2010 has been a difficult year for the world economy with growth stifled in the developed world and deficits to be tackled. The Emerging world on the other hand has demonstrated the intrinsic strength and is proving that the engine of the Global economy has categorically shifted to the East.
Over the last year, millions have joined the middle class in Africa, Asia and the Caribbean and are entering the global economy as consumers, this will continue. In Africa alone, 200m people will enter the market for consumer goods over the next five years. 2010 has been a year of surprisingly good global growth of around 4%, with emerging markers displaying rates of between 6-7% and the developed world 2-3%. This will be the pattern for years to come as the emerging nations drive the global economy forward.
Much has been written about Asia's role in the world (especially given China's emergence as the second largest economy in the world earlier this year) but the story that gets less recognition is Africa's growth story, 5% this year and predicted to be around 5.5% next year. In 2010 Ngozi Okonjo-Iweala, Managing Director of The World Bank said that Africa could be the next BRIC, and become a major recipient of investment rather than aid. At the same time McKinsey told companies, that 'global businesses cannot afford to ignore the potential' of Africa.
Africa's growth is creating massive new business opportunities, it is predicted that Africa's 4 leading industries, retail services, agriculture, resources, and infrastructure could generate as much as $2.6 trillion in revenue annually by 2020. And Africa is gaining greater access to foreign investment, total FDI into Africa rose from $9 billion in 2000 to $62 billion in 2008, and today the rate of return on foreign investment in Africa is higher than in any other developing region.
In 2011 CBC will continue its engagement with all the Commonwealth nations, we will hold investment and business promotion events in Africa, the Caribbean, Asia and the UK. And in October 2011 we will host the 8th Commonwealth Business Forum in Australia. CBF 2011 will be a major event for Large and small companies with about 1000 business leaders attending.It will also help us to reach pacific small states that we have had difficulty engaging with before. 2011 should be an exciting year!
Monday 27 December 2010
Wednesday 15 December 2010
MSMEs and the Commonwealth
Small companies are the life blood of all Commonwealth economies. In the UK, for example, MSMEs account for 99% of all businesses. As much as 50% of the UK’s workforce is employed by companies employing less than 100 people and on average 65% of all new jobs are created by MSMEs each year.
As the UK looks to export its way out of recession greater emphasis is being placed on helping to internationalise MSMEs, as only the most innovative and competitive MSMEs will succeed in international markets. A strategy that focuses on supporting fast growing and innovative MSMEs internationalise will reap disproportionately large returns for all countries involved. India in particular is seen as an enormous potential market for MSMEs, but so far UK companies have struggled to penetrate the market.
India has continually demonstrated an ability to nurture its own MSMEs into national and international corporations, almost all the major Indian companies have developed from humble origins within living memory. India is therefore an important market for international MSMEs looking to win new business and for those countries looking to learn how they can support and develop their own MSMEs.
Doing business with another Commonwealth country can be up to 20% less expensive than doing business with non-Commonwealth countries as a result of the ‘Commonwealth Factor’. These factors are of disproportionate advantage to MSMEs, so the Commonwealth relationships can play a key role in developing international MSMEs that will help drive growth and job creation across the 54 member countries of the association.
As the UK looks to export its way out of recession greater emphasis is being placed on helping to internationalise MSMEs, as only the most innovative and competitive MSMEs will succeed in international markets. A strategy that focuses on supporting fast growing and innovative MSMEs internationalise will reap disproportionately large returns for all countries involved. India in particular is seen as an enormous potential market for MSMEs, but so far UK companies have struggled to penetrate the market.
India has continually demonstrated an ability to nurture its own MSMEs into national and international corporations, almost all the major Indian companies have developed from humble origins within living memory. India is therefore an important market for international MSMEs looking to win new business and for those countries looking to learn how they can support and develop their own MSMEs.
Doing business with another Commonwealth country can be up to 20% less expensive than doing business with non-Commonwealth countries as a result of the ‘Commonwealth Factor’. These factors are of disproportionate advantage to MSMEs, so the Commonwealth relationships can play a key role in developing international MSMEs that will help drive growth and job creation across the 54 member countries of the association.
Thursday 25 November 2010
Good governance and increased prosperity
On recent trips to Asia both the British Prime Minister, David Cameron and the US President, Barack Obama have made the point of highlighting one of things that can make the Commonwealth stand out in the future – the importance of the link between good governance and increased prosperity.
Addressing the tricky topic at his lecture in a Chinese’s university, David Cameron said ‘I am convinced that the best guarantor of prosperity and stability is for economic and political progress to go in step together.’. This approach is key to the Commonwealth future success, I have always argued that the Commonwealth should give an equal focus to both the Harare Principles, on good governance and human rights and to the Edinborough Economic Declaration. This is proven by many Commonwealth members, who are required to abide by certain rules regarding governance, human rights and the rule of law, or face expulsion from the association. It is no coincidence that the same countries are nearly always investment destinations of choice.
Making this point very clearly, President Obama in his address to the Joint Session of the Indian Parliament during his recent trip said "As India marks 60 years with a strong and democratic constitution, the lesson is clear: India has succeeded, not in spite of democracy; India has succeeded because of democracy,"
Britain, India and other Commonwealth countries can help in the development of other countries by explaining how their focus on good governance has led to increased investment and increased prosperity. Commonwealth successes, are based on a respect for the rule of law, human rights, etc as it is these things that give investors the confidence to invest in the association’s member states rather than other countries.
Addressing the tricky topic at his lecture in a Chinese’s university, David Cameron said ‘I am convinced that the best guarantor of prosperity and stability is for economic and political progress to go in step together.’. This approach is key to the Commonwealth future success, I have always argued that the Commonwealth should give an equal focus to both the Harare Principles, on good governance and human rights and to the Edinborough Economic Declaration. This is proven by many Commonwealth members, who are required to abide by certain rules regarding governance, human rights and the rule of law, or face expulsion from the association. It is no coincidence that the same countries are nearly always investment destinations of choice.
Making this point very clearly, President Obama in his address to the Joint Session of the Indian Parliament during his recent trip said "As India marks 60 years with a strong and democratic constitution, the lesson is clear: India has succeeded, not in spite of democracy; India has succeeded because of democracy,"
Britain, India and other Commonwealth countries can help in the development of other countries by explaining how their focus on good governance has led to increased investment and increased prosperity. Commonwealth successes, are based on a respect for the rule of law, human rights, etc as it is these things that give investors the confidence to invest in the association’s member states rather than other countries.
Wednesday 10 November 2010
China
I was delighted to be in China last week for the first time in 10 years, even in that short part of the country’s history the change is remarkable. The level and quality of the infrastructure that has been built over that period is incredibly impressive, and beyond world class - the west would envy much of it. I also had the chance to visit the Olympic village, and see the birds nest stadium - another remarkable achievement!
I was there to sign an agreement with a large Chinese infrastructure conglomerate AVIC. The agreement is to help introduce Chinese investment into Commonwealth countries, predominantly in Africa. We hope to use the agreement to highlight investment opportunities in the less recognised and developed parts of Africa to enhance their development agenda.
The second side of the agreement focused on developing better partnerships between, British and Chinese companies, and I am grateful for the presence of the British Ambassador to China, Sebastian Wood, in recognising this.
China like India will drive the global economy for the next 50 years, a fact that is increasing recognised by western leaders. David Cameron is currently leading the largest trade mission (4 cabinet Ministers and over 40 business leaders) Britain has ever taken to country, in order to pursue the aim of doubling trade between the 2 countries. Missions like these will increasingly become a feature Heads of Government’s trips to China.
I was there to sign an agreement with a large Chinese infrastructure conglomerate AVIC. The agreement is to help introduce Chinese investment into Commonwealth countries, predominantly in Africa. We hope to use the agreement to highlight investment opportunities in the less recognised and developed parts of Africa to enhance their development agenda.
The second side of the agreement focused on developing better partnerships between, British and Chinese companies, and I am grateful for the presence of the British Ambassador to China, Sebastian Wood, in recognising this.
China like India will drive the global economy for the next 50 years, a fact that is increasing recognised by western leaders. David Cameron is currently leading the largest trade mission (4 cabinet Ministers and over 40 business leaders) Britain has ever taken to country, in order to pursue the aim of doubling trade between the 2 countries. Missions like these will increasingly become a feature Heads of Government’s trips to China.
Tuesday 2 November 2010
Power reform in Nigeria
Last month at the request of HE Goodluck Jonathon we organised in collaboration with the Presidential Task Force on Power, Chair by Professor Bart Narji, a Presidential Retreat for power Sector Investors. The President called the retreat to discuss with the international private sector his Roadmap to privatising Nigeria’s power sector. CBC brought 70 high level International power sector investors to the event from over 30 countries, both inside and outside the Commonwealth. In total 400 people attended the event, to hear addresses from the President, Vice President and Senior Ministers.
