"Africa's Industrial Drive: The Private Sector and Corporate Citizenship", the appointed ...
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"Africa's Industrial Drive: The Private Sector and Corporate Citizenship" , the appointed theme of this high-level Summit, organised jointly by the United Nations and the African Union, examined ongoing efforts to improve the environment for doing business in Africa. Click here to review the Summit report & overview

This is a report which constitutes a summary of events with respect to the African Private Sector Forum conference attended by Hanief Ebrahim of Deloitte in Addis Ababa, Ethiopia, during the week of 22-24 January 2008. The objective of the event was to discuss private sector investment in Africa. The President of Cote d'Ivoire graced the conference attendees with his presence, alongside senior business representatives from West Africa in order to table the crucial matters pertaining to investment within Africa.

Background

The event was a summit organised jointly by the United Nations and the African Union and jointly endorsed by the United Nations Global Compact and the European Union (Africa) desk. Deloitte, being a signatory to the UN Global Compact, has Mrs Futhi Mtoba, Chair of Deloitte, as the African representative for business at the UN Global Compact.

With the theme "Africa's Industrial Drive: The Private Sector and Corporate Citizenship" , the high-level summit addressed the drivers for Africa's industrial development and corporate citizenship in the region.

Examining ongoing efforts to improve the environment for doing business in Africa, the Summit highlighted the leadership role that responsible businesses can play in promoting the rapid and sustainable socio-economic development of the continent.

The Summit served as a platform for dialogue between the private sector and policy makers as well as an opportunity for the private sector to network and exchange views on ways of eliminating bottlenecks in doing business in Africa.

The Summit was designed to give voice to the private sector in advance of the policy formulation taking place at the AU Summit this week from 28-31 January 2008, and the findings and key recommendations of the Summit were to be presented to the relevant policy organs of the Africa Union immediately after the Summit.

Objective of Summit

The key objectives of the Summit were:

  • To assess the case for Africa's industrial development and consider lessons learned from other regional experiences;
  • To highlight the significance of the good corporate governance and corporate citizenship as promoted by the UN Global Compact for business development;
  • To examine the role of the private sector in accelerating Africa's industrial drive and showcase good practices that contribute to sustainable development; and
  • To promote partnerships between the public and the private sectors (PPPs) and Global Compact networks.

Delegates ranged from Commissioners; Secretariats; and Ministers to members of the private sector such as Chairmen/women; CEOs; COOs; MDs; and Executive Directors representing numerous African countries. Deloitte was asked to represent the NEPAD Business Forum (NBF) as well as to consider and consolidate the best interest of the Department of Trade and Industry.

The Summit

NBF was invited to participate in the event. As Deloitte has nominated Mr Hanief Ebahim, Corporate Affairs Head of Deloitte, to head up the NBF's Audit and Accounting Sector, he attended the event on behalf of NBF.

After an initial introduction and overview, delegates were split into three groups to discuss the following critical themes:

  • Group 1.
    Accelerating Africa's industrial development with corporate governance and corporate citizenship instruments
  • Group 2.
    Achieving economic transformation in Africa: The role of public-private partnerships (PPP's) and
  • Group 3.
    The role of the private sector in supporting the promotion of regional integration in Africa.

Deloitte was bestowed the singular honour of chairing Group 3 in the break-out sessions. The other panelists with Hanief Ebrahim were:

  1. Professor Maggie Kigozi, CEO, Uganda Investment Authority
  2. Professor Festus Fajana, AU Commission
  3. Professor Lambert N' Galadigo Bamba Commissioner for Macro Economic Affairs, Economic Council of West African States (ECOWAS)
  4. Dr Azad Jeetun, Secretary General, Professional Employees Commission for Africa

Regional Integration

The thrust of the Deloitte position with regard to regional integration was that the fortunes of the African countries' economies are inextricably linked to each other. Africa must have an interest in promoting higher levels of industrialisation and economic integration on the continent for obvious reasons - employment, poverty alleviation and sustainable growth.

