Financial Times Africa Summit: What Makes Africa Work, by Prof. Yemi osinbajo

Distinguished Ladies and Gentlemen

It is a special pleasure and privilege to be here with you this morning. And I think the Financial Times deserves every commendation for providing this platform, for discussing the region’s investment climate with a global audience . I am also grateful for the invitation to deliver this Keynote Address.

I am told that this year’s summit seeks to focus our attention on what is working in Africa in the hope of drawing broader lessons that could benefit the continent as a whole.

I have also been asked to speak briefly on our Ease of doing business efforts in Nigeria.

Regarding the question that FT asks, What makes Africa work?, I am pleased to say that searching for answers is not as exasperating as it might have been even a decade ago. Today we can demonstrate with clear examples that what makes Africa work are the ingenuity and resilience of the people, especially its 70% youth population, leadership and good governance, allowing the private sector and markets to function, focusing on infrastructural development, and the incredible opportunities that abound. Somehow everyone has a hunch that if you are not around when Africa truly gets going, it would be much like the skeptics who stood on the sidelines in the 1990s convinced that China was going nowhere. How wrong they were!

Strong visionary leadership committed to good governance has proved to be critical where our economies have recorded successes. Nigeria earning 60% less revenue than 5 years ago, last year invested N1.3t in infrastructure, the largest capital spend in its history. And will increase that in the 2018 budget. Good governance, prudent management of resources, means that you can do more with less. Ethiopia delivered its light rail and within Addis ahead of schedule and with no cost overruns. Rwanda has shrugged off the tragedy of genocide of barely 20 years ago, delivering on infrastructure and earned its place as the second easiest place to do business in Africa. Ghana is galloping away with GDP growth figures this year of 9%.

Across the entire continent there is a commitment to providing much needed infrastructure in the form of power stations, ports, rail networks, roads, that not only bring down the cost of doing business but also actively engage the private sector in funding, operation and or ownership.

Nigeria recently announced the commencement of the process of concessioning its major airports with a view to attracting world class which it hopes to attract the investors .But perhaps most importantly Africa now recognizes the limitations of governments, in cash and capacity, to run businesses. Wisdom today is in letting the private sector invest wherever it can and in practically any sector of the economy even those that once carried the halo of national security assets such as telecoms and power. Consequently we have seen the emergence of dynamic pan-African investors, who on account of their track records are able to borrow commercially cheaper than Governments. Aliko Dangote, is of course an excellent example with investments in cement manufacturing in 10 African countries. Is about to complete a 650000 barrels per day Refinery in Lagos Nigeria, the largest single line Refinery in the world and larger than all four of government owned refineries put together. A dedicated 550 kilometer subsea pipeline passing through major gas processing hubs brings crude to the refinery. He is also investing in a 3million Metric Ton fertilizer plant in the location, the largest single line in the world.

Although the sizes of investments differ, the subtext is the same, the confidence of local African investors in the opportunities available on the continent. In broadband infrastructure Funke Opeke, Nigerian born broadband entrepreneur’s MAIN ONE company launched West Africa’s first privately owned submarine cable. The cable was built over a 2 year period and the initial investment of $240 million was financed entirely by African investors and the project broke even just over 2 years after launch. Even during the economic turbulence, in 2016, private capital recognized the potential in. Infrastructure investments. General Electric (GE), infused $186M of investment in Phase 1 of the Nigerian Fast Power Program, and entered into an MOU with seven States in the North of Nigeria where radiation is highest, to supply 500MW of solar power across the states. GE is also finalizing the documentation for the concession of our Lagos Kano narrow gauge rail line, which will focus on cargo transportation from the Apapa Port northwards passing through several economically strategic cities Northwards to Kano. This involves a total investment of USD2.2billion.