The Economist, who were in attendance, wrote an interesting article about the retreat that can be read here
The following week, we here honoured to host a lunch for the Vice President, Mohammed Namadi Sambo, during his visit to London. The Vice President addressed a packed room of CBC Members, High Commissioners and business leaders with an interest in Nigeria on the power privatisation plans, during which he described CBC as a ‘true friend of Nigeria’.
CBC has been fully engaged with Nigeria since its return to democracy, in fact we were the first organisation to organise an investor conference in the country. Over the last few years, however, our relationship has shifted in priorities, moving away from more generalised trade and investment promotion – that Nigeria is needing less and less as the world wakes up to the opportunities available in the country - to more niche work, such as the power retreat. This change, I think recognises Nigeria’s move towards middle income status and as one of the drivers of Africa’s economy over the coming years.
The Economist, who were in attendance, wrote an interesting article about the retreat that can be read here
The following week, we here honoured to host a lunch for the Vice President, Mohammed Namadi Sambo, during his visit to London. The Vice President addressed a packed room of CBC Members, High Commissioners and business leaders with an interest in Nigeria on the power privatisation plans, during which he described CBC as a ‘true friend of Nigeria’.
CBC has been fully engaged with Nigeria since its return to democracy, in fact we were the first organisation to organise an investor conference in the country. Over the last few years, however, our relationship has shifted in priorities, moving away from more generalised trade and investment promotion – that Nigeria is needing less and less as the world wakes up to the opportunities available in the country - to more niche work, such as the power retreat. This change, I think recognises Nigeria’s move towards middle income status and as one of the drivers of Africa’s economy over the coming years.
Friday 29 October 2010
The future of the Commonwealth
Over the last couple of weeks I have had discussions with both the Chair in Office of the Commonwealth, the Rt Hon Kamla Persad-Bissessar, Prime Minister, Trinidad and Tobago, and the Commonwealth Eminent Persons Group on the future direction the Commonwealth should take.
The EPG was set up by the Heads of Government in Trinidad and Tobago at CHOGM last November to discuss the future of the Commonwealth and sharpen the impact, strengthen the networks, and raise the profile of the Commonwealth. I believe that both the roles of the Chair in Office and the Secretary General should be expanded to enhance coordination between the Commonwealth’s Key Agencies.
Also I feel the Commonwealth should take greater advantage of the excellent work it’s done on good governance and human rights since its founding, and now think about how to convert those successes into economic prosperity. By giving equal attention to the Harare Principles on good governance and the Edinburgh Economic Declaration, the Commonwealth can do more to highlight the link between good governance and increased investment. We feel that this link can be further strengthened by the creation of a commonwealth development fund that would invest in countries that show the best progress in good governance.
This new approach could make the Commonwealth truly relevant for tomorrow, as it will allow the association to directly focus on the areas of greatest importance to all heads of Government (developed or developing); jobs and growth, while still maintain the Commonwealth’s historic focus on good governance and human rights.
The EPG was set up by the Heads of Government in Trinidad and Tobago at CHOGM last November to discuss the future of the Commonwealth and sharpen the impact, strengthen the networks, and raise the profile of the Commonwealth. I believe that both the roles of the Chair in Office and the Secretary General should be expanded to enhance coordination between the Commonwealth’s Key Agencies.
Also I feel the Commonwealth should take greater advantage of the excellent work it’s done on good governance and human rights since its founding, and now think about how to convert those successes into economic prosperity. By giving equal attention to the Harare Principles on good governance and the Edinburgh Economic Declaration, the Commonwealth can do more to highlight the link between good governance and increased investment. We feel that this link can be further strengthened by the creation of a commonwealth development fund that would invest in countries that show the best progress in good governance.
This new approach could make the Commonwealth truly relevant for tomorrow, as it will allow the association to directly focus on the areas of greatest importance to all heads of Government (developed or developing); jobs and growth, while still maintain the Commonwealth’s historic focus on good governance and human rights.
Thursday 7 October 2010
Nigeria and Elections
Last week I was in Nigeria for our yearly Nigerian Investment Forum, the event was a great success bringing investors from across the commonwealth to meet project holders in Nigeria. For the first time the event also included a business awards gala dinner to celebrate excellence in Nigeria’s private sector, the awards were hosted at State House.
While we were in Nigeria, HE Goodluck Jonathon announced his intention to run in next years presidential election. He has promised electoral reform to ensure a free and fair vote. The Nigerian Business community along with the county’s citizens all want to see elections that will allow the country move forward with its development goals. Any uncertainty over issues of governance can have a direct and measurable effect on a country’s ability to attract foreign investment, so I add my urging that the county comes together at this election and delivers a result that the rest of the world can respect.
While we were in Nigeria, HE Goodluck Jonathon announced his intention to run in next years presidential election. He has promised electoral reform to ensure a free and fair vote. The Nigerian Business community along with the county’s citizens all want to see elections that will allow the country move forward with its development goals. Any uncertainty over issues of governance can have a direct and measurable effect on a country’s ability to attract foreign investment, so I add my urging that the county comes together at this election and delivers a result that the rest of the world can respect.
Monday 13 September 2010
President Kagame's inauguration
I was honoured to be invited by President Kagame for his inauguration last week. It was an amazing event that filled the Stadium to its capacity of 40,000 with 10s of thousands more watching on screens outside. The Event was attended by 14 Heads of State from across Africa, Ministers, Private Sector Leaders and representatives of International NGOs and Agencies.
The Event was not just the inauguration of Rwanda’s President but the inauguration of a new African Statesman, demonstrated by the level of support shown by visiting Heads of State.
President Kagame dedicated much of his speech to responding to his Critics on Human Rights and discussing the development successes in Rwanda. Anyone that has seen the changes in Rwanda over the last 10-15 years cannot fail to be impressed with the level of progress and development.
While NGOs and the International Media have a right to discuss Rwanda’s Human Rights, I hope they do it within the framework of the Development successes. Leaders like Kagame have to be engaged in Dialogue with constructive criticism rather than publicly hung.
Africa is changing, progress is being made on democracy and economic development and the continent should be engaged in recognition of its potential to be the next BRIC. Africa will be one of the key drivers of global growth over the next century. Let’s not miss this opportunity by failing to create mutually beneficial dialogue and consolidate our partnerships with the continent.
The Event was not just the inauguration of Rwanda’s President but the inauguration of a new African Statesman, demonstrated by the level of support shown by visiting Heads of State.
President Kagame dedicated much of his speech to responding to his Critics on Human Rights and discussing the development successes in Rwanda. Anyone that has seen the changes in Rwanda over the last 10-15 years cannot fail to be impressed with the level of progress and development.
While NGOs and the International Media have a right to discuss Rwanda’s Human Rights, I hope they do it within the framework of the Development successes. Leaders like Kagame have to be engaged in Dialogue with constructive criticism rather than publicly hung.
Africa is changing, progress is being made on democracy and economic development and the continent should be engaged in recognition of its potential to be the next BRIC. Africa will be one of the key drivers of global growth over the next century. Let’s not miss this opportunity by failing to create mutually beneficial dialogue and consolidate our partnerships with the continent.
Wednesday 25 August 2010
Rwanda and one size fits all development
I was pleased to see President Kagame respond to his critics in the international media via a strong article in the FT last week. It is important that we pay vigilant attention to Human Rights issues across the globe, but President Kagame makes an important point that there is no ‘one size fits all’ path to development and democracy.
Given Rwanda’s recent history, we should praise the country’s success on the path to competitive democracy and continue working with the country to help them strengthen it.
President Kagame also argued that Africa must take responsibility for its own future, that Africa must devise its own solutions to its problems and that partners that work with Africa in this way will benefit. Africa Forging its own path is important for the future of the continent and President Kagame is an important advocate of this.
Given Rwanda’s recent history, we should praise the country’s success on the path to competitive democracy and continue working with the country to help them strengthen it.
President Kagame also argued that Africa must take responsibility for its own future, that Africa must devise its own solutions to its problems and that partners that work with Africa in this way will benefit. Africa Forging its own path is important for the future of the continent and President Kagame is an important advocate of this.
Wednesday 11 August 2010
Africa the next BRIC
Sub Saharan Africa can be the next BRIC; from 2000 to 2010 Sub Sahara grew at a faster rate, in nominal dollars terms, than both India and China and is predicted by the IMF to grow at a faster rate than Brazil between 2010 – 2015.
Sub Sahara has much going for it and conditions are improving constantly. Between 2002 and 2008 the continent achieved a growth rate of 5.2% a year on average, and only dropped a single percentage point since the global economic crisis – still a higher rate than the developed world is expected to achieve.
