Tuesday, 29 June 2010


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.

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.

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.

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.

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.

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.