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 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.

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.

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.

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.

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.

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.