Africa’s population had grown to 820 million in 2008, and the percentage that can be considered ‘middle class’ has grown astronomically since the 1990s. Africa is now both ready to take its place as a market of consumers for global products and as an attractive investment destination for global business looking for new opportunities. I would suggest Commonwealth countries to potential investors as they make up 17 of the top 20 places to do business in Africa, according to the IFC.
To achieve this jump, to become the 5th BRIC, Africa needs to deal with a number of persistent issues such as the infrastructure and power deficit, increasing access and the quality of Education and enhancing business competitiveness, these will have to be achieved along with progress on democratization and good governance. To succeed on both economic development and good governance simultaneously African will need more strong and dynamic leaders. Rwanda and President Kagame are a case in point; it is unfortunate to see the international media running negative stories about one of Africa’s best success stories.
Paul Kagame has been one of the most ambitious and successful African leaders in fighting poverty and driving growth in his country. This year the IFC named Rwanda the best business reformer in the World, likewise Paul Kagame is recognised by many western leaders as one of Africa’s Best, Tony Blair described him as ‘visionary’ a sentiment I agree with.
While there are concerns about the current election in the Rwanda, we must not forget the impact that Kagame has made on the development of his country. Democracy is hugely important but it will not be achieved without economic development, democracy on empty stomachs will not succeed –this needs to be more widely recognised.
While raising the issue of Human rights, we should be supporting leaders like Paul Kagame that are driving progress in their countries and the continent. Africa is also making progress on democratisation, Kenya’s recent peaceful referendum that aimed the settle the country’s political disputed is a good example. These stories and there like should be the ones that the international media focus on as Africa strives to become a BRIC. A more balanced approached to reporting on the continent, that helps encourage Africans, will benefit us all in the end.
Sub Sahara has much going for it and conditions are improving constantly. Between 2002 and 2008 the continent achieved a growth rate of 5.2% a year on average, and only dropped a single percentage point since the global economic crisis – still a higher rate than the developed world is expected to achieve.
Africa’s population had grown to 820 million in 2008, and the percentage that can be considered ‘middle class’ has grown astronomically since the 1990s. Africa is now both ready to take its place as a market of consumers for global products and as an attractive investment destination for global business looking for new opportunities. I would suggest Commonwealth countries to potential investors as they make up 17 of the top 20 places to do business in Africa, according to the IFC.
To achieve this jump, to become the 5th BRIC, Africa needs to deal with a number of persistent issues such as the infrastructure and power deficit, increasing access and the quality of Education and enhancing business competitiveness, these will have to be achieved along with progress on democratization and good governance. To succeed on both economic development and good governance simultaneously African will need more strong and dynamic leaders. Rwanda and President Kagame are a case in point; it is unfortunate to see the international media running negative stories about one of Africa’s best success stories.
Paul Kagame has been one of the most ambitious and successful African leaders in fighting poverty and driving growth in his country. This year the IFC named Rwanda the best business reformer in the World, likewise Paul Kagame is recognised by many western leaders as one of Africa’s Best, Tony Blair described him as ‘visionary’ a sentiment I agree with.
While there are concerns about the current election in the Rwanda, we must not forget the impact that Kagame has made on the development of his country. Democracy is hugely important but it will not be achieved without economic development, democracy on empty stomachs will not succeed –this needs to be more widely recognised.
While raising the issue of Human rights, we should be supporting leaders like Paul Kagame that are driving progress in their countries and the continent. Africa is also making progress on democratisation, Kenya’s recent peaceful referendum that aimed the settle the country’s political disputed is a good example. These stories and there like should be the ones that the international media focus on as Africa strives to become a BRIC. A more balanced approached to reporting on the continent, that helps encourage Africans, will benefit us all in the end.
Friday 6 August 2010
David Cameron in India
David Cameron's visit to India last week could well turn out to be one of the most important diplomatic trips of his time in number 10.
The commitment by both Governments to transform the nation’s relationship over the coming years is most welcome. Both leaders agreed that the India-UK relationship has great room for growth, in the political, cultural, security and economic realms that would be of benefit to both countries.
I am particularly pleased to see the commitment to significantly increase trade and investment between the 2 countries. I have long been calling for the level of interaction between the countries private sectors to be raised and am delighted that the UK-India CEO’s Forum is being set up under the Peter Sands of Standard Chartered and Rattan Tata of Tata Group (both CBC members of long standing) to provide the private sector perspective on strengthening the economic relationship. I look forward to working with the Forum in the future.
Hon Kamal Nath, India’s Minister for Road Transport speaking earlier this year at our India Infrastructure Forum (IIF) said the next 10 years will be India’s Infrastructure Decade. The opportunities offered by this are enormous, tackling India’s infrastructure deficit will require cooperation between the Indian government and the national and international private sector, and the UKs business should be leaders in this. To help push this Lord Adonis, the then UK Secretary of State for Transport, initiated a MoU between the Indian Government and the UK at the IIF to work together on road development, a process that was continued during the Prime Minister’s visit last week.
It is great to see the New British Prime Minister taking such an interest in strengthening the Bi-lateral relationship between the 2 countries, in a report we produced in 2008, and are currently in the process of updating, we found that the UK was India’s most significant investor, a trend we hope continues.
And finally I was delighted to see the strong commitment made by both Prime Ministers during their meeting to work together to ‘strengthen the Commonwealth’ as an important global body.
The commitment by both Governments to transform the nation’s relationship over the coming years is most welcome. Both leaders agreed that the India-UK relationship has great room for growth, in the political, cultural, security and economic realms that would be of benefit to both countries.
I am particularly pleased to see the commitment to significantly increase trade and investment between the 2 countries. I have long been calling for the level of interaction between the countries private sectors to be raised and am delighted that the UK-India CEO’s Forum is being set up under the Peter Sands of Standard Chartered and Rattan Tata of Tata Group (both CBC members of long standing) to provide the private sector perspective on strengthening the economic relationship. I look forward to working with the Forum in the future.
Hon Kamal Nath, India’s Minister for Road Transport speaking earlier this year at our India Infrastructure Forum (IIF) said the next 10 years will be India’s Infrastructure Decade. The opportunities offered by this are enormous, tackling India’s infrastructure deficit will require cooperation between the Indian government and the national and international private sector, and the UKs business should be leaders in this. To help push this Lord Adonis, the then UK Secretary of State for Transport, initiated a MoU between the Indian Government and the UK at the IIF to work together on road development, a process that was continued during the Prime Minister’s visit last week.
It is great to see the New British Prime Minister taking such an interest in strengthening the Bi-lateral relationship between the 2 countries, in a report we produced in 2008, and are currently in the process of updating, we found that the UK was India’s most significant investor, a trend we hope continues.
And finally I was delighted to see the strong commitment made by both Prime Ministers during their meeting to work together to ‘strengthen the Commonwealth’ as an important global body.
Thursday 29 July 2010
Singapore a world leader
Further evidence of the global economies shift to the East has emerged. Singapore, one of the Commonwealths most developed nations, has released record breaking growth rates, for the second quarter of this year the country grew at 19.3%, the fastest rate of growth since records began in 1975. Singapore's remarkable record in the IFC’s Doing Business Index is not merely coincidental to its exceptional level of growth. The city state is the most business friendly county in the world, this is an example that both developing and developed countries will need to follow if they want achieve any level of growth let alone 19.3%.
Following Singapore's example of how a small state can grow to become a world player is an aspiration I have seen a lot in the commonwealth's developing nations aim to become regional players. Singapore is a financial hub for Asia and can act as a gateway for other Commonwealth countries to access its non-Commonwealth neighbours in the region, this is an example countries would like to replicate.
When Singapore is displaying growth rates of this level and many of its regional neighbours are growing at rates of 10% or more, it is no wonder that Asia is of ever increasing importance to the global economy.
Following Singapore's example of how a small state can grow to become a world player is an aspiration I have seen a lot in the commonwealth's developing nations aim to become regional players. Singapore is a financial hub for Asia and can act as a gateway for other Commonwealth countries to access its non-Commonwealth neighbours in the region, this is an example countries would like to replicate.
When Singapore is displaying growth rates of this level and many of its regional neighbours are growing at rates of 10% or more, it is no wonder that Asia is of ever increasing importance to the global economy.
Thursday 22 July 2010
CBC - ICICI Dinner
Last week I had the pleasure of Hosting Ms Chanda D Kochhar, Managing Director & CEO of ICICI Bank for a dinner with leading Indian and British business leaders in London. She made a series of extremely interesting points during her speech.
Firstly it was noted that now was the time for India to take centre stage, that its annual growth rates exceeding 8% put the country at the forefront in the Global economy and that Indians themselves believe it is there time. Ms Kochhar also argued that for the current growth rate to be sustainable over the coming years the Indian banking sector would have to grow by about 20% a year, this would mean the banking sector increasing in size by 2.5 times over the next 5 years.