Although much emphasis has been placed on efforts to promote African industrialisation this has been focused on issues of trade, particularly those of market access. However a closer examination of discourse indicates that the major constraint is on the supply side of African economies, in terms of both productive capabilities and infrastructure. Increased political stability on the continent has unlocked rapid growth in a range of African economies, although off a low base (the current crisis in Kenya excluded).

The suggestion is endorsed that a Regional and African Industrial and Trade Framework be developed in order to take advantage of the opportunities arising from growth on the continent, as well as to promote greater levels of continental industrialisation and economic integration. This includes the investigation of the development of regional value chains, based on each African country's actual or potential advantage in different value chain segments.

The Private Sectors' Role in Industrial Development

The thrust of the Deloitte position on industrial development of the continent was that in order to contribute towards Africa's goals for 2014 and beyond, the Continental Industrial Policy Framework trajectory should at the very least include:

  • The facilitation of diversification beyond Africa's current reliance on traditional commodities and non-tradable services. This requires the promotion of increased value-addition characterized particularly by movement into non-traditional tradable goods and services that are competitive in both export markets and the various African domestic economies.
  • The long-term intensification of Africa's industrialization process, and a movement towards a twenty-first century knowledge economy.
  • The promotion of a more labour-absorbing industrialization path with a particular emphasis on tradable labour-intensive goods and services and economic linkages that catalyse employment creation (to deal, inter alia, with poverty alleviation).
  • The promotion of a broader-based industrialization path characterized by greater levels of participation by historically disadvantaged economic citizens and marginalised regions in the mainstream of the continental industrial economy.
  • Contributing to industrial development with strong emphasis on building regional productive capabilities.

The essence of the Deloitte position on industrial development of the continent further stressed that:

  • Industrial policy cannot be the domain of a single African government or regional/sub-regional authority. It must demand intensive co-ordination across the range of all stakeholders, that is, government, private sector, organs of the public sector and beyond. Industrial policy can also only be implemented successfully if it is aligned with four associated and supporting sets of objectives:
    1. A stable and supportive macroeconomic and regulatory environment.
    2. Appropriate skills development and education systems which are increasingly integrated with the needs of the industrial economy.
    3. Sufficient, reliable and competitively priced traditional and modern infrastructure. (e.g. with direct reference to current electricity crisis in South Africa).
    4. Adequate support for various forms of technological investment within the various African economies.

This in turn must be linked to ongoing research in promoting regional industrialisation across the continent in a sustainable manner.

It is widely recognized that private firms under-invest in innovation and technology. The suggestion made was that the Summit highlights and focuses on two main areas:

  1. Further development of pockets of technology in which Africa has a potential advantage; and
  2. Stronger support for product development and the commercialization of intellectual property (IP), particularly IP developed through public funding. (The DTI position).

Group 3 gave the following feedback and recommendations back to the full plenary group:

A: Actions Required by Government (The Public Sector)
  1. Governments to demonstrate their political will and commit more meaningfully to regional integration;
  2. To further strengthen the dialogue with private sector;
  3. The African Union to deepen and widen the involvement of the private sector in its Forum through:
    1. Submitting the recommendations of the private sector Forum to the Assembly;
    2. Ensuring proper implementation at all levels, regional, sub-regional, national; and
    3. Developing mechanisms that would ensure full and transparent feed-back/communication with all stakeholders;
  4. Governments to provide conducive, regulatory and enabling environments specifically in the area of: trade, peace and security, good governance;
  5. Governments to provide macroeconomics stability to attract investments from the private sector;
  6. Invest in the following key critical areas (in no particular order):
    1. Education;
    2. Health;
    3. SME's;
    4. ICT;
    5. Infrastructure; and
    6. Research and development
  7. Integrating cross border informal trade, for example trade by women which contributes significantly to the active role played by the private sector;
  8. Governments to align their regional integration efforts with the complementary efforts in the private sector;
  9. To develop a visible and accessible electronic repository of information that indicates the current status of integration efforts;
  10. Build upon and strengthen existing and parallel accords;

