Education, governance, and connectivity are three key factors driving Africa’s growth as an emerging market, according to Jonathan Berman, a fellow of the Milken Institute Center for Financial Markets and former senior partner at Dalberg, a strategy consulting firm focused on frontier markets.
Berman served as the keynote speaker Tuesday morning at the sixth annual Center for Emerging Markets Symposium. Northeastern hosted the conference, titled “Beyond the BRICs” and co-organized by the Center for Emerging Markets in the D’Amore-McKim School of Business and Cornell University’s Emerging Markets Institute. BRIC refers to the world’s four emerging national economies: Brazil, Russia, India, and China.
In Africa, Berman said, there is a cadre of educated talent that wasn’t there before, with many students being educated abroad and then returning home. “Those who used to stay in markets like this one have begun to return,” he said. “You find them leading Africa’s high-growth companies and increasingly leading some of Africa’s ministries, and soon you’ll find them leading Africa as a state.” However, he added, much work still remains to educate the continent’s population as a whole.
Berman said that Africa’s increasingly educated population ties into the improvement in the country’s governance. For example, he noted that the African Development Bank recently elected its first new president in 10 years—Akinwumi Adesina, who previously served as Nigeria’s agriculture minister.
The third factor involves linking government and the private sector, which, Berman said, leads to an “incredible explosion of connectivity.” He pointed to the widespread use of mobile phones, even in some remote villages, adding that broadband will be the next important wave of connectivity “that will unleash a comparable rise in productivity.”
Berman said that growing and managing companies in Africa necessitates overcoming some presumptions, one of which is that doing business there requires having a wealth of data, existing infrastructure, and sanctity of contracts. These, he noted, are important yet only base-level requirements, adding that this presumption is inhibiting American companies from investing in businesses there.
He sees Africa as an opportunity to peer into the future, and he described some successful moves being made by companies like M-PESA, a mobile device-based money transfer and microlending service, and Econet Wireless, which has more than 20 million customers.
“This is a place where we’re going to see a lot of innovation that migrates its way back to places like the U.S.,” he said.
What’s happening in Brazil?
Following Berman’s talk, the program’s focus shifted to South America with speaker Humberto Luiz Ribeiro, the Secretary of Commerce and Services in Brazil’s Ministry of Industry, Commerce, and Foreign Trade. Ribeiro explained that in recent years Brazil has made strides to lower unemployment and increase both social inclusiveness and the country’s fiscal stability. However, he added, despite these successes the country’s economy grew only 0.1 percent in 2014—and the 2015 forecast is grim.
Ribeiro pointed to a few factors that may be contributing to this “perfect storm.” One is the country’s recent polarizing elections in which President Dilma Rousseff prevailed by only a slim margin. Others include a corruption scandal that engulfed the major petroleum company Petrobras and a severe drought in some of the country’s most developed areas, including Rio de Janeiro and São Paolo.
Ribeiro then offered some reasons Brazil may rebound. One is the increased focus on education, with 98 percent of children now in school and the recent implementation of the country’s largest ever scholarship program to send students to higher education institutions abroad. Other pillars for growth and recovery, he said, have been the strong trade agendas as well as economic and fiscal reforms that have bolstered the services sector.
Beyond the BRICs
Ravi Ramamurti, Distinguished Professor of International Business and Strategy in the D’Amore-McKim School of Business, is the director of Northeastern’s Center for Emerging Markets. In his welcome remarks, he noted that the attention-grabbing BRICs make up only about 40 percent of the GDP of all emerging markets worldwide.
“It’s important to recognize that beyond the BRICS, there are countries with fairly large populations and economies such as Indonesia, Mexico, Nigeria, South Africa, and Turkey that are contenders for investments from U.S. companies and others in the West,” said Ramamurti, whose research and consulting for the past 35 years have focused on strategy and innovation in emerging markets. “With Brazil and Russia stumbling, it seems even more relevant to ask which other countries companies ought to be looking at.”
Other speakers throughout the day focused on these markets. Lourdes Casanova, academic director of Cornell’s Emerging Markets Institute, and Joel Schwartz, senior vice president for global new business development at EMC Corporation, examined other markets throughout Latin America. Ömür Budak, Boston’s Consul General of Turkey and the former deputy chief of staff to President Abudllah Gul, gave a talk on Turkey’s place among the world’s emerging markets. Bhasker Natarajan, chief operating officer and large emerging markets executive vice president at Liberty International, and Wiebe Tinga, executive vice president and chief commercial officer at Hasbro, gave fascinating accounts of how their organizations expanded rapidly into large and small emerging economies in Asia, Africa, and Latin America.
In welcome remarks, D’Amore-McKim School of Business Dean Hugh Courtney expressed his excitement in partnering with Cornell to organize this symposium and then highlighted the ways in which he’s reminded that the event feels “quintessentially Northeastern” to him. One is the Center for Emerging Markets’ interdisciplinary focus, featuring a cluster of scholars cutting across areas such as law, public policy, economics, and business to understand the dynamics of emerging markets. He added that students in the business school are learning about these same dynamics while on co-op, noting that one-third of their co-ops are outside the U.S.
“It takes them out of their comfort zones, to markets and regions of the world that they don’t know that well yet,” Courtney said, “and we know they’ll have transformational learning experiences as a result.”