Ms Kochar also drew an interesting parallel between the western economies and India. She suggested that the while stimulus packages had been needed in the west to preserve growth and stave off recession, in India all the investment is demand led. "as bridges and roads are completed they are filled with traffic" she said. 'The need for infrastructure for a development is currently a real opportunity, but left un-tackled will become a serious bottle neck to Indian growth', she added.
Ms Kochar made one final 'mind boggling' observation, that by 2020 India would be home to 25% of the world's work force. India will continue to benefit from the demographic dividend until 2040, which will be the first point at which the median age of the population exceeds 32, a benefit China does not share. With such a large part of the population in the working age group, India can expect to enjoy a long period of increasing domestic consumption and prosperity.
The strengths of the Indian economy Ms Kochar highlighted, clearly demonstrate just how important India is becoming to the global economy. And indicate the level of opportunity available to the international investor looking to invest.
Firstly it was noted that now was the time for India to take centre stage, that its annual growth rates exceeding 8% put the country at the forefront in the Global economy and that Indians themselves believe it is there time. Ms Kochhar also argued that for the current growth rate to be sustainable over the coming years the Indian banking sector would have to grow by about 20% a year, this would mean the banking sector increasing in size by 2.5 times over the next 5 years.
Ms Kochar also drew an interesting parallel between the western economies and India. She suggested that the while stimulus packages had been needed in the west to preserve growth and stave off recession, in India all the investment is demand led. "as bridges and roads are completed they are filled with traffic" she said. 'The need for infrastructure for a development is currently a real opportunity, but left un-tackled will become a serious bottle neck to Indian growth', she added.
Ms Kochar made one final 'mind boggling' observation, that by 2020 India would be home to 25% of the world's work force. India will continue to benefit from the demographic dividend until 2040, which will be the first point at which the median age of the population exceeds 32, a benefit China does not share. With such a large part of the population in the working age group, India can expect to enjoy a long period of increasing domestic consumption and prosperity.
The strengths of the Indian economy Ms Kochar highlighted, clearly demonstrate just how important India is becoming to the global economy. And indicate the level of opportunity available to the international investor looking to invest.
Friday 16 July 2010
India, Africa and employment
An interesting report by the Oxford poverty and human development inactive was recently released that found that there were ‘more poor’ in India than Africa. This doesn’t surprise me as much as it seems to have others, while India has made improvements it has never rated highly on the UN’s Human Development Index, India ranked 134th out of 182 countries in 2009.
What occurs to me, is the similarities between the areas of high poverty in India and Africa. Outside of the urban poor, the areas with high levels of poverty are predominantly regions with large deposits of natural resources and areas of with high levels of agricultural fertility, that still operate some form of feudal system.
The reasons for poverty are the same the world over and many of the solutions can be applied globally. Investing in agriculture will allow farmers to move away from subsistence to commercial viability. Resource companies are not ‘good’ job creators, so they must be pushed to downstream and help create the support industries that will provide employment in resource rich regions.
Poverty will only be tackled successfully where government works in partnership with the private sector. Government must provide a regulatory and tax environment that stimulates economic activity. While the private sector must take advantage of this and provide employment along the length of the value chain.
What occurs to me, is the similarities between the areas of high poverty in India and Africa. Outside of the urban poor, the areas with high levels of poverty are predominantly regions with large deposits of natural resources and areas of with high levels of agricultural fertility, that still operate some form of feudal system.
The reasons for poverty are the same the world over and many of the solutions can be applied globally. Investing in agriculture will allow farmers to move away from subsistence to commercial viability. Resource companies are not ‘good’ job creators, so they must be pushed to downstream and help create the support industries that will provide employment in resource rich regions.
Poverty will only be tackled successfully where government works in partnership with the private sector. Government must provide a regulatory and tax environment that stimulates economic activity. While the private sector must take advantage of this and provide employment along the length of the value chain.
Monday 12 July 2010
UK aid commitments
I support the UK’s International Development Secretary, Andrew Mitchell’s decision to relook at the at the UK’s aid commitments to the BRIC countries (Brazil, Russia, India and China). This money can now be shifted more towards countries with a greater need, and less ability to help themselves.
Also, I again urge the Minster to examine the way in which aid is spent, there must be a shift over the next few years to aid that supports growth and aims to increase the involvement of the private sector, allowing national governments to pay for their own social infrastructure. While the shift cannot be uniform, many of the poorest countries will still need support in social areas; there are other middle income countries that can begin the shift towards growth centred aid, so that they may hopefully follow in the BRIC’s footsteps.
Also, I again urge the Minster to examine the way in which aid is spent, there must be a shift over the next few years to aid that supports growth and aims to increase the involvement of the private sector, allowing national governments to pay for their own social infrastructure. While the shift cannot be uniform, many of the poorest countries will still need support in social areas; there are other middle income countries that can begin the shift towards growth centred aid, so that they may hopefully follow in the BRIC’s footsteps.
Friday 9 July 2010
Vince Cable's Industrial Policy
I am pleased to note that Vince Cable the UK’s new Business secretary is adopting a more market orientated industrial policy than we have been used to in recent years. Mr Cable has describe an industrial policy that funds public goods such as, research, education and infrastructure but does so in a way that is market led rather than state led.
While recognising that the state has an important role in supporting areas and sectors where the UK has a competitive advantage, Mr Cable is rolling back the support offered to individual firms and factories. Instead the department for Business favours investing in the support for increasing the UK’s human and intellectual capital. In the long term backing training and research in the UK is the only sustainable way of increasing employment and growth in the UK.
Vince Cables Business Department is also continuing the push to force the nationalised banks to increase their levels of lending, this is very welcome. The current lack of available credit in the UK economy is stifling the Critical SME sector that will be vital for bringing down levels of unemployment.
Vince Cables new approach to Industrial policy in the UK is very welcome as it positions the private sector at the heart of the British economy while not forgetting the important areas in which the state needs to support the wider economy.
While recognising that the state has an important role in supporting areas and sectors where the UK has a competitive advantage, Mr Cable is rolling back the support offered to individual firms and factories. Instead the department for Business favours investing in the support for increasing the UK’s human and intellectual capital. In the long term backing training and research in the UK is the only sustainable way of increasing employment and growth in the UK.
Vince Cables Business Department is also continuing the push to force the nationalised banks to increase their levels of lending, this is very welcome. The current lack of available credit in the UK economy is stifling the Critical SME sector that will be vital for bringing down levels of unemployment.
Vince Cables new approach to Industrial policy in the UK is very welcome as it positions the private sector at the heart of the British economy while not forgetting the important areas in which the state needs to support the wider economy.
Friday 2 July 2010
Make Poverty History through Trade and Investment
Make Poverty History is an idea that has been picked up by nearly every agency working in developing countries whether they are charities, NGO’s or development agencies. However the slogan has become so closely related to charity and foreign aid, that I fear the wider picture has been forgotten. Make Poverty History is even more relevant for the Growth agenda, for CBC we are trying to make poverty history though trade and investment. I am glad to support the work of the multi party parliamentary group, Trade out of Poverty, who are dedicated to this agenda and aim to help the world’s poorest countries trade their way to a better life.
It is my feeling that we too often forget that the only sustainable way to eliminate poverty is to ensure that the local government is responsible for its achievement. This does not mean that we don’t have a responsibility to eliminate poverty, quite the opposite; I feel it is all of our responsibilities to support the governments in their mission to eliminate poverty.
Growth is the only tool that can eliminate poverty, aid alone will never achieve this, and developing countries must develop their economic infrastructure, which will in turn increase their tax revenues allowing greater investment in the engines of growth. It is the responsibility those outside the country to support the government’s efforts in this regard, whether it be refocusing aid to help in the strengthening of business environment or facilitating private sector investment in big infrastructure projects.
It is my feeling that we too often forget that the only sustainable way to eliminate poverty is to ensure that the local government is responsible for its achievement. This does not mean that we don’t have a responsibility to eliminate poverty, quite the opposite; I feel it is all of our responsibilities to support the governments in their mission to eliminate poverty.
Growth is the only tool that can eliminate poverty, aid alone will never achieve this, and developing countries must develop their economic infrastructure, which will in turn increase their tax revenues allowing greater investment in the engines of growth. It is the responsibility those outside the country to support the government’s efforts in this regard, whether it be refocusing aid to help in the strengthening of business environment or facilitating private sector investment in big infrastructure projects.
Tuesday 29 June 2010
G20
One of the inevitable results of the Global Financial crisis was the widening of international economic discourses beyond the G8. I welcome the official recognition of G20 in this new role, as the first line of the Communiqué put it, Canada was the first meeting of the G20 in its ‘new capacity as the premier forum for our international economic cooperation’. The G20 is a bigger and more inclusive forum than its predecessor the G8, containing wider views and more of the countries who were least affected by the financial crisis. The G20 should be better placed than the ‘western’ orientated G8 to prevent future banking crises.
