‘Democracy dividend’ bringing real economic growth to Africa

AFRICA is benefiting from a “democracy dividend” as professionals replace revolutionaries and post-colonial leaderships, according to one of the continent’s top bankers.

Stephen Kossoff, chief executive of Investec
Stephen Kossoff, chief executive of Investec

In an interview with The Yorkshire Post, Stephen Koseff, chief executive of Investec, said some African countries are now led by technocrats who understand how to grow an economy and encourage investment.

“You remember The Economist had a headline ‘Hopeless Continent’ in 2000? Now they have ‘Africa Rising’,” said Mr Koseff.

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“The big difference is that you have the democracy dividend.”

Last year, the African economy grew at a rate of 4 per cent, outperforming the global growth of 3 per cent.

Mr Koseff added: “Some of the countries have moved from autocracy to democracy and in that process you encourage in investment.

“Africa has a lot of expats who are educated in the US or UK or other parts of the world who are flying back and moving into government and it is no longer revolutionaries running government or post-colonial leadership.

“You are now getting professional leadership. That’s the important thing – democracy with professional leadership.

“You have to encourage investment and create a safe place for people to invest and know they are going to get their money out.”

The biggest benefit to South Africa was the economic liberalisation that followed the scrapping of apartheid 20 years ago, said Mr Koseff.

The nation outperformed emerging market rivals Brazil and Russia, but adversity between unions and business leaders has hit its economy in recent years.

Mr Koseff said: “You need a partnership – business, labour and government. It needs to say, what do we need to do together to grow this country?

“Everyone has to give and play a part in building an economy. It has got to be a partnership and we all have to do more.”

Investec is an investment bank and asset manager jointly listed on the London and Johannesburg stock exchanges.

It has offices around the world but is concentrated in southern Africa and the UK with wealth management operations in Leeds and Sheffield.

Mr Koseff joined Investec in 1980 when it had just seven other members of staff. Today, the bank has revenues of $2bn.

Investec started out lending money to doctors and accountants, knowing it would have low levels of default.

Mr Koseff charted its growth story.

“We went step by step, adding pieces here and there. We perpetuated that. We survived many crises. We have made mistakes on the way. We bought some businesses that probably weren’t appropriate for us. We did a bit too much property lending pre the crisis. It wasn’t that bad because we were lowly leveraged. We never made losses but we had large impairments. That’s now working through the system, it’s almost gone.

“The thing is about building sustainability, surviving those bumps because you get much stronger. You know how to deal with it. You enhance your gene pool by doing it. You become more shock absorbent by doing it.”

Mr Koseff gave the interview to The Yorkshire Post during the EY World Entrepreneur of the Year Awards in Monte Carlo last month.