And the opportunities are enormous indeed. Let me tell you another quick story. Nigeria’s 180 million people, over 50 million have no power. As part of our diversifying power sources to improve access we started a programme of providing solar power in 20,000 homes in rural villages. We started in Wuna a village just outside Abuja. Wuna is an agrarian community. It is not on the grid, and had no other source of light. To charge their phones an entrepreneur with a small generator runs a service. You take your phone to his shop once a day or so, you pay a small fee for charging. Life in Wuna shuts down at about 7pm until daylight. Working with a PPP model.

The government owned NDPHC partnered with Azuri technology a private solar company to provide a domestic solar solution. Azuri had provided the same end to end service in the East Africa. . A solar home system, including a payment system. The system cost N1,900 a month ( about 7 dollars a month) . For the first time in its existence the village now has running water solar powered ….. the school has power . The school hall is now used a community all in the evenings. Each home has 4 points of light.

Children can now stay up and do some studying at night. Many of Wuna’s women who make process their millet and yams at night now. New jobs have been created, solar installers, maintenance, payment systems. One guy has lost his business in Wuna The phone charger. Every household can now charge their phones. There a millions of homes waiting for solar power. There are opportunities for Many Azuris.

The opportunities in our power sector are immense, especially as we open the sector further. This month the National Electricity Regulatory Commission in August issued the eligible customer directives and will this month issue directives on independent metering. The eligible customer regime allows a willing seller willing buyer arrangements in the sale of power. While the independent metering allows independent entities aside from registered power distribution companies to sell and install meters to customers and be paid directly as collections are made from metered customers. This deepening of the privatization of the power sector is bound to create a fresh bounce in investment activity.

The story of investors in agriculture in Nigeria is also worth hearing. R Carlos, is a Mexican farmer and proprietor of San Carlos farms, possibly the largest banana and pineapples farm in Mexico. He partnered with local investors to replicate his hugely successful fruit and vegetable farms in Mexico in Nigeria. The idea was to grow for export. He currently farms close to 5000 hectares. After his first harvest, he exported nothing but turned in a decent profit. His partners asked him what the magic was. His answer, we cannot even satisfy the local demand, besides according to him it was even more lucrative to sell locally than to export. Agricultural production, or manufacture of fast moving goods in a market the size of Nigeria and the adjoining ECOWAS market is quite frankly a no- brainer.

Fahad Awadh, a 29-year old entrepreneur from Tanzania, who set up a cashew processing facility in Tanzania also underscores the immense opportunities in the agriculture value chain. The factory brings international standards and traceability to the cashew nuts. The company’s flagship processing facility in Zanzibar has an installed capacity of 2,500 Tons per annum, and recently raised a $500,000 investment from the Africa Enterprise Challenge Fund to establish another processing facility in Mtwara, south-eastern Tanzania

But If I were a betting man I would surely put my money on African businesses that demonstrate an awareness of how technology will be an exponential catalyst for business. All over Africa telephony and technology are unearthing riches hitherto unknown. Kenya’s M-pesa has become the largest mobile telephony payment solution in the world. The story of how MTN in Nigeria became the largest mobile network in Africa in less than a decade is still the stuff of legendary investment stories. But the point to note is that those who missed that pioneer telecoms opportunity typically assumed that the Nigerian market was large but not rich enough to translate the numbers to cash. How wrong they were.

Today, companies such as Flutterwave a payment solutions company, Andela a software development engineering company Jobberman, an on-line human resource , and Konga, an on line mall , are poignant examples of how young African entrepreneurs are using technology disruptively to create profit in various business lines. And evidently, smart money all over the world is paying attention.

For example, Flutterwave, saw an investment of 10 million USD, and Konga an impressive 25 million USD, the second biggest amount raised by an African start-up business on the continent. And Andela attracted equity investment from Facebook Mark Zuckerberg.

Over the last few decades, the global perception of Africa has evolved from a “Hopeless Continent” to the “Africa Rising” rhetoric, to a pride of “Lions on the Move”. But however one chooses to slice it, the African growth story is real. Major global analysts appear united in the view that Africca Has the highest number of economies projected to grow above 5% by 2030. Although in the last few years we have seen a number of African economies experience major economic challenges due to the crash in resource prices on the global market,

And as a result, Africa’s real GDP grew at an average of 3.3 percent a year between 2010 and 2015, considerably slower than the 5.4 percent from 2000 to 2010. And although FDIs and other capital flows to Africa have slowed and accessing global debt markets is tough. Yet, this overall picture is misleading.

