Power to the peopleGood to talk

Connecting conversations on development

Moving on, moving upGetting down to business in Africa

Temperature checkIndian health care uncovered

DynamicsSupporting international development around the world

July 2013Issue 7

Dynamics │ Issue 7 │ July 2013Dynamics │ Issue 7 │ July 2013

We consider how Brazil’s Presidente Dutra Highway not only links the twin cities of São Paulo and Rio de Janeiro, but also plays a key role in delivering new standards of sustainability. Health care in India, together with the prevalent infrastructure challenges in Asia, fall under our spotlight, and we also meet Huguette Labelle, the former President of the Canadian International Development Agency who is now chairing the board of Transparency International. With development an enduring theme during her working life, we hear about the lessons she has learned and her advice for future generations. We also take a look at Nigeria and EY’s presence in this rapidly developing country.

We are eager to hear your feedback and suggestions for the magazine — and especially any offers to contribute your own experiences and insights. Please contact me at mcupit@uk.ey.com. I look forward to hearing from you.

01

Welcome to this new edition of Dynamics, EY’s magazine for the global international development community.I am writing this from EY’s office in Malawi, a country that encapsulates the

diverse challenges facing development professionals around the world. While on the up in many ways — a projected GDP growth rate of 7% between 2012–17 for example — it remains a country where more than half the population live below the poverty line, and where a high rate of HIV-AIDS continues to defy long-lasting solution.

Malawi’s example helps demonstrate that there are few easy fixes to systemic, deep-rooted problems. Decades of development work have, unfortunately, shown that sustainable progress against challenges such as extreme poverty and hunger can remain all too elusive. Only those programs — ideally formed from a broad church of government, multilateral and bilateral organizations, and designed in conjunction with the recipient country — are likely to lead to sustainable improvements in a world that continues to be heavily shaped by globalization and the effects of the financial crisis. In this edition, we analyze many of these challenges.

We meet Olav Kjørven, a man whose current priority is the not-so-small task of engaging hundreds of thousands of people from around the world to help design the next generation of development goals. The Assistant Secretary-General of the United Nations explains why the voices of the grassroots will resonate powerfully with policy-makers at the decision-making table in the months and years to come.

We also meet with senior representatives from the Millennium Challenge Corporation. The US Agency is on a major push to engage the private sector in its efforts to reduce global poverty; we hear about the progress made and how they are building a bridge to business. Such collaboration is increasingly occurring across Africa, a continent that continues to progress and develop at a rate of knots. While challenges remain, the findings of EY’s latest Africa attractiveness survey, together with the viewpoints of African leaders at our recent Strategic Growth Forum, in Cape Town, South Africa, instills a strong feeling of confidence in the continent’s long-term future.

Welcome

Michael CupitDirector International Development and Managing Editor of Dynamics

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About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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ContentsWe meet ... Features Regulars

Voices from AfricaA selection of speakers from EY’s recent Strategic Growth Forum in Africa tell us about the reality of doing business in Africa and why it is a continent replete with opportunities

24

Brazil’s road to sustainabilityBrazil’s Presidente Dutra Highway links

São Paulo and Rio de Janeiro and is now helping deliver greater sustainable development. Claudia Valenzuela finds

out how 33

Africa on the rise“Sustainable and real” is Michael Lalor’s

verdict on Africa’s growth. Here he explains why the continent continues to

move forward 18

ContactsEY’s international development professionals around the world44

Country spotlight: NigeriaWe set out Nigeria’s challenges and priorities and introduce EY’s team and services in this rapidly evolving country42

Round up, refreshA summary and analysis of recent news and events from the international development sector04

Breaking barriers, building bridgesSince its creation in 2004, the Millennium Challenge Corporation has rapidly built up a strong reputation in the development field. We hear from senior representatives about its efforts to work with private sector partners to reduce global poverty

08

13Making people the priority

UNDP director Olav Kjørven tells us how citizens around the world are helping design

the next generation of development goals

36

My story, my views …Huguette Labelle has had quite a career.

The former President of the Canadian International Development Agency, who

is now chairing the board of Transparency International, tells us about her experiences

of life in the arena

30In the works

Asia’s recent economic growth may have been meteoric but infrastructure

challenges continue to proliferate across the region. Bill Banks takes a look at what

needs to be done

26

Health benefitsIndia’s recent story has been one of

rapid-growth, but ongoing challenges. Here, Satish Kaushal examines the

country’s heath care sector and suggests what needs to be done to inject a faster

pace of development

New development goals focusing on extreme povertyNew recommendations that aim to shift the world’s global developmental agenda beyond the Millennium Development Goals (MDGs) have been presented to the United Nations.

