Africa doesn’t always feature high on the agenda at World Economic Forum events – but at Davos this year Old Mutual elevated the continent’s presence on the global stage.

The financial services group has partnered with Swiss-based think tank Africa Services and the Secretariat of the African Continental Free Trade Area (AfCFTA) to launch The Africa Collective, a platform for pan-African and global stakeholders to advance business and investment on the continent.

Old Mutual CEO Iain Williamson says the partnership will highlight opportunities presented by the continent, although uneven development means some countries currently have more to offer than others.

‘While parts of Africa remain unequal and there are challenges that have to be resolved, from poor infrastructure to political risk, the continent is the most demographically favourable region in the world,’ he points out.

‘By 2050, we will have the largest working-age population – a considerable advantage if people are well-educated and enabled to provide for themselves and their communities. We are potentially looking at the largest consumer market in the world. This is what makes Africa a potential powerhouse.’

Financial services in Africa

The Africa Collective will further raise the profile of the continent at a time when AfCFTA is gaining significant traction.

As one of the 13 flagship projects of Agenda 2063 of the African Union, AfCFTA sets the scene for a $3 trillion borderless market that is poised to drive unprecedented growth in Africa, potentially helping to lift millions out of poverty.

Currently, 45 of the 54 countries in Africa have deposited their ratification instruments, meaning it’s ‘all systems go’ to trade in this new single market.

From Old Mutual’s perspective as a financial services company, this is good news. ‘As a business rooted in Africa, I believe there’s great advantage to reducing barriers to trade and market growth,’ he says.

Old Mutual currently operates in 13 markets on the continent, and Williamson sees growth opportunities there too. ‘Underdeveloped markets can only mature if there is education around the necessity for financial services together with a sensible volume of underlying economic activity that drives the demand for those services,’ he says. ‘The opportunity really lies in market development.’

Removing barriers to business in Africa

That is one of the reasons The Africa Collective was formed. Williamson believes that it will ‘lean in’ to try to solve problems that are hampering business.

‘We won’t necessarily have the resources to solve them ourselves but getting the problems – and the potential solutions – onto the global agenda will ultimately help to remove some barriers.’

This includes priority items like roads and rail, border-post infrastructure, harmonising customs systems and visas for travel. ‘It’s often easier for a European or an American visitor to get around Africa than it is for African citizens,’ Williamson points out.

Another good example of what The Africa Collective can achieve is helping to harmonise pharmaceutical regulations. ‘If a generic drug is approved for use in particular countries, do we really need to get 50 plus approvals from every single African country before we can transport the medicines across borders?’

Although The Africa Collective will contribute to the idea of Africans solving their own problems for their mutual benefit through the mechanism of AfCFTA, its overall purpose is to persuade stakeholders to participate in the broader discussion.

‘We need collective political will and an understanding of the consequences of historical decisions to move us to a more positive place without any African country feeling its sovereignty is being compromised,’ he says.

The Secretariat of AfCFTA and WEF hosted a business breakfast at Davos for multinationals who already have a presence in Africa. ‘The value of this was to raise awareness of opportunities as well as what it will take to capture those opportunities in the future,’ he said.

Becoming an active participant in the mineral supply chain

Although many African countries would be slow to adopt electric vehicles due to their inadequate power systems, an export market for these vehicles could develop fairly rapidly says Williamson.

‘We have big manufacturing plants for vehicles in Morocco and South Africa, and some of the biggest supplies of lithium in the world in Zambia and Zimbabwe. There’s an opportunity to link supply chains across countries, so you could extract minerals in one country, beneficiate them in another, and supply those countries that are building the vehicles,’ he says.

Identifying the gaps could allow parts of the supply chain to be developed locally rather than extracting raw materials and exporting them for beneficiation.

Reasons to be optimistic

The Africa Collective’s task is made easier by the fact that 45 nations have made real progress in making AfCFTA a reality, Williamson says. ‘Further progress will require short-term political will to push some decisions through. One of the biggest risks is that commitment might fade. However, if we’re realistic about the challenges we face, we won’t be deterred.

‘I believe there’s a lot of goodwill from powerful organisations that would like to see this collective succeed.’

The big topics under discussion at Davos included the global economy, climate change and energy challenges. Despite these global problems, Williamson says: ‘The mood was one of hope rather than despondency, but we do have challenges pertaining to inflation, energy costs and reliable energy supply. Many developed countries may well enter a recession later this year and we’re in for a difficult 12–24 months.’

However, the world has lived through an extended period of low-interest rates. ‘To some extent, this is a return to reality, but it will be painful for many countries,’ he comments.

The general feeling also was that countries in the global south should not be made to pay for the climate ‘sins’ of the global north, and Western countries should assist less developed nations on the path to a just transition.

‘This is a pragmatic approach, which I am pleased about, since the ‘green at any cost’ paradigm wouldn’t work in sub-Saharan Africa and other countries in the south,’ Williamson says. ‘We would like to see concrete investments that would help a very “brown” energy system become greener.’