I also welcome and fully support Prime Minster David Cameron’s remarks during the summit on the importance of the Doha round of trade talks. He commented that all countries will befit from an increase in trade flows and that his government would be pushing for the rounds conclusion. He added that the concluded round could contribute over $170 billion to the world economy, this I think would be very welcome at a time when global growth is still sluggish.
Finally i was pleased that a B20 meeting was held alongside the G20 meeting for the first time. This gathering of business leaders was designed to allow the views of the private sector to be fed into the G20’s deliberations. The private sector is essential to ensuring a sustainable global recovery. I am pleased that John Denton, a CBC Board Member, was representing Australian business at the event and look forward to working closely with the B20 in the future.
I also welcome and fully support Prime Minster David Cameron’s remarks during the summit on the importance of the Doha round of trade talks. He commented that all countries will befit from an increase in trade flows and that his government would be pushing for the rounds conclusion. He added that the concluded round could contribute over $170 billion to the world economy, this I think would be very welcome at a time when global growth is still sluggish.
Finally i was pleased that a B20 meeting was held alongside the G20 meeting for the first time. This gathering of business leaders was designed to allow the views of the private sector to be fed into the G20’s deliberations. The private sector is essential to ensuring a sustainable global recovery. I am pleased that John Denton, a CBC Board Member, was representing Australian business at the event and look forward to working closely with the B20 in the future.
Friday 25 June 2010
Africa and Aid
At the beginning of the week I had the pleasure of opening our G8 Africa Business Forum in London. The Forum is an annual event that feeds African private sectors views into the G8’s deliberations. Considering the recent economic turmoil we thought it best to focus on the good, and highlight the myriad opportunities offered by Africa, hence the theme Success stories and new partnerships.
The Forum was addressed by the Prime Ministers of Togo and Cameroon and Ministers from Angola, Namibia and Zambia. We were also delighted to have 2 members of the UK’s new coalition government address the Forum.
One of the Key messages coming out of the forum, and one I think is particularly important, from both government and business is the need for Africa to accelerate its move away from dependence on foreign aid to wealth created by its own citizens.
Future foreign aid must be directed to concentrate on reforms to deliver sustainable results and improve value for money. Aid should be targeted to improve the basic economic infrastructure, to improve competitiveness and produce higher rates of growth. As a result African government’s tax revenues will increase, which will in turn allow them to focus on their own social infrastructure. This will shift the responsibility for their delivery of public services like health and education to African Governments.
Entrepreneurship and the private sector are the only sustainable drivers of growth in Africa, and targeting Aid to enhance them should accelerate the continents ability to create its own wealth and increase its prosperity. I have personally been advocating this message to Aid Agencies and Governments and have written to the Chair of the G8, the Canadian Prime Minister to reiterate it.
The Forum was addressed by the Prime Ministers of Togo and Cameroon and Ministers from Angola, Namibia and Zambia. We were also delighted to have 2 members of the UK’s new coalition government address the Forum.
One of the Key messages coming out of the forum, and one I think is particularly important, from both government and business is the need for Africa to accelerate its move away from dependence on foreign aid to wealth created by its own citizens.
Future foreign aid must be directed to concentrate on reforms to deliver sustainable results and improve value for money. Aid should be targeted to improve the basic economic infrastructure, to improve competitiveness and produce higher rates of growth. As a result African government’s tax revenues will increase, which will in turn allow them to focus on their own social infrastructure. This will shift the responsibility for their delivery of public services like health and education to African Governments.
Entrepreneurship and the private sector are the only sustainable drivers of growth in Africa, and targeting Aid to enhance them should accelerate the continents ability to create its own wealth and increase its prosperity. I have personally been advocating this message to Aid Agencies and Governments and have written to the Chair of the G8, the Canadian Prime Minister to reiterate it.
Wednesday 23 June 2010
UK Budget
I would like to join with the CBI and the British Chamber of Commerce, who have broadly supported the Chancellors budget plans. Both are pleased by the Chancellors plans to cut the deficit and restore investor confidence. I feel it is important that the private sector is at the heart of the British economy.
Maintaining Britain’s privileged position as an investment destination of choice is something I have commented on before in this blog. Changes to corporation tax should help with this. Reduction of the small businesses rate to 20% and a 4 year plan to reduce the headline rate to 24% are also welcome and should help maintain Britain’s competitiveness.
The significant increase in entrepreneur’s relief and maintaining thresholds should be effective in insulating small business and investors from the increase in Capital gains tax. The proposed new 28% rate of tax should allow the UK to remain internationally competitive.
The budget appears to be well positioned to promote British business and maintain the levels of investment. The Government's plans to consult with business on issues relating to the R&D tax credit are also welcome.
Maintaining Britain’s privileged position as an investment destination of choice is something I have commented on before in this blog. Changes to corporation tax should help with this. Reduction of the small businesses rate to 20% and a 4 year plan to reduce the headline rate to 24% are also welcome and should help maintain Britain’s competitiveness.
The significant increase in entrepreneur’s relief and maintaining thresholds should be effective in insulating small business and investors from the increase in Capital gains tax. The proposed new 28% rate of tax should allow the UK to remain internationally competitive.
The budget appears to be well positioned to promote British business and maintain the levels of investment. The Government's plans to consult with business on issues relating to the R&D tax credit are also welcome.
Friday 18 June 2010
BP and Oil
The BP Oil disaster has been badly mishandled by all concerned. President Obama's personal attacks on Tony Hayward were not warranted. I have had interactions with Tony and heard him recently at our Business Forum in Port of Spain. He takes corporate social responsibility very seriously. However most people think that BP's initial reaction was not well thought out, Tony Haywood's gaffes about wanting his life back were not appreciated in the US. This has led to greater than was necessary pressure on the Oil Company. It is a good sign that BP has now agreed to suspend its dividend payments this year, and will instead pay into a compensation fund for those affected. This news has been met with a rise, the first since the crisis began, in BP's oil price. BP needs to reflect on whether its existing CSR policy is sufficient, or whether it was badly implemented in this situation.
BP's interaction with the US Government have not been well handled, neither the Company nor the President are currently considered to have handled the situation well. The company's initial reaction angered the American public and resulted in strong statements from the White House. The Presidents desire to 'kick some arse' was not good for the Company's share price. Tony Haywood faces congress this week in an exchange that is not going to be good for the Company's image. The Line taken by the US government in this crisis appears to disregard that BP is jointly listed in the US and London with nearly 30% of its shareholders based in America.
The Company's apparent lack of preparation for this disaster has left the BP open to criticism. All energy companies, including BP, need to invest more time and money in R&D to help prevent accidents of these types and have better plans in place to deal with the consequences of inevitable failures. On a similar note a renewed focus on developing alternative energy solutions would make drilling for oil in these difficult and dangerous locations unnecessary altogether.
BP's interaction with the US Government have not been well handled, neither the Company nor the President are currently considered to have handled the situation well. The company's initial reaction angered the American public and resulted in strong statements from the White House. The Presidents desire to 'kick some arse' was not good for the Company's share price. Tony Haywood faces congress this week in an exchange that is not going to be good for the Company's image. The Line taken by the US government in this crisis appears to disregard that BP is jointly listed in the US and London with nearly 30% of its shareholders based in America.
The Company's apparent lack of preparation for this disaster has left the BP open to criticism. All energy companies, including BP, need to invest more time and money in R&D to help prevent accidents of these types and have better plans in place to deal with the consequences of inevitable failures. On a similar note a renewed focus on developing alternative energy solutions would make drilling for oil in these difficult and dangerous locations unnecessary altogether.
Tuesday 8 June 2010
The new coalition government has a difficult tight rope to walk over the coming months, on one hand the deficit in public spending must be reduced – spending cuts and higher taxes will probably both be necessary. On the other hand the Government needs to be careful not to jeopardise the UK’s position as a global investment hub. The Budget on the 22nd of June must be carefully balanced to protect this, while delivering a tax system that is fairer to the less well off.
My suggestions for the government are:
The UK is more often than not either the largest or second largest source of investment in Commonwealth Countries. In return the UK is often the destination of choice for other Commonwealth countries outbound investment flows. This privileged position needs to be protected.
Government expenditure needs to reduced, there are many tasks currently undertaken by the public sector that the Private can deliver, particularly in international aid.
While I was pleased to hear in the Prime Minsters speech this morning that international aid is to be ring fenced, there is a need to refocus what it is spent on. Aid should be spent on improving the receiving countries ability to attract increased private sector investment that will promote job and wealth creation, creating a sustainable economy.
Finally the UK must preserve its Global Comparative advantage; it should implement a mechanism that attracts highly skilled and professional migrants to the UK.
