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Business around the world is currently focused on a crucial issue for its survival and growth: how to reimagine the role of corporations.
The message is clear: we must define ourselves as more than just an investor for a high shareholder return; we must also be a trustworthy and reliable partner for development.
We must therefore invest time and effort in understanding what is now being called "stakeholder capitalism". This means recognising that the long-term viability of our businesses as engines of value creation is largely a function of the viability of the societies and economies in which we operate.
Put differently, businesses are stakeholders in the health of their social, policy and economic enabling environment.
We all have an intrinsic material stake in the social cohesion of the jurisdictions in which we have significant operations. As a result, we are being called upon to harmonise the needs of all stakeholders, including but not only shareholders.
So how do we do it, and how do we do it in Africa in particular?
In my view, the African Growth Platform (AGP) that has been launched by the World Economic Forum is a living example of how to go about it.
The AGP is bringing stakeholders together to enable specific interventions that can significantly improve the ability of businesses within target sectors to grow and create jobs.
The platform was launched at WEF Africa in Cape Town last year, and we are already making solid progress with its implementation. (I have "skin in the game", as they say, as I co-chair a regional stewardship board that is overseeing its implementation.)
Broadly speaking, our objective is to address Africa’s job creation crisis by massively scaling up millions of SMEs and start-ups across the continent by bringing together governments, investors and entrepreneurs to enhance funding prospects and create better enabling environments for small business growth.
Our target is 100 million SMEs and start-ups by 2025.
The AGP is a business community-driven response to the current youth unemployment crisis and entails helping small businesses grow beyond their domestic borders and compete in international markets through intentional linkages to the supply chains and value chains of large corporations.
African economic growth is projected to be 4.1% this year by the African Development Bank. While higher than that of other emerging and developing countries, it remains insufficient to address the structural challenges of persistent current and fiscal deficits, debt vulnerability, acute youth unemployment and infrastructure backlogs.
No single stakeholder can resolve these issues alone, try as they might – not in an era of purposeful partnerships, inclusive growth and stakeholder capitalism. But we can certainly achieve a lot more if all Africa’s stakeholders act in concert.
For example, there is the question of a borderless Africa, which is not just a political ideal. We could draw lessons from Asia in this regard, particularly the growth of China's middle class. A borderless China has in 40 years seen phenomenal economic development to become the second largest economy in the world.
A continent that moves as one when drawing investment and developing infrastructure would fare better than one that was fragmented.
We need to think continentally, whether we think trade and investment or infrastructure. The major challenge for the continent is the seriousness with which it takes its borders. They are too hard and need to be softened.
The good news is that there is momentum we can build on.
The latest Africa Visa Openness Index Report shows that African countries are on average becoming more open to each other. But the fact that Africans still require visas to travel to just over half of other African countries shows that more progress is needed to realise free movement of people and goods on the continent.
Similarly, it is quite lamentable that Africa currently has the lowest percentage of intra-regional trade in the world at 18%, compared with 70% in Europe, 55% in North America, 45% in Asia, and 35% in Latin America. According to the African Export-Import Bank, the current 18% figure could more than double within the first decade after implementing the recently announced Africa Continental Free Trade Agreement (ACFTA).
It is my conviction that ACFTA would be enabled by an African leadership from across society that champions a Pan-African rather than a nationalist agenda. The dream of a single market in Africa needs to become a reality in practice.
I recognise that considerable progress has been made over the past decade on establishing regional transport corridors. On the eve of this new decade, how fast can these infrastructure corridors be transformed into globally competitive industrial corridors?
There is a yearning for more action and much less talk.
We will all have to work together to enable an inclusive and diverse business environment, equipping the next generation with the tools to make a meaningful impact on Africa’s future - and the future of the world.
Pityana is president of Business Unity South Africa. This is an edited version of a speech delivered on 4 March 2020 at the Black Business Council Business Summit in Johannesburg. Views expressed are his own.