The report, A New Global Partnership: Eradicate Poverty and Transform Economies Through Sustainable Development, is the result of months of consultation and has been drafted by a High Level Panel led by the leaders of Liberia, the United Kingdom and Indonesia. Among its 12 measurable goals and 54 targets are a commitment to end extreme poverty by 2030, as well as specific improvements in women’s rights, universal access to water and food security.

Panel member, John Podesta, a former White House Chief of Staff under Bill Clinton, said they were influenced by the successes and failures of the MDGs, claiming that one of the MDG failings was that they focused on peace and security but there were no building blocks to actually produce that. “We’ve tried to at least add some ideas that can be thought through in the work streams of the UN process to ensure stable and peaceful societies,” he said.

The MDGs sought to halve extreme poverty, defined as people earning less than US$1.25 a day, but the panel called for a more ambitious goal over the following 15 years. UK Prime Minister David Cameron, who has been criticized by domestic opponents for protecting development funds while at the same time implementing other spending cuts, said that the report “sets out a clear roadmap” for eradicating extreme poverty. Cameron, who co-chaired the panel alongside Liberian president Ellen Johnson Sirleaf and Indonesia’s Susilo Bambang Yudhoyono, added, “We need a new global partnership to finish the job on the current Millennium Development Goals, tackle the underlying causes of poverty and champion sustainable development.”

As part of efforts to empower women, the report, which will form the basis for two years of negotiation on the agenda to replace the MDGs, called for an end to child marriage and equal rights to open bank accounts and own property. The panel also recommended bringing together development and environmental agendas, with targets for reducing food waste, slowing deforestation

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0504 Dynamics │ Issue 7 │ July 2013 Dynamics │ Issue 7 │ July 2013

Extra funds pledged to tackle child malnutritionAn extra US$4.15b has been pledged to address child undernutrition in developing countries up to 2020. The extra funds were secured at a nutrition for growth summit in London, co-hosted by UK Prime Minster David Cameron, Michel Temer, the Vice-President of Brazil, and the Children’s Investment Fund Foundation.

A total of 24 governments, together with and 28 businesses and science organizations, signed a global nutrition for growth compact that aims to improve the nutrition of 500

million pregnant women and young children. Signatories also pledged to reduce the number of children under five who are affected by undernutrition by an additional 20 million and save the lives of at least 1.7 million children.

The extra funds will focus on making world-class scientific knowledge and evidence more available so that farmers can grow nutrition-rich and resilient crops, promoting breastfeeding as a priority, and supporting the governments of developing countries to formulate country-centric nutrition plans.

UK International Development Secretary Justine Greening said that undernutrition is a systemic problem across many developing countries. “A strong and healthy workforce is vital if a country’s economy is to prosper,” she said. “This means business and science taking a lead in fighting for good nutrition because we understand that better nutrition is the smart way to tackle extreme poverty, child mortality and economic underachievement.”

Canada’s International Development Agency (CIDA) is to be disbanded and brought into its country’s Department of Foreign Affairs. The announcement means that the new department will be known as the Department of Foreign Affairs, Trade and Development.

Under the new structure, Minister of International Cooperation Julian Fantino will continue to be responsible for Canada’s international development portfolio and he was keen to play down the impact of the shift. “The new Department of Foreign Affairs, Trade

and Development will maintain the mandate of poverty alleviation and humanitarian support,” he said. “This decision will have no impact on Canada’s international assistance budget.”

However, a number of aid agencies said they were worried about what the change could mean for CIDA’s current goal of reducing and alleviating poverty around the world. “We are extremely concerned that this new direction for CIDA means that development assistance will be used to advance Canada’s prosperity and security, rather than focusing

Girl power: UK gears up for education push in AfghanistanGirls in some of the poorest rural areas of Afghanistan are set to benefit from three new education programs funded by the UK Government. The funding, worth £47m (US$72m) over three years, will invest in innovative approaches to improve girls’ education from early childhood through to secondary school and will aim to get more than 250,000 Afghan girls into education.

The programs will support a teacher apprenticeship scheme that will help girls move from secondary school into teaching, supporting the next generation of girls; will

increase the involvement of parents and the community in how girls are learning; and will provide a “second-chance” literacy program for older girls who missed schooling.

UK International Development Secretary Justine Greening described education in Afghanistan as a “success story” but added that more could and should be done. “Every year, there are more children in school, new schools built and more teachers trained — and two million girls now go to school, up from virtually zero under the Taliban,” she said. “But if these girls are to play a full role in building a brighter future for their country, there is still much to be done. This additional support is an important step, giving over a quarter of a million more Afghan girls the chance to improve their lives through education.”

refreshRound

up,

and protecting ecosystems. “We should ensure that

no person — regardless of ethnicity, gender, geography, disability, race or other status — is denied universal human rights and basic economic opportunities,” it said. “We can be the first generation in human history to end hunger and ensure that every person achieves a basic standard of well-being. There can be no excuses.

