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The East African : Nov 14th 2015
32 Want to benefit f≥om the Af≥ican p≥omise? You must show up intrinsically intertwined with the private sector on the continent. Everywhere in the world, the private sector is the engine of growth, once the government has provided the right business environment. Emerging local and global T realities suggest, however, that this sector can no longer afford to be a detached observer. It must be an active partner all the time, especially in creation of favourable environments for investment and business growth. It must also support probity in government. This was one of the conclu- sions of the Fifth Africa Governance, Leadership and Management Convention, organised by the Kenya Institute of Management and Nigeria’s African Leadership Forum from October 6 to 9 in Kenya’s Kwale County. The meeting trained the spot- light on the private sector and the emerging security challenges in Africa. The focus was particularly on terrorism and health issues as hurdles to business growth in Africa. The continent is increasingly flagged as the next frontier for global entrepreneurship. During his visit to Kenya and Ethiopia in July, US President Barack Obama acknowledged that Africa is on the rise and, indeed, over the past four years, this has been President Obama’s message to the world. Africa is the place of hope. One international forum af- ter another acclaims Africa’s remarkable promise of opportunities for everybody. There is nothing new about the percep- he future of Africa’s economic growth and the destiny of millions of Africans will remain tion that it is now easier to do business in Africa than anywhere else. The continent boasts an ever-expanding youthful workforce. By some estimates, Africa will, by 2040, have a larger workforce than India, or even China. Add to this renewable internal fresh water, throw in the best global potential for green energy and cap it with an expanding educated class and an abundance of natural resources and you couldn’t possibly get anything better. It should not be a surprise that in gloomy global economic times over the past three years, Africa has experienced an average of 6 per cent economic growth. In 2009, General Electric committed to invest $2 billion in green energy in Africa by 2018. Such is the extent of the faith of the global investment community in Africa. Addressing an international forum in Washington DC, GE Group chief executive officer Jeffrey R. Immelt hailed the developments in Africa saying, “The growth is real. The challenges remain. But they can be solved. To play, you have to show up.” Showing up is obligatory for those who want to gain from the African promise. There is a Kiswahili saying that there is nothing for those who don’t show up. Similarly, those who show up must be part of the search for solutions to the challenges to which GE alludes. As is the case everywhere else in the world, security challenges stand out, with terrorism as their face. The world has never been the same since September 11. We wake up every day to the fear of global terror. Africa is easily the most vulnerable place in this context: Without strong COMMENTARY BARRACK MULUKA AND DAVID MUTURI “Economic planners must prioritise employment of young people.” monitoring mechanisms and instruments, many parts of the continent have been hit time and again. The times when investors used to pack up and decamp in the face of environmental challenges are no more, however. The merchants of terror have shown that no place is immune to their dissoluteness. The private sector can no longer, therefore, leave it to the public sector to wrestle with the problems. The private and public sectors must find synergy in the fight against terrorism. The strike against the World Chinese and Kenyan construction workers build the standard gauge railway. Picture: File Trade Centre on 9/11 was itself a symbolic blow against the heart of capitalism and entrepreneurship. Capital cannot, accordingly, run away from the merchants of global terror. To attempt to do so is to try to run away from your shadow. For terrorism hides and strikes in the shadows of capitalism. Health concerns such as Ebola and other hitherto unknown or rare scourges also pose a formidable risk to growth in Africa. Once again, the reality on the ground has demonstrated that you cannot run away from these challenges. When Ebola struck in West Africa last year, it was just a matter of days before the reverberations were felt in far away lands. American doctor Kent Brantly contracted the virus while attending to patients The EastAfrican BUSINESS NOVEMBER 14-20,2015 in Liberia. Weeks later, he was discharged from Emory University Hospital in Atlanta, after medical care that came close to a miracle. He had fully recovered from the virus. Nothing could possibly lend better credence to the dictum that where there is a will, there is a way. The global private sector could work with Africa to keep at bay the threats posed to investment by such diseases as Ebola, Marburg and HIV/Aids. Africa’s youth bulge is one of the attractions for investment and business growth on the continent. Paradoxically, it is also a major security risk. Speaking at the AGLMC, the patron Olusegun Obasanjo said, “One major human security threat is the rising joblessness among African youth, partly arising from education systems that fail to provide the youth with skills to secure a living.” Constitute a pool The desperation that attends joblessness among young people undermines progress in Africa, the former Nigerian president observed. This is especially so in countries emerging from conflict. Such youth constitute a pool for recruitment by terrorist organisations and other criminal groups. To paraphrase Marx and Engels, they have nothing to lose but their desperation. But the young people, being sexually active, also remain the most vulnerable demographic group to the threat of HIV/Aids. Their high mobility also makes them more exposed to other scourges like Ebola. African economic planners must prioritise gainful and sustainable employment among young people. There must be clear harmony between the gears of training and the engines of labour. We must continuously interrogate the relevance of training to job and wealth creation – and specifically whether this helps Africa’s young people to fit in. Obasanjo concluded, “Until this situation changes, the likelihood of genuine peace and development in Africa remains small.” D≥. David Mutu≥i is the CEO of KIM while Ba≥≥ack Muluka is a communications consultant. Sto≥my ma≥kets today may o≠e≥ steady g≥owth tomo≥≥ow By CONRAD DE AENLLE New York Times News Service THERE ARE times when a cautious investor can take risks that a rough-and-ready speculator cannot. When the price of an asset has plunged so far, so fast that it seems to get cheaper by the day, it can be imprudent for a short-term trader to bet that the trend will change. An investor planning for the long haul can be confident, however, that what seems like a bargain will pay off eventually. Certain depressed assets — notably stocks in emerging markets or those related to energy and other commodities, or the commodities themselves — fit the bill, investment advisers say. They could offer excellent returns in coming years, even if they are risky propositions in coming weeks. “Valuation is a very important consideration for long-term returns, but it is a terrible mechanism to time when to buy and sell things,” said Russ Koesterich, global chief investment strategist at fundmanagement firm BlackRock. He finds good values available but advises, “Don’t kid yourself that you’re going to get in at the low.” Among the beaten-down groups of investments, Koesterich prefers emerging markets. “It’s a universally hated asset class” that “has underperformed for years,” he said. He cautioned that while emerging markets in general are cheap, there is great variation in prospects among individual countries. The best long-term bets, in his view, include India and Mexico. Chris Brightman, a financial adviser at Research Affiliates 7.9pc less than half the valuation of US stocks, based on a measure that compares prices with an average of companies’ long-term earnings, a way to compensate for businesscycle fluctuations, and at less than 60 per cent of their own average valuation over the past 20 years. The discrepancies have led him The emerging markets’ return a year, net of inflation for the next decade in Newport Beach, California, highlighted in a recent report how cheap emerging markets are relative to others and to their own history. They were trading at to calculate that emerging markets will return 7.9 per cent a year for the next decade, net of inflation, compared with 1.1 per cent for their US counterparts. He makes no claim about any shorter horizon. “Speculators in equities ask how I can be sure that equity prices in emerging markets will rise more than equity prices in the United States over the coming year,” Brightman wrote. “I respond that I have no clue about the prospects for short-term price changes. I am not speculating on price changes, I explain. I am investing to build long-term wealth.” As strategists at HSBC note, the developing world “appears to have inherited a bad legacy from the developed world, namely low growth and high debt.” They go on to say that the “bleak fundamental outlook makes us remain cautious” and that “current valuations offer only limited opportunities on a very selective basis.” HSBC recommends owning stocks in China, India, Mexico and Taiwan and avoiding Brazil, Malaysia, South Africa and Thailand.
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