At our last CEO Engagement for the year, we hosted Maria Ramos, the CEO of Barclays Africa who spoke to us about SA’s influence on the African growth trajectory. SA has long held the promise of being the driving force behind Africa’s economic resurgence. However, geopolitical shifts and the impact this has on the global economy, as well as SA’s economic strain resulting from political instability and an imminent ratings downgrade, have called into question not only global sentiment about Africa’s growth trajectory, but also the potential for SA to be the gateway to the continent.
With respect to global growth dynamics, and to contextualise SA’s position within the global arena, Maria said that we often tell ourselves the global economy is part of the economic challenges we are facing. At the recent annual meetings of the World Bank and the International Monetary Fund (IMF), the latest forecast for the global growth rate was published. It was interesting to hear that while the global economy is currently growing at close to its long-run average growth rate of 3.6%, and expected to improve to 3.8% for 2018, Sub-Saharan Africa has seen a fragile growth performance forecast to end at just 2.6% for 2017.
Nigeria, SA and Angola are Sub-Saharan Africa’s largest economies, yet they remain the laggards and continue to drag the continents’ growth performance down. Maria said that it is unfortunate that political interference and corruption across the African continent is a massive hinderance in terms of Africa’s growth, and added that it has come to dominate so much and caused a great deal of friction and uncertainty.
Across our continent, infrastructure is a challenge and an opportunity. Infrastructure provision per capita income in emerging markets and low-income countries is a fraction of what is available, and in comparison, to spend which occurs in advanced economies. Maria went on to say that even when projects attract sufficient financing, delivering the infrastructure remains a challenge since we lack skilled engineers, commercial experts, project managers, amongst others. This skills deficit should be addressed urgently – platinum and gold are no longer Africa’s assets, skilled people are.
As a continent, our spending on infrastructure, although it has nearly doubled from $56 billion between 2001 and 2006, to $80 billion in 2015, as a percentage of GDP is only around 3.5%. Maria said that this percentage needs to be in the order of 4.5% – 5% and to reach this 4.5%, $150 billion must be invested annually until 2025 to catch up to the rest of the global economy. With regards to financial infrastructure, Maria highlighted that we do not have a complete set of financial markets across the continent. This serves as a further hinderance to our growth, as it makes infrastructure investment an extremely trying task. We desperately need greater depth of African financial markets to finance infrastructure appropriately, and to develop our financial markets. Click here to view the Barclays 2017 Africa Financial Markets Index.
The session ended with a vibrant discussion between Maria and our CEO’s where Maria shared that as an organisation, Barclays Africa’s investment spend is geared towards three key areas – education, financial inclusion and entrepreneur development. By the end of this year, the group would have spent just under R2 million on education, as well as dispersed 3000 bursaries and scholarships across Africa. Maria encouraged business leaders to seek out opportunities in these areas in order to take Africa to the next level.