09 Dec 2019 / Interview

Capitalism for the many: why we think this theme is essential

For its eighth edition, the largest annual gathering of the African private sector has chosen as its central theme: “Capitalism for the many: a new horizon for the African private sector” It is a way of examining the role of large African companies in a continent where the wealth gap is often still widening, inequality is widespread and environmental risks are increasing. Frédéric Maury, Editorial Director of the AFRICA CEO FORUM, explains the reasons for this choice.

 

The AFRICA CEO FORUM is the meeting place for the African private sector. Why did you choose a theme that at first glance seems societal?

Frédéric Maury: The AFRICA CEO FORUM was created seven years ago and has evolved significantly since its launch at the end of 2012. In structuring itself, it has also set itself missions: to be a business accelerator for the private sector in Africa, to foster public-private dialogue, and to promote the civic and societal role of African companies. Having already concentrated on public-private dialogue, particularly during our last edition, which focused on the Continental Free Trade Area, the theme chosen for the 2020 edition of the Forum is in line with our mission to accelerate business and promote the role of societal role of African large companies.

 

Do you think it is possible to “do business” and “do good” at the same time?

This is the point on which Africa’s voice must bring something different to the major global debates. Because, yes, on the continent it is possible to “do business” and “do good” at the same time. There are more and more examples: what did Safaricom do when it created M-Pesa if not launch a new business and boost the financial inclusion of fragile communities at the same time? What are BBoxx and other solar start-ups doing in Africa if not developing an innovative business model while bringing light to areas that lacked it? Even traditional sectors are now thinking about how to boost their impact while increasing their bottom line. This is the case for agroindustry firms, for example, which, after years of importing the resources they needed on a massive scale, are beginning to invest in upstream agriculture alongside farmers. There are many investment opportunities in Africa in high-impact sectors. Dalberg, a strategy consulting firm, has estimated that investments that meet sustainable development objectives in Africa could unlock business opportunities of $2trn per year.

What we need to discuss is changing the model: should the private sector, or should it not, place this societal responsibility at the heart of its strategy?

Will the AFRICA CEO FORUM 2020 be talking about CSR?

No… at least not as we traditionally understand the term. For a long time CSR has been a way for large businesses to relieve their consciences. What we need to discuss is changing the model: should the private sector, or should it not, place this societal responsibility at the heart of its strategy, on the same level as growth and profits? And if so, is it possible, and how can it be done? Large African businesses like Mauritius Commercial Bank have placed these aims at the core of their model with strategies like Success Beyond Numbers, which highlights the business’s responsibility in key fields such as local impact, manufacturing on-site, etc.

Across the world, the influence of governments has considerably lessened with globalization.

Should businesses be a substitute for governments?

Clearly not. But the reality is there: across the world, the influence of governments has considerably lessened with globalization. Which is the most influential between Amazon, Google and the United States? When you think about it the answer is not so clear. In Africa, the situation is a little different: a large number of African states have failed up to now in their social and environmental mandates. The private sector can help them to achieve certain objectives, because in Africa it is often more effective than administrations. In any case, the aim is not to substitute but to create partnerships and incite the private sector to play a role in the inclusion of young people or women, in the creation of stable jobs, in the conversion to renewable energy or the fight against environmental destruction.

 

Could you give us more on the precise subjects that will be discussed?

I will give you a few examples. The first is obvious: how to integrate these new dimensions into the economic model of large companies, with a commitment at the highest level and not at the level of a CSR department that is often linked to public relations… Next, in the mining field, we will tackle what Ernst & Young calls the foremost danger for players in the sector today: the risks that weigh on their right to operate, whether these are of a social or environmental nature. One of the Forum debates will also be on the end of natural fossil fuel resources and the way in which Africa can adapt. And we know that this subject is contentious, as shown by the recent statements of twenty or so African ministers reaffirming that they do not want to give up their hydrocarbons as a spur to their economic development and to fulfil their energy needs. We will also have a session on local sourcing, which is a currently a hot topic for agroindustry companies working in Africa. Here again, it will ultimately be a matter of “doing good” for these players, by contributing to the essential modernization of agriculture upstream, and “doing business” because producing locally means limiting dependence on foreign exchange and also increasing their influence. As a last example, the partnership between big businesses and start-ups, which is sometimes called “corporate venturing”. This phenomenon is exploding in Africa because the benefits are mutual: start-ups find financing, which is scarce on the continent, and big companies see start-ups as a way to accelerate innovation and thus increase their impact in many areas.

 

Talking about the social responsibility of the African private sector may seem out of step when we know that this same private sector is one of the least developed in the world….

That’s for sure, and it’s what some of the CEOs we talk to on a regular basis have told us. The African private sector is developing quickly, but it’s true that it is still fragile and it faces a series of challenges that are frequently referred to in the major annual survey we conduct, the AFRICA CEOs SURVEY. The first of these challenges is the business climate. But Africa does not exist in isolation. Global capitalism has suffered its own shock waves: the growth of inequality, the emergence of climate risk, technological revolutions and the resurgence of protectionism. It is in the process of changing, as the successful writings of Thomas Piketty or the analysis of Joseph Stiglitz show. Africa must seize on this debate, reflect on its role and face reality by asking itself certain questions: should it place the fight against the growth of inequality, environmental struggles, job creation, the integration of younger generations among its strategic priorities? How can it reconcile these objectives with the challenges of competitiveness? How can it turn the digital wave into an impact accelerator?

 

In 2019 in Kigali, the CFTA was at the heart of the AFRICA CEO FORUM debates, and especially the role of the private sector in accelerating economic integration in general and the creation of this common market in particular. Will the subject be on the agenda again?

Of course. Economic integration, the creation of new African champions like Ethiopian Airlines or Ecobank, is a necessity for strengthening the African private sector. The AFRICA CEO FORUM is the only platform today that has enough legitimacy to bring the voice of the private sector to the debates around the CFTA. We will continue to work on this, in particular through a session devoted to trade finance, which is shrinking in Africa, whereas it is an essential element for accelerating intra-African trade.

 

Will there be any other new features in the program?

Firstly, there will be many other topics covered, addressing the major issues of the different sectors, and we will also continue to organize working round tables with private-sector CEOs, ministers and financiers on major public-private subjects. We will also highlight more clearly the transactions that are made through the forum: with more than 1000 CEOs of major African companies, and most of the heads of major African and international financial institutions, the AFRICA CEO FORUM is a place where deals that advance African economies are born or finalized. And there will indeed be some new features. I would like to mention the continuation of our work on African Family Businesses, which began in Kigali this year and has met with great success. The growth and modernization of family businesses on the continent is essential for accelerating private-sector-led growth. For the first time, we will bring together the African public enterprise community for a dedicated session. They have an essential weight in Africa and are often in the process of transformation. It is quite possible to have more African state champions such as Ethiopian Airlines or OCP. We will also have a session on African megacities, which are a major challenge because they concentrate most of Africa’s wealth. I will leave it there for now. The program will be announced in detail in the coming weeks.

 

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