B: Actions by the Private Sector

  1. To take a step up, embrace and more intensely join in the continental narrative for regional integration;
  2. Private sector to align their efforts towards regional integration with governments and other stakeholders;
  3. To encourage synergies so that regional integration is the domain of all stakeholders;
  4. To support macroeconomic frameworks and political stability through economic and sustainable development;
  5. To support the existing regional associations, sub-regional associations and national organs;
  6. To support (financially) the programs, projects and institutions aimed at regional integration;
  7. To promote the model of "made in Africa" and marketing Africa as a destination of choice;
  8. To play a more meaningful advocacy role with regard to regional integration;
  9. To develop a best practice resource that showcases success stories for ideation and innovation;
  10. To develop a business directory to identify experts in Africa;
  11. To call on governments to implement the recommendations / declarations that have been developed at the continental and regional level;
  12. Private sector to continue networking within their countries and across boundaries in order to create regional markets; and
  13. Private sector to invest in the following key critical areas (in no particular order):
    1. Education;
    2. Health;
    3. SMMEs;
    4. ICT;
    5. Infrastructure; and
    6. Research and development

Concluding Remarks:

It is important just to restate and note the context.

NEPAD has been conceived by African Heads of State, with the fundamental objective to promote sustainable development on the African continent, in a manner that embodies social, economic and environmental dimensions. These efforts have received the fullest support from the G8 Nations, the African Union, the World Economic Forum, and the United Nations, as well as many other public and private institutions, including the World Bank and the International Monetary Fund.

The regional economic communities (RECs) as building blocks of the AU, the parent body of the NEPAD initiative, form the sub-regional level for planning, co-ordination and execution and monitoring of the respective projects agreed to by NEPAD.

NEPAD and by extension the NEPAD Business Foundation, which Deloitte are actively involved with, reflects the belief of all African leaders that they have the responsibility, together with the African people, to address:

  • The lack of development and growth on the continent.
  • The pressing problems of poverty and social exclusion that face the majority of the African population.
  • Africa's increasing marginalisation from global markets for goods, services and capital.

The Summit emphasised that Africa is a continent that is rich in natural resources and has a highly cost-effective labour base; it is for these reasons amongst others, that as a continent, it has a substantial amount to offer the world and humanity. NEPAD is the vehicle through which the continent will be united and promoted, thereby increasing its competitiveness in global markets and putting it on a path of sustainable growth and development.

Also, the Summit amplified the view, underscored by all delegates, that Africa is on the threshold of a new economic era, and the time has come for her people to take control of their destiny, and responsibility for freeing themselves from poverty and underdevelopment. It was noted that Africa is not a poor continent in terms of resources – it is the African people that are poor.

To correct this, both public and private sectors need to work consciously to assist in ending conflicts, raise levels of trust, build conditions conducive to economic growth and sustainable development, and accelerate economic integration through policy reforms and increased investment in infrastructure. It is ultimately about developing the continent as a united economic and trading bloc, and thereby increasing its competitiveness.

All of these ties in to a firm conviction that resonated at the Summit: that sustainable development is not possible without a vibrant private sector, both domestic and international. As NEPAD is about creating conditions conducive to private sector investment in African countries, the challenge for the private sector is thus to identify unfolding opportunities in the African region, and to take a medium to long-term view of pursuing such opportunities.

On behalf of the NBF, Deloitte was able to extol their ‘virtues' in four crucial areas:

  • The efforts in relation to the elimination of corruption - synergies exist with their Forensics division;
  • The development of superb accounting and auditing practices - Deloitte already has a footprint within NEPAD through Mrs Futhi Mtoba;
  • The support of principles of good corporate governance - Deloitte already has a footprint in this field with regard to the work of Roy Shough;
  • The NBF and Deloitte's commitment to Corporate Citizenship and Corporate Social Responsibility – Deloitte are starting to make a more broad impact.

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