This article was first published on LinkedIn on 17 December 2019
In November 2019 I chaired the GTR Africa London conference at the Park Plaza London Victoria, which had a record 475 delegates in attendance. The focus of our discussions was on trade finance, insurance and infrastructure investment in the continent. China, fintech and sustainability were key themes, cropping up throughout the day’s panels and breakout discussions. I moderated several sessions and here follow my key takeaways from the day:
1) US EXIM is back! I started the day over a ‘morning cappuccino’ with Judith Pryor, board member of Export-Import Bank of the United States (US EXIM). Judith took us through US EXIM’s history in Africa, from the first financing in Angola in 1942 through AGOA, PEPFAR & Power Africa to the Trump administration’s Prosper Africa programme. After a ‘near death experience’ when its operations were shuttered, US EXIM expects the approval of a new seven-year mandate and it is stepping up its investments in Africa. These will include US EXIM’s largest ever financing anywhere in the world: USD5 billion for an LNG project in Mozambique. This is a welcome return to the fold of a vital partner in US-Africa trade and investment.
2) China’s involvement in Africa remains controversial. I chaired a spirited debate on the motion: “This house believes that China’s strategic investment in Africa is overall positive”. Speaking in favour of the motion, Helena Huang (ICBC Standard Bank) and Cavlin Walker (CWP) argued that Chinese investments are diversifying away from a pure commodity focus, that China has filled an urgent financing gap for many African governments and that the quality of Chinese work is improving. Speaking against, Elizabeth Stephens (Geopolitical Risk Advisory) and Robert Besseling (EXX Africa) argued that Chinese investment has primarily benefitted Africa’s leaders, not ordinary Africans, and that some African governments are pushing back against Chinese financing over environmental and transparency concerns. Ultimately the conference was not convinced of China’s intentions in Africa – the final vote on Slido was 70% against the motion. Perhaps if the vote had been taken in China or Africa the outcome might have been different!
3) The next generation of solar tech is changing the game. Simon Bransfield-Garth (Azuri Technologies) and Henry Clarke (SunCulture) discussed how the latest solar technology can be combined with other tech – mobile payments, water pumps – to deliver a startling array of goods and services to Africans who are currently off the national grid. These range from consumer and farmer input financing for the so-called ‘unbankable’ to micro-insurance for the so-called ‘uninsurable’. In the process the combination of solar with other technologies can create consumers ‘out of thin air’, giving them a digital footprint and credit history that can be leveraged for other services. The speed with which solar technology is improving with each iteration was summed up by Simon: “Seven years ago Azuri was basically a solar-powered torch; today it is a 32-inch television. In five years’ time distributed solar units will be able to power every routine device you have in your home. At that point, who cares whether you are on the grid?”
4) Blockchain technology could provide the breakthrough for some of the most stubborn blockages in trade finance. The ability of blockchain to deliver digital trust makes it an ideal technology for transferring documentation and assets, settling transactions between parties and storing KYC & AML data. The tech breakout session profiled four innovators who are deploying distributed ledger technology (DLT) to address diverse issues in African trade finance: these included the distribution of trade assets (TradeAssets), deal origination and business development (Orbitt Capital), providing liquidity to SMEs (Trade Finance Market), and creating bespoke KYC and fraud detection (Cognissys). With such a diversity of blockchain solutions being developed it’s time we stopped focusing on the speculative world of cryptocurrencies and recognise the breakthroughs that blockchain is delivering in the trade value chain.
5) Sustainability is now part of everyday business, not a desirable add-on. Sustainability was one of the watchwords of the conference and throughout the day we heard many definitions of what it means in theory and in practice. The three panellists on the sustainability panel I moderated gave their own interpretations: Shona Tatchel (Halotrade) argued that the current business model doesn’t work and that if we don’t change it radically we will destroy the planet. Too many companies are focused on exploiting resources and workers in order to boost profits and there is little accountability for the impact they have on the environment and society. Mark Eckstein (CDC) argued that sustainability is fundamentally about financial stability: projects must deliver both financial returns but also an environmental and social dividend. Unless profitability and sustainability are explicitly linked, projects are likely to fail on both monetary and environmental grounds. Aidan Shilling (Arviem) warned that all multinationals need credibility when claiming their business model is sustainable: the new generation of consumers is not as forgiving and will switch brand the moment they doubt the integrity of a company’s operations.
6) Everyone recognises the opportunity of African markets, but also the challenges of doing business there. During the conference delegates were invited to contribute to a word cloud describing in one word what doing business in African markets meant for them. By the end of the day four words stood out: opportunity, patience, challenging and exciting. I thought they sum it up pretty well. It takes patient capital to realise the opportunities in Africa – the days of suitcase banking are long over. But for all the challenges African markets throw up, they remain an exciting place to do business. I suspect that this is why so many professionals who attend GTR events have developed a passion for Africa and relish the challenge of putting together deals across the continent.