When you unpack the average growth rate of the African region, you find a good number of outlier growth stories, such as Ghana, which recently recorded a 9% year-on-year growth in GDP for the second quarter of 2017 — I believe the highest in the world. In 2016, many other African economies maintained high growth rates — for example, Ethiopia and Cote d’Ivoire grew by approximately 8%; while Kenya, Mauritius, Rwanda and Senegal grew by about 6% on average.

The rest of Africa posted accelerating growth at an average annual rate of 4.4 percent in 2010 to 2015, compared with 4.1 percent in 2000 to 2010.

All told I think it. Is evident that the continent’s fundamentals are genuinely strong.

Permit me then to speak briefly about some of the specific efforts that we are making in Nigeria to enable the private sector to thrive. Specifically and in addition to on-going investments in production and infrastructure we are undertaking extensive ‘ease of doing business’ reforms.

To start with, we have worked assiduously to improve macroeconomic conditions. After a continuous slide in growth since 2014, the trend of growth in GDP has turned around with a modest growth of 0.5% in the second quarter of this year while inflation, though still somewhat high, has declined from its peak of 18.7% in January 2017 to about 16% today.

The outlook going forward is quite positive based on improvements in oil prices and production and the trend of leading indicators such as positive purchasing managers indices, a revived stock exchange and increasing foreign exchange reserves.

Moreover, the uncertainties in the foreign exchange market have abated with the introduction of a new window for investors and exporters (NIFEX) which gives more transparency and guarantees repatriation of funds. The results have been encouraging as the inflows of capital in the second quarter of 2017 of about $1.8 billion were almost double the amount of $908 million imported in the first quarter of the year.

Indeed, investor interest remains undoubtedly strong with announced investments of $22.42 billion from January to August 2017 in 41 projects across 22 states.

Importantly, for the first time, coordinated efforts are underway to make it easier to do business in Nigeria. Through systemic changes, we are repositioning regulators as facilitators of business, and are steadily improving transparency and efficiency of service delivery by the public sector.

The In the first stage, reforms were introduced under a 60-day national action plan focused on eight areas that make it easier to register businesses, obtain construction permits, get credit, pay taxes, get electricity, trade across borders, facilitate entry and exit of people and register property.”

Practical examples of success include leveraging the use of technology to fast track business registration and payment of taxes, a functioning, tried and tested 48 hour electronic visa procedure, and an Executive Order mandating greater transparency and efficiency across all government agencies. These reforms have led to reduction in cost and time, as well as greater transparency for small and medium sized enterprises in particular.

These reforms are complemented by a welcoming attitude to investment. To properly guide investors and make it easier for them to access required information, the National Investment Promotion Commission will be releasing a Compendium of Investment Incentives in Nigeria by the end of this month. Similarly, we have recently reviewed and revised our pioneer status programme which gives five year tax holidays across eligible sectors.

Following the 70% success rate achieved in the first phase of the ease of doing business reforms we recently embarked on a second national action plan which will have 11 areas of focus and will run for 60 days from October 2017.

The Nigerian government is intent on bringing about rapid, sustainable and inclusive growth in order to improve the lot of our dynamic and hardworking people. We realise that the scale of the challenge is huge given our large and rapidly growing population and the relentless march of progress in other parts of the world. We are nevertheless determined and optimistic that Nigeria will along with the rest of the continent will bring about an Africa that works for all its people and contributes to global growth and prosperity.

Three lessons that Africa has learnt in the past few years, first diversification from resource based revenues, second private and sector and markets are key and creating the right environment is not optional.

Full text of the Vice President, Prof. Yemi Osinbajo at Financial Times Africa Summit