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.

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.

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.

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.