My suggestions for the government are:
The UK is more often than not either the largest or second largest source of investment in Commonwealth Countries. In return the UK is often the destination of choice for other Commonwealth countries outbound investment flows. This privileged position needs to be protected.
Government expenditure needs to reduced, there are many tasks currently undertaken by the public sector that the Private can deliver, particularly in international aid.
While I was pleased to hear in the Prime Minsters speech this morning that international aid is to be ring fenced, there is a need to refocus what it is spent on. Aid should be spent on improving the receiving countries ability to attract increased private sector investment that will promote job and wealth creation, creating a sustainable economy.
Finally the UK must preserve its Global Comparative advantage; it should implement a mechanism that attracts highly skilled and professional migrants to the UK.
Wednesday 2 June 2010
Africa Day
Last week we celebrated Africa day with a dinner for High Commissioners and Ambassadors from African Countries. The Dinner was hosted by Essar Group and addressed by Antonio Gumende, High Commissioner for Mozambique and acting Dean of the African Union Heads of Mission. Discussions focused on increasing investment in Africa with a particular focus on Infrastructure and power generation. I would like to thank Essar Group’s Vice-Chair Ravi Ruia for flying in especially for the dinner.
The dinner marks a continued increase in interest and confidence in Africa from business around the world; capital flows rose by 16% up to a record $62 billion in 2008, while foreign direct investment fell 20% worldwide in the same year. Many countries are increasing their presence in Africa Singapore, Malaysia, Canada and the UK, to name but a few. Australia’s presence is also increasing, around 40 per cent of Australian mining companies' overseas projects are in Africa and Australia’s trade with the continent has grown about 9% a year for the last 10 years.
This renewed confidence was supported by a report in the FT this morning, that stated 500 of Africa’s companies have been displaying growth of about 8% a year since 1998; this is supported by a surge in export growth that is either exceeding or matching that of the BRIC countries. The last few decades of the 20th century were all about the Asian tigers driving Asia’s growth, the next 20 years could well be about the African Lions that will drive Africa’s.
The dinner marks a continued increase in interest and confidence in Africa from business around the world; capital flows rose by 16% up to a record $62 billion in 2008, while foreign direct investment fell 20% worldwide in the same year. Many countries are increasing their presence in Africa Singapore, Malaysia, Canada and the UK, to name but a few. Australia’s presence is also increasing, around 40 per cent of Australian mining companies' overseas projects are in Africa and Australia’s trade with the continent has grown about 9% a year for the last 10 years.
This renewed confidence was supported by a report in the FT this morning, that stated 500 of Africa’s companies have been displaying growth of about 8% a year since 1998; this is supported by a surge in export growth that is either exceeding or matching that of the BRIC countries. The last few decades of the 20th century were all about the Asian tigers driving Asia’s growth, the next 20 years could well be about the African Lions that will drive Africa’s.
Wednesday 26 May 2010
Rwanda Investment Forum
Last week CBC hosted the first international investment forum in Rwanda since the country joined the Commonwealth in November 2010. It was a pleasure to be back in Kigali with HE Paul Kagame and his team of Ministers who led the discussions at the Forum.
Rwanda has been a favourite destination of mine and CBC for the last 3 years and I am delighted that the Forum was a huge success. Over 300 delegates attended, nearly half of whom were made up from international investors, many visiting Rwanda for the first time. 10 Companies expressed an interest in setting up in Rwanda, including a large Indian ICT company, which will set up its Africa office in Kigali and also several proposals in Agriculture and Agri-processing.
I would like to express my personal gratitude to the British High Commissioner in Rwanda for hosting a reception for the international delegation, and to his wife for graciously preparing sushi for the guests. Another highlight of the Trip was a Commonwealth Vs Rwanda cricket match that very diplomatically resulted in a draw. Rwanda, with only 3 months membership under its belt is already acting as if it has been a member for years!
I am sure contributions and leadership of HE Paul Kagame will be very noticeable at all future commonwealth deliberations.
Rwanda has been a favourite destination of mine and CBC for the last 3 years and I am delighted that the Forum was a huge success. Over 300 delegates attended, nearly half of whom were made up from international investors, many visiting Rwanda for the first time. 10 Companies expressed an interest in setting up in Rwanda, including a large Indian ICT company, which will set up its Africa office in Kigali and also several proposals in Agriculture and Agri-processing.
I would like to express my personal gratitude to the British High Commissioner in Rwanda for hosting a reception for the international delegation, and to his wife for graciously preparing sushi for the guests. Another highlight of the Trip was a Commonwealth Vs Rwanda cricket match that very diplomatically resulted in a draw. Rwanda, with only 3 months membership under its belt is already acting as if it has been a member for years!
I am sure contributions and leadership of HE Paul Kagame will be very noticeable at all future commonwealth deliberations.
Friday 30 April 2010
The Commonwealth Factor and Africa
As I have said before in this blog, the Commonwealth's greatest strength is not its institutions but its networks, values and the, 'Commonwealth Factor' - the similar administrative, legal, financial and business practices that members share.
The impact of the Commonwealth Factor is best demonstrated in Sub-Saharan Africa. According to the International Financial Corporation’s (IFC) Doing Business Report 2010, 17 of the top 20 places to do business in Sub Saharan Africa are Commonwealth countries: Mauritius, South Africa, Botswana, Namibia, Rwanda, Zambia, Ghana, Kenya, Seychelles, Uganda, Swaziland, Nigeria, Lesotho, Tanzania, Malawi, Mozambique and The Gambia. A high ranking on the ease of doing business index means the regulatory and business environment is conducive to the operation of business and goes a long way to explain why Commonwealth countries outperform competitors.
Africa’s Commonwealth countries have shown good progress, reforming to become better business destinations over the last few years, with Mauritius, Mozambique, Sierra Leone, and Zambia all moving up the rankings in 2010. Rwanda’s case is extraordinary, rising from 158th in 2006 to 67th in 2010.
The impact of the Commonwealth Factor is best demonstrated in Sub-Saharan Africa. According to the International Financial Corporation’s (IFC) Doing Business Report 2010, 17 of the top 20 places to do business in Sub Saharan Africa are Commonwealth countries: Mauritius, South Africa, Botswana, Namibia, Rwanda, Zambia, Ghana, Kenya, Seychelles, Uganda, Swaziland, Nigeria, Lesotho, Tanzania, Malawi, Mozambique and The Gambia. A high ranking on the ease of doing business index means the regulatory and business environment is conducive to the operation of business and goes a long way to explain why Commonwealth countries outperform competitors.
Africa’s Commonwealth countries have shown good progress, reforming to become better business destinations over the last few years, with Mauritius, Mozambique, Sierra Leone, and Zambia all moving up the rankings in 2010. Rwanda’s case is extraordinary, rising from 158th in 2006 to 67th in 2010.
Monday 26 April 2010
The UK Election and the Economy
A recent article in the economist made some concerning comparisons between the UK's recovery from the recent financial crisis and Japans recovery from the Asian banking crisis in the 1990s. The report compared the 2 countries of level of indebtedness and found them similar; it also stated that Japan has never really recovered from its economic momentum since the crisis.
I agree with the Economist that this is an unlikely outcome for the UK; I have a lot of faith in the UK's businesses and entrepreneurs to find a way to stay profitable and keep growing. However this growth can only be assured if business and the wider economy are supported by the government. With elections fast approaching and the outcome more uncertain than in recent years there are signs of fear in the stock market and public anxiety around a hung parliament.
This is the worst time for British politicians to try to learn the art of government by coalition and compromise when the economy is still in need of strong leadership and decisive action. Whatever the form of the next British government takes it must be able to act rapidly and with conviction.
The polls are suggesting the Liberal Democrats are doing better than ever before, this must surely increase the chances of a Hung Parliament. I hope that any coalition Government can quickly form a consensus on the direction of Britain's economic recovery, and the parties' inability to agree does not prevent a return to sustained growth. I was surprised that Nick clegg still feels that Uk should join Euro. It would have been a disaster for Uk if it had joined Euro. UK is much better outside Euro so that it can control its monetary policy as Uk's Economy is very much linked to global economy. Singapore ,a much smaller country and economy, is in the same position and is able to see high growth as it controls its own currency.
What ever the outcome of the elections i hope politicians of all parties will be more honest with the public about the state of economy and the need for structural reforms to return to economic growth and to balance the economy between various sectors and particularly to increase the role of manufacturing. Hard decisions will need to taken sooner than latter particularly in balancing the reduced role of government and recovery of the economy.
I agree with the Economist that this is an unlikely outcome for the UK; I have a lot of faith in the UK's businesses and entrepreneurs to find a way to stay profitable and keep growing. However this growth can only be assured if business and the wider economy are supported by the government. With elections fast approaching and the outcome more uncertain than in recent years there are signs of fear in the stock market and public anxiety around a hung parliament.
