Building sustainable prosperity in a world of continuous disruptions
Thought leaders from the Shared Value community came together at the 2021 Africa Shared Value Leadership Summit to deliberate current economic challenges and risks, lessons learnt during the COVID-19 pandemic and opportunities for building back better
Africa’s future, as envisaged by United Nations 2030 Agenda for Sustainable Development, is one that is economically sustainable, socially inclusive and environmentally resilient. However, in order to survive and prosper in a world of continuous disruptions, as well as exploit the many opportunities offered by the current economic crisis, Africa needs a comprehensive package for creating sustainable prosperity.
Key elements of this recovery compendium was explored during the 2021 Africa Shared Value Leadership Summit under the theme One Africa One Voice. Topics for discussion included business unity and collaboration, the African Continental Free Trade Area (AfCFTA), entrepreneurs as the engine of growth, gender equality and inclusion, and pursuit of the Sustainable Development Goals.
During a leadership roundtable on accelerating economic growth, moderated by economist Ayabonga Cawe, CEOs reflected on how they themselves grappled with unprecedented changes induced by COVID-19 and offered insights into lessons learnt that, in turn, could inform the pursuit of an economic growth path that is more inclusive.
In the final instance, it is about doing more than simply getting economies and livelihoods quickly back on their feet. It is about behavioural changes that will reduce the likelihood of future shocks and increase society’s resilience to them when they do occur. Central to this will be collaboration, a renewed push for financial inclusion and a dramatic shift towards accessibility-based mobility solutions.
According to Peter Ndegwa, CEO of Safaricom, the COVID-19 crisis underscored the importance of connectivity and using digital financial services to improve people’s everyday lifestyle in a way that works in a remote environment. “During COVID connectivity, access to the internet and financial inclusion became central to how the country coped with the crisis. Collaboration and partnerships played an important role in ensuring that Safaricom was able to support both society and government in reducing the impact of the crisis.”
Insurance, according to Old Mutual Limited CEO Iain Williamson, has an equally fundamental role to play in the economic growth of nations and of society. Firstly, there is the basic need to help companies, families and individuals recover financially from unanticipated events. Secondly, as custodians of significant pools of capital on behalf of its clients, diversified financial services firms like Old Mutual are able to invest that capital with a long term horizon. “We are uniquely positioned to invest in, for example, infrastructure, whether that is solar or wind energy or road construction and, from a climate change perspective, we have a key role to play as a responsible steward of that money.”
With COVID-19 also came the opportunity to do business differently. Said Adeolu Adewumi-Zer, Managing Director/ CEO of Allianz Nigeria Insurance: “The pandemic helped us to refocus and pivot. We relooked our purpose, our vision, and the culture that we’re building within Allianz in Nigeria. It helped us identify what we need to change in a post-COVID world and how we can use digital tools to help employees remain safe, now and in the long term.”
The economic crisis has also shown that prioritising short-term economic growth and efficiency over long-term resilience can have huge societal costs. In fact, according to William Dachs, CEO of the Gautrain Management Agency, the urgency to return to long-term, economic thinking should not be underestimated, especially when dealing with climate change and the economic impact of good, well-planned infrastructure and how to get that going.
On the subject of COVID-induced risks to Africa’s economic recovery, panelists noted the direct impact of the pandemic on illness, health and life insurance, and the associated management of future climate and pandemic risk as the obvious ones. Other risks included business interruption risk, complications relating to the transport of goods and services, and the sourcing raw materials.
Iain Williamson also identified supply chain disruptions, notably in the hospitality and property sectors, which resulted in many small businesses experiencing significant cash flow crunches that severely impacted their ability to timelessly service supplier invoices.
A much less obvious threat, which accompanied the change to hybrid working environments, has been a corresponding increase in cyber risk.
Adeolu Adewumi-Zer explained: “Many of our employees are working in locations where, despite all the tools and firewalls we put in place, they might work outside of that. This then opens us and many other companies to a far greater cyber risk and we have seen the impact of this globally. Cyber used to be a very manageable risk but it has almost become an epidemic of its own.” She added that Allianz and Allianz Nigeria have mitigated this risk, by updating key products and solutions to cover the impacts of COVID and other pandemics that weren’t considered when these products were put together.
Interestingly, for an organisation like Safaricom it is no longer just about risk management, noted Peter Ndegwa. “Our ability to provide stable and secure connectivity, backed by user friendly and accessible services has become an essential service and the economic backbone of the country.”
Conversely, there have also been many opportunities fueled by the pandemic and by far the most significant growth has been in the demand for access to the internet and mobile connectivity, with a corresponding surge in e-commerce transactions. There has also been the unexpected, rapid development and reliance on digital ecosystems, for example, in the case of education and delivering remote healthcare.
As for critical actions, at a national level, that could catalyze decades of sustained growth, Iain Williamson identified demography and in-market development as real drivers in the short to medium term. He also noted that cross-continental trade development may help to amplify some of that impact, by improving the mobility of goods and services across borders to different markets.
Along the same continental lines, Peter Ndegwa pin-pointed cross-border policy or regulatory frameworks, with regulators working together rather than being in-country focused, as an important step to be taken. He also emphasised the need for collaboration and partnerships across industries and beyond borders.
Adeolu Adewumi-Zer underscored the importance of capability development, not just for employees, but also in the wider social context, as key to Africa’s future success.
On the subject of collaboration, William Dachs enthused that partnerships between private and public sector organisations (PPPs) have the potential to become significant drivers of sustained economic growth, but only if they are founded on the principles of profit with purpose – profit that’s invested in communities and socioeconomic development. For its part, of course, government needs to up its governance game.
Opportunities aside, all panelists agreed that the immediate socioeconomic challenges remain front of mind, notably logistics and the high degree of difficulty associated with moving physical goods across the African continent, compounded by cross-country border issues, lack of road infrastructure and transport issues. Others include the development of a mutually acceptable common currency and realising policy certainty across the regions, in order for businesses to confidently take long-term investment decisions without having to put enormous risk premiums on their capital.
In the final instance, it was noted that economic recovery efforts across Africa should include a cocktail of strategies, ranging from capacity building to improved access to finance, to rebuild MSMEs and make them more sustainable and resilient. As highlighted by Peter Ndegwa, the ability to support SMMEs and address their requirements for access to credit and access to markets will be a fundamental driver of sustainable growth, with digital ecosystems playing a vital role.
Interestingly, women and youths form a significant percentage of operators of small businesses in Africa. By implication then, the strategic involvement of women and youth in the development process will not only close the yawning gender gaps, but will also go a long way towards reducing inequalities across the continent.