Lynette Chen: «The approach for doing business in Africa should be ‘business unusual’»

Lynette Chen is the CEO of the NEPAD Business Foundation, one of Africa’s leading membership based foundations for sustainable economic development. She will be addressing the issue of  ‘Businesses making a sustainable difference’ at the Mauritius Institute of Directors’ conference titled ‘Africa Rising!’ More on Africa’s economic emergence in the interview below.

BUSINESSMAG. How would you define the world’s sudden interest in Africa?

The world is fast realising that Africa is the last growth frontier for a variety of business ventures. There is tremendous potential that our young population possesses that if unlocked, will make this continent tell a different story. With a growing Africa based middle class, increase in access to technology and improvements in infrastructure, the world is beginning to see Africa as an investment destination.

BUSINESSMAG. There is the emergence of several MNCs on the African continent. What is being done to boost and promote local entrepreneurship?

The NEPAD Business Foundation supports the NEPAD vision by guiding business on the development priorities of the continent and conduct expected of them. In that regard, MNCs investing in Africa need to understand the importance of developing and supporting local entrepreneurs along the value chain in order for jobs and small businesses are created to ensure long term sustainable growth of the country.  The term “inclusive business” is becoming well-known amongst the corporate sector and this is an effort to integrate suppliers and small businesses into the value chain as well as demonstrating good corporate citizenship. Governments are putting in place measures to ensure this happens and in many countries – there are strict rules when entering into an investment, which require the investor to plan and implement these integration processes.

BUSINESSMAG. Many African countries are at an economic disadvantage due to their political instability. What, according to you, should be done to foster leaders that are able to propel their country’s economic development?

A realisation and understanding that political stability attracts capital and investments is important. African leaders are fast becoming aware that the world is a global market and capital mobility is rapid. Given that scenario, all countries are competing for the same capital that will grow their domestic industries. The more stable a country, the more investment flows which ultimately creates jobs which ensure development. A shift in mind-set for all leaders will make Africa grow even faster.

In an effort to capacitate future leaders of Africa, the NBF has launched an innovative leadership training programme called “1 million African leaders connect”, which aims to train and connect leaders at a management, youth and community level by 2030. 

BUSINESSMAG. You will also be speaking on businesses making a sustainable difference. What does this encompass and how can businesses achieve this?

The approach for doing business in Africa should be “business unusual” as the continent is an emerging market and many frameworks, policy and regulatory issues are being revised and redefined. Therefore, businesses should understand that in order to make a sustainable difference, new innovative approaches for sustainable local economic development needs to be implemented. Examples of good practice to achieve this would be: to partner and enter into joint ventures with local companies to ensure local representation, to invest in transfer of skills and training, to employ local citizens in all operations, to procure from local companies to develop SME’s and to invest in creating local manufacturing and processing industries.

Local entrepreneurial development is the most impotant difference. Being able to integrate local businesses and facilitate the development of local skills will ensure a more long lasting legacy.

BUSINESSMAG. There is a huge gap in terms of economic prosperity and welfare among countries in the African continent. This gap is even present among different regions of certain countries. How can this be addressed?

There are certain African countries that have been identified as the “growth nodes” for the continent, such as South Africa, Nigeria, Algeria, Kenya, Ghana, Egypt, Angola, Mozambique and Ethiopia. Neighbouring countries should leverage off the growth of these countries to increase their own economic growth potential. Therefore, regional integration and the harmonisation of regional policies, regulations and trade agreements are key to ensuring that the benefits of good growth some countries are experiencing also filter to other countries.

Over the past 7 years, there has been much effort to increase regional integration and successes can be seen from the ECOWAS, SADC and COMESA regions. 

Regionally integrated infrastructure development is expected to increase intra-Africa and international trade exponentially, as linkages in transportation networks improve. The three Regional Economic Communities (RECs) of East African Community (EAC), Southern Africa Development Community (SADC) and Common Market for East and Southern Africa (COMESA), have joined forces to create the Tripartite Alliance in order create a Free Trade Area (TFTA) in a bid to harmonise trade policies, create industrialisation zones and to enhance the capacity to jointly implement cross border infrastructure projects.

The Common Market for COMESA-EAC-SADC comprises 26 countries with a combined population of nearly 600 million people and a total Gross Domestic Product (GDP) of approximately US$1.0 trillion. The main objective of the COMESA-EAC-SADC Tripartite is strengthening and deepening economic integration of the southern and eastern Africa region. This will be achieved through harmonisation of policies and programmes across the three Regional Economic Communities (RECs) in the areas of trade, customs and infrastructure
development.

BUSINESSMAG. What should be Africa’s priority right now? How can the continent achieve sustainability for its people?

Africa’s priorities will be to attract investment that can unlock local value, develop regionally integrating infrastructure and create an environment promoting best practice corporate and political governance. Achieving the three will allow the continent to move to a higher economic level that supports higher GDP/per capita growth of countries. Increased economic activity leads to more jobs and enterprises being created, which will in turn ensure long term sustainable livelihoods for Africans and upliftment of social conditions.

BUSINESSMAG. What are your views on Mauritius as an integral part of Africa?

Mauritius is rated in the top five African countries of the Mo Ibrahim Governance index and World Bank’s “Ease of Doing Business in Africa” index. This means that the practices and processes in Mauritius are promoting and attracting investments and capital. Africa has a lot to share in terms of instituting good corporate governance and as such, Mauritius has a lot to contribute.

In addition, understanding that there is strong investment flows into Africa from international organisations, Mauritius has positioned itself very strategically to become the regional hub for financial services and ICT.