This is the worst time for British politicians to try to learn the art of government by coalition and compromise when the economy is still in need of strong leadership and decisive action. Whatever the form of the next British government takes it must be able to act rapidly and with conviction.
The polls are suggesting the Liberal Democrats are doing better than ever before, this must surely increase the chances of a Hung Parliament. I hope that any coalition Government can quickly form a consensus on the direction of Britain's economic recovery, and the parties' inability to agree does not prevent a return to sustained growth. I was surprised that Nick clegg still feels that Uk should join Euro. It would have been a disaster for Uk if it had joined Euro. UK is much better outside Euro so that it can control its monetary policy as Uk's Economy is very much linked to global economy. Singapore ,a much smaller country and economy, is in the same position and is able to see high growth as it controls its own currency.
What ever the outcome of the elections i hope politicians of all parties will be more honest with the public about the state of economy and the need for structural reforms to return to economic growth and to balance the economy between various sectors and particularly to increase the role of manufacturing. Hard decisions will need to taken sooner than latter particularly in balancing the reduced role of government and recovery of the economy.
Tuesday 20 April 2010
Customer value and share value
After reading an interview with Paul Polman, the CEO of Unilever, in the FT I want to congratulate him for reopening an important debate, and I hope that other CEO's will follow his lead and start talking about who the most important stakeholder in a company should be. Paul's argument was that making share value the key objective of a business is great for in the short term but is not so good for the long term planning or prospects of a company. By focusing on the customer and consumer and ensuring the company acts as a good corporate citizen long term profits are ensured.
CBC's corporate social responsibility makes a similar point, while share holder value is important there are other considerations. Customers must be considered the most important stake holder, no company can continue without the continued support of its customers.
CBC's approach is based on the fact that Customers and Shareholders play the most important role in shaping the values and strategy of the Company.The other stakeholders being the employees and suppliers.
Good corporate citizenship based on customer satisfaction includes many benefits such as brand reputation, ability to enter new markets and defend existing ones and retain good employees. As Polman has demonstrated with Unilever companies that prioritise customers and act as responsible members of the communities they operate in "share value" success will follow.
CBC's corporate social responsibility makes a similar point, while share holder value is important there are other considerations. Customers must be considered the most important stake holder, no company can continue without the continued support of its customers.
CBC's approach is based on the fact that Customers and Shareholders play the most important role in shaping the values and strategy of the Company.The other stakeholders being the employees and suppliers.
Good corporate citizenship based on customer satisfaction includes many benefits such as brand reputation, ability to enter new markets and defend existing ones and retain good employees. As Polman has demonstrated with Unilever companies that prioritise customers and act as responsible members of the communities they operate in "share value" success will follow.
Wednesday 7 April 2010
India's second tier cities
I was in India earlier this month, as well as visiting the major business cities I spent time in some of the ‘second tier cities‘, Ahmadabad, Chennai and Kochi. What I noticed most of all was how well the infrastructure in these cities is developing to handle the increase in business there.
In Ahmadabad in particular, a city once renowned for its cost saving, the business district’s skyline is becoming more and more impressive. Business in these cities are following in the footsteps of the bigger cities and becoming more like their western counterparts, adopting western style business structures and marketing strategies. Where business were once housed in old building to avoid costs, they are becoming more and more willing to undertake the often extravagant costs of moving to high end, high tech office spaces with the view it will help get the next order and allow them to compete with rivals. This change in attitude should help make India’s second cities more competitive and drive forward their growth.
In Ahmadabad in particular, a city once renowned for its cost saving, the business district’s skyline is becoming more and more impressive. Business in these cities are following in the footsteps of the bigger cities and becoming more like their western counterparts, adopting western style business structures and marketing strategies. Where business were once housed in old building to avoid costs, they are becoming more and more willing to undertake the often extravagant costs of moving to high end, high tech office spaces with the view it will help get the next order and allow them to compete with rivals. This change in attitude should help make India’s second cities more competitive and drive forward their growth.
Friday 19 March 2010
Prime Minister Manning and CBF
It was a pleasure to catch up with Prime Minister Manning of Trinidad and Tobago last week while he was in London for Commonwealth Day. We discussed CHOGM and CBF and its impact on Trinidad and Tobago, the Prime Minster made it clear that he believes that the Business Forum is a vital part of the whole CHOGM experience. For any country that hosts CHOGM, he said, the key is maximizing the private sectors involvement.
Prime Minster Manning spoke of how by leverraging the Business Forum he was able to broaden the horizons of Trinidad and Tobago’s SME sector. By interacting with the global business leaders who attended the forum Trinidad’s small businessmen were able to develop new global linkages and partnerships. The Forum was also important in bringing new investment and investors to the Island by increasing the profile of the Country to an international audience.
The Prime Minster described how by interacting with the private sector and politicians who attended CHOGM he was able to get a better understanding of how other countries are managing to balance challenges such as climate change with the need to maintain high growth rates.
Prime Minister Manning was particularly proud of how successful the Forum was in promoting new linkages between the Commonwealth and the Americas, and suggested that Trinidad should be the host of a Global Business Forum early next year to keep up this momentum. I was delighted to hear this from the Prime Minister; we place a high value on his leadership and recognise the key role he played in making the Business Forum such a success.
Prime Minster Manning spoke of how by leverraging the Business Forum he was able to broaden the horizons of Trinidad and Tobago’s SME sector. By interacting with the global business leaders who attended the forum Trinidad’s small businessmen were able to develop new global linkages and partnerships. The Forum was also important in bringing new investment and investors to the Island by increasing the profile of the Country to an international audience.
The Prime Minster described how by interacting with the private sector and politicians who attended CHOGM he was able to get a better understanding of how other countries are managing to balance challenges such as climate change with the need to maintain high growth rates.
Prime Minister Manning was particularly proud of how successful the Forum was in promoting new linkages between the Commonwealth and the Americas, and suggested that Trinidad should be the host of a Global Business Forum early next year to keep up this momentum. I was delighted to hear this from the Prime Minister; we place a high value on his leadership and recognise the key role he played in making the Business Forum such a success.
Wednesday 3 March 2010
Encouraging signs in Malaysia
Last week I was in Kuala Lumpur, Malaysia to continue talks with Prime Minister, Najib Tun Razak, started at CBF in Trinidad. I had a very good meeting especially coming at a time when the economy is showing encouraging signs of growth estimated to be 5% for the coming year. The main theme of the discussion was on the Prime Ministers views on the return to global growth particularly through emerging markets like Malaysia. The Prime Minister told me that Malaysian Companies are becoming more and more active in other Asian Countries, particularly China, India and Indonesia.
The British High Commissioner to Malaysia, Boyd McCleary, confirmed the importance of the Malaysia to the developed world in the wake of the Financial Crisis, more and more British companies have a growing presence in Malaysia.
I met with a number of prominent Malaysian business leaders during the trip; they all expressed similar optimism and described growth plans for the coming year, from plantation projects in Indonesia, rural Malaysia and Nigeria to exporting the Malaysian experience in world class Infrastructure development to other markets, such as India. Malaysian companies are expecting real growth this year.
The British High Commissioner to Malaysia, Boyd McCleary, confirmed the importance of the Malaysia to the developed world in the wake of the Financial Crisis, more and more British companies have a growing presence in Malaysia.
I met with a number of prominent Malaysian business leaders during the trip; they all expressed similar optimism and described growth plans for the coming year, from plantation projects in Indonesia, rural Malaysia and Nigeria to exporting the Malaysian experience in world class Infrastructure development to other markets, such as India. Malaysian companies are expecting real growth this year.
Tuesday 23 February 2010
Africa Investment Forum
The Africa Investment Forum, which we held in Ghana for the first time, was the largest Investment Forum of its type CBC, has ever held. Over 700 delegates gathered from more than 30 countries for the Forum. One of the most impressive features of this year’s Forum was the wide scale involvement of Investment Promotion Agencies from across the Africa; over 220 projects were up for discussion.
3 Heads of State, 15 Ministers and over 50 Business leaders took part in the sessions; there were a couple of key themes I noticed coming out though out the Forum.
1) Every session, whatever the title on the programme eventually made mention of greater regional integration and the importance of enhancing Intra-Africa trade.
2) Secondly, one of the key impediments to growth and development highlighted at the forum was the need to do more to reduce the infrastructure gap in Africa; this was also flavoured by the talk of Greater regional cooperation – reductions in infrastructure barriers can happen faster if countries work for a more unified response.
3) The Importance of Agriculture for the coming decade, increasing rural incomes is essential to driving sustainable growth and development. The ever growing Global demand for food products is a perfect opportunity for Africa to taped its potential in this area.
The President of Togo, HE Faure Gnassingbe, requested that CBC take part in the promotion of Togo to International Investors. The request was made after the President addressed the opening ceremony and hosted a private Togo investor roundtable during the Forum.
