The B20 South Africa Summit showcased “SA at its best”, says Standard Bank Group CEO Sim Tshabalala.
With Africa in the global spotlight, he also called on the continent’s business and political leaders to “use its own resources more, for its own development”.
Tshabalala was speaking to Moneyweb at the close of the B20 event in Sandton on Thursday, which preceded the weekend’s historic G20 Leaders’ Summit.
It is the first time that Africa has hosted the G20 and B20 summits. Standard Bank Group – the largest bank in Africa by assets – was a lead sponsor of B20 South Africa.
Discussions around the cost of capital in Africa dominated deliberations at the B20, the official business dialogue of the G20.
Tshabalala and other leaders once again raised the issue of the negative impact of the poor ratings of African countries by global rating agencies, which drive up the cost of capital, cost of investment in infrastructure, and effectively the cost of doing business in Africa.
Unlocking local pension funds across the continent was highlighted several times as one of the solutions to address Africa’s projected $100 billion infrastructure gap and to help lower the cost of capital.
“Africa faces a heavy premium when it comes to the cost of capital, and yes, using the vast capital in some of our own pension funds is something that we need to seriously look at,” Tshabalala told Moneyweb.
He said investing locally will also lead to attracting foreign investment and other sources of capital, thereby boosting Africa’s overall growth and development.
Tshabalala chaired the Finance and Infrastructure Task Force for this year’s B20, which presented three main recommendations that were adopted and put forward to the G20. Lungisa Fuzile, CEO of Standard Bank Group’s Africa Regions and Offshore, was the deputy chair.
Co-chairs on the task force included Anne Richards, former CEO of Fidelity International; Benjamin Hung, President: International at Standard Chartered; Daniel Pinto, President and COO at JPMorgan Chase; Gianluca Riccio, chair of the Finance Committee at the Organisation for Economic Co-operation and Development; John Denton, Secretary-General of the International Chamber of Commerce; Luciana Ribeiro, founding partner of eB Capital; Samaila Zubairu, CEO of Africa Finance Corporation; Strive Masiyiwa, founder and Executive Chair of Econet and Cassava; Tareq Muhmood, Regional President at Visa; and Thierry Deau, CEO of Meridiam.
The three main recommendations
Recommendation 1: Support the expansion of investable infrastructure projects
- Provide targeted support for infrastructure projects across their development cycle to reduce pipeline bottlenecks and drop-offs.
- Prioritise the provision of critical infrastructure, with greater focus on international coordination and cooperation.
Recommendation 2: Improve access to capital by increasing the availability, effectiveness and resilience of public, private and philanthropic investment
- Build investment capacity by expanding the availability of new and existing sources of capital and addressing regulatory considerations.
- Explore improvements to data and information availability to support credit rating assessments, capital allocation, and opportunities to reduce the cost of capital.
- Derisk investing through increased use of concessional blended finance and public-private philanthropic partnerships (PPPPs), and other scalable private capital mobilisation techniques and credit insurance mechanisms.
Recommendation 3: Enhance the flow of funds between investors, infrastructure projects and the wider economy
- Facilitate the flow of funds between investors and infrastructure projects, both within and across borders.
- Enhance working capital and payment efficiency to facilitate the flow of funds throughout infrastructure supply chains.
- Support wider economic development and growth by facilitating the flow of funds from infrastructure investments into the wider economy.
“Although our recommendations are directed towards the G20 as a whole, they are especially focused on emerging markets and developing economies [EMDEs],” Tshabalala writes in the foreword of the final Finance and Infrastructure Task Force document.
“During Africa’s first G20 presidency, we believe that this focus is both appropriate and essential,” he notes.
“The G20 has committed to broad-based growth and prosperity through global cooperation – a goal that is shared by the overall theme of South Africa’s B20 year, and that we have aimed to reflect throughout our paper. In our view, supporting EMDEs is the most efficient way to support that global goal,” adds Tshabalala.
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