It’s hard to imagine two gatherings more different, on their surface, between TED Global in Arusha, and the World Economic Forum’s meeting in Cape Town, a week later. I’m spending 15 days in Tanzania and South Africa, working out of a single suitcase, which means I’ve got a sport coat, but not a suit. And I’m way, way underdressed for this event, which is held in Cape Town’s international conference center and the accompanying Sheraton Hotel. If you weren’t very observant about who was seated around a meeting table, it could as easily be New York, London, Tokyo.
It will be interesting to see if South African reality intrudes on the gathering. There’s a general strike, organized by the Congress of South African Trade Unions, joining striking government workers. The government workers haven’t been able to agree on a salary increase with the government, and they’ve been striking for 13 days now. As of today, the trade unions have called a general strike, urging everyone to stay home from work… and threatening people who are working. My taxi driver this morning reported that the parked cars of workers at their jobs are a major target for strikers, who want to punish those people for going to work. Adding complexity to the situation, students have joined the strike because their teachers went on strike, cancelling their exams. This means that students won’t have the chance to qualify for university places, which is understandably angering them, and some have taken to the streets, protesting both the government and the teachers who are on strike.
While we’re a few thousand kilometers from Arusha, and in a comfortable interzone that feels as much like LA as South Africa, the same topics and some of the same people are on the table as in last week’s conference. I’m sitting with Salim Amin, the remarkable founder of A24, who spoke at TED, and Dan Shine, who runs 50×15 for AMD, who announced AMD’s support for the laptop for fellows program on the last day of the TED conference. We’re part of a program at the World Economic Forum, called “Young Global Leaders”, which is an attempt to open WEF to a more diverse set of participants, inviting 660 young leaders so far, and expanding at 250 new participants a year. Our first meeting is a discussion on the Investment Climate Facility for Africa. (Like all of WEF, these meetings are under Chatham House rules, so I can try to give you a sense for the discussions, but not any attributable quotes.)
ICF is an outgrowth of the Blair Commission on Africa, which determined that a major African issue was unavailability of investment funding, both domestic and international. While the project was officially launched a year ago, it’s taken nine months to find a national home for it – Tanzania finally invited the project in this March, offering tax exempt status and full diplomatic protection, and the fund (which is a non-profit trust) is now based in Dar es Salaam. (This is clearly a symbol for how difficult governmental cooperation projects can be in an African context.) The project is designed to exist only for seven years, so there’s pressure to get projects off the ground very quickly.
The priorities for ICF look a great deal like priorities suggested by many of the pro-business TED speakers: intra-African trade, strong infrastructural investment, a focus on power generation and on building local capital markets. These are huge, broad priorities – the project now launching in Rwanda is a good example of what specific interventions ICF intends to fund. The Rwandan project has three dimensions: reforming business registration, hoping to make the process as smooth as in Norway or Latvia; setting up and staffing (possibly with foreign legal talent) a commercial court to address a backload of 2,700 cases; working on land registration, so that property can be registered within thirty days. (Hernando de Soto and “The Mystery of Capital” is invoked more than once around the table…)
The choice of Rwanda as the venue for the first project raises some tough questions around the table. An argument is offered that Rwanda is moving very quickly because the President has been willing to get personally involved and to move projects forward very quickly. A YGL knowledgeable about Zimbabwe points to the danger of trusting “big men”, observing that Robert Mugabe created a very efficient and business-friendly state in the early 1980s before “going bonkers” – he points to the need for institutions, not reliance on individuals. The supporters of Rwanda as the first venue for ICF activities point out that President Kagame has set up a system of contracts and accountability and holds himself accountable as well, reporting to the press and fielding questions every six months. (This press, of course, rates as one of the least free as assessed by Freedom House, tying with Sudan and beating only Zimbabwe, Eritrea and Equatorial Guinea in Africa. This raises some questions about just how accountable the Rwandan press can hold a leader.)
There’s an interesting debate about privatization and the role of government in creating infrastructure. Our ICF representative points out that there’s a balancing act between allowing private support for the creation of infrastructure, and the resistance of local populations to this private involvement. No one likes to pay to use toll roads, but allowing private investors to build this key infrastructure may be the only way to get it created, as governments aren’t capable of funding the infrastructure themselves without overtaxing their citizens… and their citizens have real economic losses based on the lack of these roads. Several concrete examples are offered, mostly from Tanzania, about how the absence of infrastructure keeps road usage free in financial terms, but expensive in terms of time lost – if it costs 10 cents to take a ferry, but costs 2 hours to wait for your space on the ferry, it’s a much greater economic cost than the 10 cents spent.
Another major topic of conversation is the need to harness expatriate remittance. It’s pointed out that Africa, continent-wide, receives far more support via remittance than international aid. Harnessing these remittances – which usually go directly to families – and using them as a form of investment is a huge potential for ICF. I offered a thought about “modular investment”: reflecting on the growth of the mobile phone industry in Africa, it seems clear that at least two factors were key – companies could get into the game for a few million dollars, not billions, and much of the financing for cell networks came from their users, through their purchase of handsets. I wonder whether a similar model could harness remittance income to produce modular power systems – could you harness the money that expatriates would send home to buy diesel generators, bring it together and match it with funding from groups like ICF and invest in power generating facilities to serve local areas with greater efficiency and at lower cost. (Maybe it’s time for me to learn something about electricity, so I’m not a complete idiot about these issues.)