The Economist: African High-Growth Markets Conference

Speech Given By Sheikh Mohammed Hussein Al Amoudi
Founder & Owner, MIDROC & Saudi Star
at the Economist African High-Growth Markets Summit
2 December 2013, Addis Sheraton, Addis Ababa, Ethiopia

Excellencies, Ladies and Gentlemen

I am a Saudi investor who invests and believes in Ethiopia. What is being achieved by Prime Minister Desalegn and was achieved by Prime Minister Meles Zenawi, and by the other Government Ministers is now spreading through the whole continent, transforming Africa into a high growth market.

We are not only seeing unparalleled levels of growth in countries such as Ethiopia but we are seeing new models for regional collaboration. For example, our neighbor Kenya will now have the opportunity to obtain cheaper electricity from Ethiopia because of the agreement to construct a power line, over 1,000 kilometres long, across the border, using excess power generated by the new dam.

This is just one example of many African projects that cross borders. The extra capacity generated by the Ethiopian Government’s commitment to making best use of its access to hydro-electricity provides power to the towns of North East Kenya. That means jobs for Africans and jobs mean a chance to rise out of poverty.

I am also contributing directly to employment through my investments. For example, our agribusiness companies Horizon and Agriceft manage over 56,000 hectares of developed land in the Oromia, SNNPR and Amhara regions. What this means is that over 48,000 people have permanent or seasonal jobs and that we have provided housing and social services for a total population of 180,000. These companies produce and export coffee, flowers, cereals, tea fruits and vegetables. These exports drive jobs, housing and social services.

Here are some more figures for you that will show you the scale of production: over 11 million stems of special cut flowers, over 116,000 metric tonnes of fruits and vegetables, over 45,000 metric tonnes of cereals and over 8,000 metric tonnes of coffee. We have over 85% of the national tea market, amounting to around 10,000 metric tonnnes. These levels of production show what can be achieved by private enterprise working with an effective government.

Of course, Africa still has problems like poverty, disease, and conflict but the Continent is beginning to claim its place as a major growth market. As the middle class grows, they will help create the wealth needed to banish poverty, disease and conflict.

The interest by investors in Africa as a high growth market is a recent phenomenon. I am pleased to see the respected Economist holding this event. It shows this increased level of interest in Africa; but it is now time to turn the excitement in investing in Africa into concrete business commitments.

We all live in an interconnected world now. We have seen a movement toward globalisation and there is no turning back. What we now need to do is to make sure that Africa benefits from globalisation and is a true equal in international trade. When we have a world of equals trading from local and regional strengths we are likely to be a much more peaceful world.

I am certainly proud to say that Ethiopia is one of the African nations which is leading this historic development. However, one of the lessons of Ethiopian development is that the process of creating a stable modern state, amidst many social problems, requires a strong partnership between Government and business.

The aims of both sides of the African state and private sector are much the same – a prosperous, highly educated country that can stand on its own feet as centre of production and as a regional partner in international trade.

I think it important, not only for Ethiopia, but for all of Africa, that we learn best practices from the rest of the world. We must ensure that investment in manufacturing and in other goods and services is coupled with investment in improving the lives of Africans – in areas like healthcare and education.

There is much talk of inequality and poverty and rightly so. The World Bank notes that almost 50% of Africans still live in extreme poverty and that must change. The best way forward is to create self-sustaining economic development. We will need committed businessmen to act as partners alongside Government to share the burden of development.

One of the biggest problems in Africa today is the lack of enough trained and educated manpower at the local community level. Too many educated Africans leave. We must encourage them to stay and we must also train middle managers and executives, doctors and nurses and teachers who will supply the human capital required for sustainable African development.

Every private sector investor should help ‘grow their own’ talent and create a work force that spreads technology, knowledge and a commitment to hard work throughout the Continent.

I have substantial manufacturing and commercial interests in Ethiopia, but all of these interests need highly educated managers and administrators. Therefore it is in both my interest and the country’s interest to invest actively in higher education as MIDROC Ethiopia has done in Unity University.

There is no market for our goods and services if our people are poor, hungry and sick. Therefore, it pays for us to invest in manufacturing that creates jobs, in improved agricultural production and in healthcare.

Through Saudi Star, our main agribusiness interest, we invest in land that previously would not support crops. By adding fresh capital and technical expertise, we transform this land into a potential source of food not only to feed our own people and to create jobs, but also to earn foreign currency from export which is vital if the broader economy is to prosper.

Similarly, in healthcare, I have committed significant sums to fight AIDS in Africa, a disease that has weakened a whole generation. I would like to give special praise to the Clinton Foundation and the Clinton Health Access Initiative and the work of ICASA. These are all initiatives that I – and my companies – have supported.

In addition, I recently announced an agreement to bring pharmaceuticals production to Ethiopia in association with the highly regarded Jordanian pharmaceuticals company Hikma with the specific aim of producing high quality drugs for export across Africa.

Private enterprise’s main aim is to make capital work hard and create more capital for investment in yet more productive capacity. A high growth market needs to encourage private enterprise to grab opportunities and make them work fast in order to create self-sustaining growth.

But Africa’s opportunity lies in the involvement of the private sector, working with stable and responsible governments like Ethiopia, to find the opportunities that strengthen our managerial and administrative capacity and bring the best of technology to Africa.

I want to talk now about technology transfer and its importance. Again, you will forgive me if I speak of what I know best – my own experience.

The question is how to transform Africa into a technological equal. I see this as having three components: encouraging our most highly educated who are overseas to return home to a land of opportunity; being confident in making use of the best technologies from elsewhere to solve our problems and create our opportunities; and beginning the process of investing in technological development ourselves.

I have adopted this strategy wherever I could, especially in Ethiopian manufacturing and agribusiness. Every time we build a new factory (as with the new soft drinks production facility in Mekele), we partner experienced non-African engineers with our own managers and workers so that those workers learn the skills and the Ethiopian consumer always gets the best available product at the best reasonable price. Ethiopia gets the benefit of the jobs creation that goes with the development.

Saudi Star has not been afraid to collaborate very closely with the best talent available in agro-engineering to ensure the most efficient and sustainable production of such commodities as rice. But again we train and use local people to manage and work at our facilities.

Similarly, I invested (and I think of it as an investment) in Africa’s largest observatory high in the clear mountains north of here because Africa also needs to understand the technology of space for the sake of its agriculture and communications. In the meantime, it should gain revenue as a tourist destination and for astronomers who will benefit from the clarity of our skies for their research.

My investment philosophy is of course guided by my religion. I have the cultural advantage over many Western businesses of being a Muslim. I do not say that lightly because our tradition of ‘zakat’ helps obligate the wealthy to give back to society, through investments in social service, education and charity. This obligation has been discovered in the West recently as Corporate Social Responsibility. Across Africa, there is a strong traditional culture of community and mutual assistance.

Africa is the same but also different from other markets. Its current high growth prospects depend on socially-minded local businesses working with strong management to help attract overseas technology and capital on the one hand and set free the amazing potential of the African people on the other – both as entrepreneurial people and as communities.

Somewhere in a village an African is born today who may transform the world as Bill Gates has done. If, by chance, they read this in forty years, I hope they will follow the leadership of the best of our time.

As investors, you will be the more welcome and the more successful if you also engage with the whole human supply chain in Africa and invest in education and welfare in the communities that are you are doing business with. Investment in education of the African workforce of the future and in the local communities is very much part of the new African business model.

We must all – government and the private sector – work together if we are to reach our goals of a more prosperous Africa where all of its people, from every nation, can achieve their full potential.

Thank you.