opportunities for foreign and domestic investors to share the risk and benefit from the upside of agricultural activity.

Foreign direct investment to Africa has declined slightly, but private equity is booming, with $4 billion raised in 2014 matched by a further $2 billion in January 2015 alone. The combination of 600 million hectares of farmable land in Africa powered by mobile money is an extremely exciting prospect.  Innovations that leverage these advantages have potential to scale.

If you could make one thing happen in the next 12 months, what would it be?

I want to see a carbon-neutral industrialization strategy for the region. Africa’s cities are the only ones in the world that have grown without industrialization. Investment is badly needed to drive growth and create jobs for our young population but this cannot come at the expense of the environment. Rather, by focusing on job creation and sustainability we can create modern economies and cities capable of competing in the global marketplace of the 21st century.

Author: Frannie Léautier, Chief Executive of Mboka Private Equity Fund, Tanzania. Member of the World Economic Forum Global Agenda Council on Africa. She is participating at the Summit on the Global Agenda 2015, which takes place in Abu Dhabi from 25-27 October.

Image: People wait for their turn to vote in the presidential election at a polling station as voting equipment arrives in Gagnoa, in western Ivory Coast, October 25, 2015. REUTERS/Thierry Gouegnon