Africa in the New Millennium: Invest in the Future - Presentation Roundup

"These are momentous and unsettled times for Africa," noted Maurice Tempelsman, a financier with extensive experience on the continent, during his opening address at the Africa Business Conference. "In the past, the focus of a conference would not have been on business or on the continent's promise."

Tempelsman's involvement with Africa includes his role as chairman of the Corporate Council on Africa. He is also senior partner in Leon Tempelsman & Son, a company active in mining, investments and business development, and chairman of the board for the diamond house Lazare Kaplan International, Inc. He was appointed by President Clinton as a director of the Southern Africa Enterprise Development Fund, and is chairman of the Harvard AIDS Institute's International Advisory Council.

In his remarks at HBS, Tempelsman focused on the effects and responsibilities of globalization and on the tragedy of AIDS. "AIDS is not just a health issue, not just a humanitarian challenge," he said. "It is an economic threat to the entire continent."

"But the worst is not inevitable if we act," he asserted. "We must make moral and financial investments in Africa's future."

Africa does not reward investors with illusions, he told the audience. But for business people with "initiative, creativity and toughness in surmounting obstacles," he said, there are fewer better proving grounds than Africa.

"For over 50 years Africa has been a part of my life and my business," he said in conclusion. "This relationship has seen travails, but it has never been a source of regret. I have seen the depth of Africa's spirit and the dignity of its people. It is my hope that I will yet see its promise."

The Specter of AIDS Frames Debate on Health Care

If Africans sit and wait for Western pharmaceutical companies to rescue them from the AIDS crisis, noted panelist Rahel Adamu of the Africa-America Institute, "we're dead."

Adamu, speaking at the Health Care forum of the Africa Business Conference, described a study she conducted in her native Ethiopia. It concludes that educating children aged 5 to 14 about preventing AIDS offers the best "window of hope" for stemming the spread of the disease.

Discussion about the devastating effects of AIDS in Africa dominated the Health Care forum. The panel was moderated by an HBS student, Dr. Abdu Mukhtar (MBA '01), a specialist in the disease. One panelist, Dr. Richard Cash, a public health physician and a fellow of the Harvard Institute for International Development, noted that African children still die from diseases like malaria, diarrhea and measles, all treatable by generic drugs that are nevertheless in short supply. The treatment of AIDS is far more complicated. "The idea that you will get drugs to treat AIDS just isn't going to happen," Cash stated.

Fola Elebute (HBS MBA '99), of the health-maintenance organization Hygeia Nigeria Limited, described business methods her company is applying to try to make health care more available and affordable. Hygeia looks at economies of scale, Elebute explained, and tries to link networks of doctors, paramedics and pharmaceutical companies.

"We're trying to create an industry in which investment can be channeled," she said, adding, "I don't know anyone in Africa who can afford the latest technology." Still, she suggested, there might be ways to close the gap between what companies want and what people can afford to pay.

It would be a mistake to view AIDS as a tiny sector divorced from Africa's other issues, said Adamu. "The bottom line comes down to our economic situation," she said. "You can't convince someone who can't eat today to protect themselves from a virus that could kill them six years from now."

Creating networks in Africa both for work and for building trust should be the mandate of non-governmental organizations (NGOs), according to panelists who spoke on the role of NGOs at the Africa Business Conference.

The American strategy for activities abroad has been to slot people and projects into U.S.-designed development programs, complained panelist Michaela Walsh, founding president of Women's World Banking, an agency that provides microcredit and business development services to low-income women entrepreneurs around the world. "One of the issues to recognize is that small businesses are the basic tenet of most economies of the world," she said. "We need to get rid of the arrogance that big is better."

NGOs should pay more attention to the contributions of the local population, added Abby Maxman, a deputy regional director for CARE. "Look at what everyone's bringing to the table," said Maxman. The NGO should support the processes that are needed, she said, and create an environment for access to information, be it about AIDS or anything else. "There are complementing roles that everyone can play," she said.

Many members of the audience questioned the basic direction of NGO activities in Africa. One observed that most NGOs work in capital cities, while 95 percent of any problem, she said, is found in the rural areas. Another said that more money should be spent on information and education, and that NGOs need to be more aware of each other and coordinate their activities better so as to eliminate overlap.

Walsh agreed that supportive networks are more important even than projects. "Somewhere we have to shift that mentality away from the notion that there are experts out there who will tell us better," she noted.

The prospects for economic development are "generally favorable" in certain African countries, according to economist Lisa Cook, who spoke at the Africa Business Conference.

Cook, deputy director for Africa Research at Harvard's Center for International Development, presented highlights from a forthcoming publication, the Africa Competitiveness Report 2000, to the HBS audience at the conference. The report will be officially unveiled at the Southern Africa Economic Summit this June in Durban, South Africa, and will be available through Oxford University Press.

Among the report's findings: Countries such as Botswana, Mauritius, Nigeria and the Seychelles have improved in a number of areas. Tunisia, Namibia and Botswana emerged as "least corrupt." Public sector contracts are considered more open to foreigners, "but not open enough," said Cook.

Cook, who worked on the project, said the report provides the only systematic benchmarking for Africa. Produced as one of a series of joint projects from the World Economic Forum, the Africa survey evaluated results from 1800 firms in a total of 29 countries. It assessed individual countries based on a number of indicators, such as openness, infrastructure, finance, effectiveness of legal system, and other factors.

Its data will likely be utilized as was the previous Africa Competitiveness Report, issued in 1998. The 1998 report influenced finance ministers, policy-making boards of corporations, investment promotion agencies, and academics seeking information on factors affecting competition and growth in Africa, said Cook.

The 2000 report details that the major concerns of the firms surveyed were HIV/AIDS infection of the labor force, as well as foreign direct investment, political instability, tax incentives, reliability of government policies and ability to repatriate profits.

Cook also noted that the new report reflects discussions at the annual meeting of the World Economic Forum in Davos, Switzerland, such as development of the Internet. "The promise for e-commerce in Africa should be greater than any other place in the world," she pointed out, adding that the Internet would eliminate the problems of borders and the need for large inventories. "It creates a distance-neutral economy," she said.

Infrastructure Looks to the Private Sector

The opportunities for infrastructure development in Africa are as big and broad as Africa itself, according to Colin Clarke, a participant on the infrastructure panel at the Africa Business Conference.

And anyone who thinks infrastructure in Africa is not "exciting" or "sexy" should think again, said Clarke, of the asset management firm New Africa Advisors. "It is exciting. It is sexy. We've proven that. We're looking at 118%. That's triple digit returns. That's as sexy as anything in the States."

But even with such returns, it's not always easy to attract investment to Africa. "A lot of people don't want to hear anything about Africa," said Mandla Sibanda of AIG Global Investment Corp. which recently introduced an African Infrastructure Fund. "The moment you say you are looking at an Africa-wide investment, it becomes a huge stumbling block."

That resistance to private sector investment will have to be overcome, said Frannie Leautier, Infrastructure Director at the World Bank Group. "Infrastructure lending [at the World Bank] is declining twice as fast as overall lending. The mix of public and private is changing," she said. "The challenge is looking at the types of contracts that will attract private investment."

At times, said moderator Benjamin Esty, an HBS professor who specializes in project finance, it seems like a classic chicken and egg problem, with investors looking for stability and growth before they'll put in their funds and with organizations like the World Bank saying they'll need private investment to bring about stability and growth.

It's a challenge all sides are going have to find new ways to meet, said the panelists. "The solutions," said Leautier, "cannot just come from the way we did business in the past."