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Graduating from political to economic independence

Graduating from political to economic independence

Paulo Gomes, Member of the AfroChampions initiative, talks about the practicalities of creating a fertile environment for African multinationals to arise.

What role does the AfroChampions initiative have to play in building a pan-African market?

The initiative was born from the need to reach a critical mass and to have a global African coalition, so that the Africa Union’s Agenda 2063 can be achieved. We are now realising that the private sector also has a key role to play in this. We must now think about the methods and platforms to drive forward and complete the process of regional integration. AfroChampions is one such platform. Its goal is to create a fertile environment for African multinationals to arise, with the goal of these multinationals investing, not only in their own country, but also in other countries. This way they can became agents of change and a driver of regional integration.

But Africans have never worked together like this. They don’t have the culture of working together. How can you attain this objective of creating synergies within the private sector now that it’s become pressing to do so?

I don’t agree with you on this. I think that Africans do have a culture of working together. Don’t forget that people have already united in struggles to win political independence, albeit this was some years ago. The question now is knowing what to do with this independence and turning it into an economic independence that can give rise to prosperity for everyone. We find ourselves in a tunnel right now, full of flaws and disappointments, but this isn’t something we can finish in a day or two.

How do you prioritise and bring order to this plan?

We need to create a case-by-case, step-by-step approach and put it into practice. It’s one thing coming up with great ideas – and I think that’s something that we’ve done here – but now we need to put it into practice one step at a time. Some countries are ready, some are not, but they may be in the near future.  We do understand the enormity of the task – it’s not as though 55 different countries are suddenly going to leap onto the same page and start pulling in the same direction.  We’ll start with the ones that are ready, launch initiatives one at a time, and the results will quickly become apparent. Success breeds success, as those who aren’t yet enjoying it will soon want it for themselves.

What’s the best way of doing this? For example, would Singapore be a good model to copy?  What use can Africa make of success stories like that?

First of all, we can’t just copy other countries, because we have to take our specific situation into account. We invited Singapore to the forum so that we could learn from them – they have one of the best sovereign wealth funds in the world, after all – but not so that we could copy them. We will see which of their best practices we can use to build a strategic alliance of African sovereign wealth funds and get them investing together.

But does Africa have the means to seize control of its own financial resources?

Absolutely it does! Of course, we’re not currently looking to compete with sovereign wealth funds on the scale of Singapore, which is managing a fund of $200bn.  However, it’s possible to start with a modest strategic fund, so long as you know exactly what you want to do with it. There’s no magic formula. It’s first and foremost a case of the countries being able to create savings and use them for strategic actions. Senegal has begun by creating a small fund called Fonsis. Ghana also has a small fund amounting to $250m, which is focused entirely on infrastructure. Africa has the means to create small investment funds, strategic funds, and sovereign wealth funds. We just have to start out transparently, with transparent governance and a clear strategic focus.

To put ideas into practice, it’s important to know how things are in reality. However, all too often in Africa figures are just vague estimates. How can you build a solid vision on the back of shaky data?

You’re right that our statistical information leaves a lot to be desired, but it’s getting better We have a huge amount of information, figures and data right now, not only at the state level but also, and in fact especially, in the private sector. Technology is vital in this respect. As an example, for urbanisation we have a significant amount of information from satellite data, in the form of diagrams, systems and algorithms. Technology will make it easier for us to collect and analyse data. Of course, this doesn’t solve all of our problems. In particular Africans still have problems accessing and using statistics under circumstances that amount to a world data war. We need to do everything we can to get hold of the data and use it in our strategy.

Will Africa also be in a position to use soft power, and influence other countries in order to construct its own vision of the world?

I believe so. The new generation of Africans have global experience. There are people with African heritage in Latin America, the United States and Europe, who hold influence and the power to make significant decisions. These people are not necessarily going to want to hurry back to Africa overnight but they haven’t forgotten where they came from. They can help reshape perceptions about Africa, convey the message that the continent can build its own development model without replicating errors from other region, and serve as an incredible lab for economic and innovation able to inspire the rest of the world. Any soft power exercise should aim at promoting this new narrative. 

If AfroChampions is going to become a successful vehicle for awareness, how can sovereign wealth funds, such as the one you manage, help with this? What is your vision here and how do you intend to make it reality?

Within AfroChampions, I work as the chair of the commission in charge of the alliance between sovereign wealth funds and strategic funds. The first meeting has the aim of launching the alliance and exchanging best practices, which is why we invited the fund managers from Singapore in charge of the Temasek Holdings
fund to bring their experience to the table. The discussions should help us to look at different joint-investment options for strategic projects in Africa and in Singapore.

From a strategic point of view, what should the sovereign wealth funds be aiming towards? What kind of large-scale infrastructure projects are the best fit?

The funds can help with durable development projects, such as renewable energy projects that could work for several countries at the same time. They could also be used for railway projects, which again could benefit a number of countries. There are a lot of projects that can be shared and co-funded, which are exactly what we are looking to identify. n

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Written by African Business Magazine

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