The Africa Investment Forum 2010 was a great success and we look forward to carrying this though to the next AIF in Uganda, February 2010.
3 Heads of State, 15 Ministers and over 50 Business leaders took part in the sessions; there were a couple of key themes I noticed coming out though out the Forum.
1) Every session, whatever the title on the programme eventually made mention of greater regional integration and the importance of enhancing Intra-Africa trade.
2) Secondly, one of the key impediments to growth and development highlighted at the forum was the need to do more to reduce the infrastructure gap in Africa; this was also flavoured by the talk of Greater regional cooperation – reductions in infrastructure barriers can happen faster if countries work for a more unified response.
3) The Importance of Agriculture for the coming decade, increasing rural incomes is essential to driving sustainable growth and development. The ever growing Global demand for food products is a perfect opportunity for Africa to taped its potential in this area.
The President of Togo, HE Faure Gnassingbe, requested that CBC take part in the promotion of Togo to International Investors. The request was made after the President addressed the opening ceremony and hosted a private Togo investor roundtable during the Forum.
The Africa Investment Forum 2010 was a great success and we look forward to carrying this though to the next AIF in Uganda, February 2010.
Monday 1 February 2010
Talks in Uganda
Last week I was in Uganda to follow up on talks I had with President Museveni, while he was at the Commonwealth Business Forum in Trinidad and Tobago last November. We discussed how CBC could increase it interaction with Uganda, over the coming year, to develop an investment promotion programme, particularly focused on the areas of agriculture and skills development.
At meetings with the Minister of Finance, Hon. Syda Bbumba, I discussed the practical functions of the programme and the implementation details, particularly how we would help generate the required investment to support the growth of both small and commercial farms. We also discussed a similar plan for skills promotion in the country.
Before leaving the country on Thursday, I met with the Uganda Investment Authority, where it was agreed that CBC would bring its prestigious Africa Investment Forum to Uganda in February 2011 and that work would continue on the development of a large scale ICT park outside Kampala.
At meetings with the Minister of Finance, Hon. Syda Bbumba, I discussed the practical functions of the programme and the implementation details, particularly how we would help generate the required investment to support the growth of both small and commercial farms. We also discussed a similar plan for skills promotion in the country.
Before leaving the country on Thursday, I met with the Uganda Investment Authority, where it was agreed that CBC would bring its prestigious Africa Investment Forum to Uganda in February 2011 and that work would continue on the development of a large scale ICT park outside Kampala.
Monday 25 January 2010
India - economic optimism for 2010
After returning from India last week, one of the main differences in the conversations going on between business here in the UK and in India is the way growth is discussed. In the UK the talk is of recovery, in India the talk is all about how much the economy will grow this year. Discussion in India is optimistic, rather than the UKs current trend of Pessimism. The Federal Government of India is Predicting a return to growth of around 7% this year. The Chairman of ICICI bank is even more optimistic predicting India’s growth rate to be at 10% by 2011.
Much of this optimism comes from the changes we see in India, firstly the county never entered recession as the West did, there was only a slight drop in Growth. Secondly, the improvements to the country’s infrastructure are dramatic; the road network for example is almost unrecognisable from only 15 years ago. Entrepreneurs across the county are all looking for new opportunities, both national and international and the demand for luxury consumer goods in India is increasing year on year.
Ironically there is talk of Bonuses in the Indian Media, but it’s not focused on Bankers, rather IT companies. The rate of Growth in the IT sector has been much higher than expected over the last year, Tata Consultancy for example plan a 150% bonus pay out for 2010.
They are not the only company in the sector revealing higher than expected profits, nor is the IT Sector alone in displaying stronger than predicted results, the economic prospects for the coming year in India look great.
Much of this optimism comes from the changes we see in India, firstly the county never entered recession as the West did, there was only a slight drop in Growth. Secondly, the improvements to the country’s infrastructure are dramatic; the road network for example is almost unrecognisable from only 15 years ago. Entrepreneurs across the county are all looking for new opportunities, both national and international and the demand for luxury consumer goods in India is increasing year on year.
Ironically there is talk of Bonuses in the Indian Media, but it’s not focused on Bankers, rather IT companies. The rate of Growth in the IT sector has been much higher than expected over the last year, Tata Consultancy for example plan a 150% bonus pay out for 2010.
They are not the only company in the sector revealing higher than expected profits, nor is the IT Sector alone in displaying stronger than predicted results, the economic prospects for the coming year in India look great.
Thursday 14 January 2010
Commonwealth Games and Business
Later this year Delhi will host the 19th Commonwealth Games, as with all large expensive international events it is the long term effects and impact that there success is now measured on. Business Involvement at the Games will be essential to ensuring the Games have a lasting impact on the City, and was one of the most important reasons for the city agreeing to host. As we saw recently in Trinidad and Tobago at CHOGM the private sector presence can contribute the most to the host country, the new partnerships and relationships that started there ensure that the organising country’s investment pays off over the coming years.
Sporting Events are no different - the world cup in south Africa, for example, is expected to pump around R21.3-billion into South Africa's economy and create an estimated 159 000 new jobs. CBC will be working with CII to ensure that the Private Sector from across the Commonwealth is represented at the Games and that the Business dimension of the games is Strong.
Sporting Events are no different - the world cup in south Africa, for example, is expected to pump around R21.3-billion into South Africa's economy and create an estimated 159 000 new jobs. CBC will be working with CII to ensure that the Private Sector from across the Commonwealth is represented at the Games and that the Business dimension of the games is Strong.
Wednesday 6 January 2010
What will 2010 bring?
Contrary to all expectations at the beginning of the year 2009 ended with a majority of the developing nations in surprisingly strong economic positions. Most of the largest developing nation stock markets have recouped all the losses made in 2008, and countries such as China and India have avoided recession all together, only experiencing reduced growth. 2010 will have a much greater emphasis on the G20 and the BRICs countries than we have ever seen.
Recovery in the developed nations will now depend much more on how the consumer acts in India, China and other emerging markets. Demand for imports of high value manufactured goods from the BRIC countries can help drive forward recovery in western countries. There is evidence that Germany, France and Spain are enhancing manufacturing capacity to match the increasing demand from India and other countries, I hope the UK will follow suit.
Energy is going to be an important sector in 2010 as we move more towards clean technologies it will create new manufacturing opportunities in both the developing and developed world. Infrastructure represents a similar opportunity, the high demand in India and Africa will create opportunities for specialised companies in the western world. Africa will be the focus of a push for increased global agricultural production.
As Developing countries return to stronger growth they will help push the whole of the global economy out of recession. Consequently, how the developing world manages its economies will have a much greater impact on the western countries than ever before.
2009 was not the end of globalisation as some predicted, rather, we have seen just how linked the world economies have become. Globalisation will now be driven more by the BRIC countries, the G20 and the developing world than before, so it is in all our best interests to see the Developing world do better.
In this light I hope that 2010 will see a successful conclusion to the Doha Round of trade talks, this will depend much on the level of emphasis the developed countries put on it. In 2010 I think the major difference will be in the respective importance of the G20 and G8. The G20 will come to the fore on most Global Issues. There has been a reversal that will be all the more obvious in 2010, for the last 2 decades the consumer in the West has been buying from the manufacturer in the East, now it is the Consumers in Asian Countries that will drive forward the next stage of globalisation.
Recovery in the developed nations will now depend much more on how the consumer acts in India, China and other emerging markets. Demand for imports of high value manufactured goods from the BRIC countries can help drive forward recovery in western countries. There is evidence that Germany, France and Spain are enhancing manufacturing capacity to match the increasing demand from India and other countries, I hope the UK will follow suit.
Energy is going to be an important sector in 2010 as we move more towards clean technologies it will create new manufacturing opportunities in both the developing and developed world. Infrastructure represents a similar opportunity, the high demand in India and Africa will create opportunities for specialised companies in the western world. Africa will be the focus of a push for increased global agricultural production.
As Developing countries return to stronger growth they will help push the whole of the global economy out of recession. Consequently, how the developing world manages its economies will have a much greater impact on the western countries than ever before.
2009 was not the end of globalisation as some predicted, rather, we have seen just how linked the world economies have become. Globalisation will now be driven more by the BRIC countries, the G20 and the developing world than before, so it is in all our best interests to see the Developing world do better.
In this light I hope that 2010 will see a successful conclusion to the Doha Round of trade talks, this will depend much on the level of emphasis the developed countries put on it. In 2010 I think the major difference will be in the respective importance of the G20 and G8. The G20 will come to the fore on most Global Issues. There has been a reversal that will be all the more obvious in 2010, for the last 2 decades the consumer in the West has been buying from the manufacturer in the East, now it is the Consumers in Asian Countries that will drive forward the next stage of globalisation.
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