This is a universal agenda, for which everyone must accept their proper share of responsibility.”

Turn to page 13 for an interview with UN Development Programme Director Olav Kjørven about how citizens are helping design the next generation of development goals

CIDA braced for departmental shift

solely on the needs and aspirations of the poor,” said Dave Toycen, President of World Vision Canada. “We are particularly concerned about the needs of children who are living in extreme poverty and are subject to malnutrition and exploitation. Responding to their needs might not get us closer to our trade objectives. Responding to their needs might not get us closer to our foreign policy objectives. But doing so reflects the compassion of Canadians who expect Canada to be a substantive leader in responding to the needs and aspirations of the poor.”

The move follows several other shifts in Canada’s approach to development issues in recent years. In addition to a reduced number of focus countries and regional issues, Canadian policy-makers have increasingly attempted to align aid efforts with trade objectives. And as a result of changes brought in by the 2012 Budget, CIDA had also been operating under reduced financial resources — an 8% cut over three years. This spending reduction amounted to more than CA$319m (US$310m) and, as a result, Canadian overseas development assistance was set to drop to the lowest in recent history, to just 0.25% of gross national income (GNI) by 2015. Canada is now near the bottom of the list of donor countries despite its 2008 commitment to the OECD target contribution of 0.7% of national income to international development.

Dynamics │ Issue 7 │ July 2013Dynamics │ Issue 7 │ July 2013

A new US$23m fund designed to stimulate greater private investment in agricultural infrastructure in sub-Saharan Africa has been unveiled. The new program — a creation of the African Development Bank (AfDB), USAID and the Swedish Government — will focus its efforts on the six members of the New Alliance for Food Security and Nutrition launched by the United States’ President Barack Obama at the 2012 G8 Summit. The six member countries of the alliance are Burkina Faso, Côte d’Ivoire, Ethiopia, Ghana, Mozambique and Tanzania.

Designed to strengthen the links between farmers, markets and consumers, the Agriculture Fast Track Fund (AFTF) will finance feasibility studies, project design, market analyses, site surveys, business plans,

financial modeling and other upstream activities that ensure project quality and bankability. These project preparation grants will facilitate access to more funding for agricultural infrastructure from banks and other investors.

The AFTF is being funded by USAID, which has committed US$15m, and the Swedish Government, which is providing US$10m. The fund will be managed by the AfDB. “The African economy is currently overly dependent on public investment for infrastructure development,” said AfDB President Dr. Donald Kaberuka. “The Agriculture Fast Track is a critical tool to better leverage donor funding to catalyze private sector investment in support of infrastructure construction and Africa’s long-term economic growth and food security.”

Gunilla Carlsson, Swedish Minister for International Development Cooperation, added that the project heralded a new era. “By targeting the preparation stage of projects, the Agriculture Fast Track will advance infrastructure projects when funding is most acutely needed to pivot from

planning to construction,” she said. “This targeted approach allows us to catalyze significantly more private sector investments and ensure the highest standards in terms of social and environmental sustainability.”

Despite consistent economic growth in many African countries over the last few years, gains have not always led to greater gender equality or poverty reduction, according to The World Bank.

To mark International Women’s Day earlier this year, The World Bank’s Africa region launched an Africa Gender Action Plan, a five-year blueprint for the Bank’s gender-informed activities. Together with a new Gender Innovation Lab that aims to bring scientific solutions through rigorous impact evaluation, the two initiatives will link scientific evidence to guide gender-related lending operations in Africa.

“In the past decade, African countries have made some considerable strides when it comes to gender equality,” says Makhar Diop, World Bank Vice President for Africa. “Today, we have moved from an intuitive understanding of gender programs to add the Gender Innovation Lab that will fill the knowledge gap by providing more qualitative and quantitative evidence than ever about what works and what doesn’t in terms of gender equality in sub-Saharan Africa.”

The Africa Gender Action Plan will advance development for both men and women using the latest technological tools that provide evidence on the effectiveness of gender programs through its funding and operations.

The Gender Innovation Lab, the first at The World Bank, brings science to improve delivery of its programs. The Lab already has over 20 impact evaluations under way, and they are providing clear evidence of what works. For example, partnering with DFID and the Rwandan Government, a Lab impact evaluation showed how land title registration resulted in women increasing investments in land, at twice the level as men.

Improved health outcomes and enhanced food security are the twin objectives of the US Government’s first Water and Development Strategy. Globally, over 780 million people lack access to safe drinking water and 2.5 billion people lack access to sanitation. Projections are that, by 2025, two-thirds of the world’s population could be living under severe water stress conditions.

The new strategy represents an important shift at USAID toward a new model of development — one defined by public and private partnerships, use of new technology, and emphasis on long-term results, according to the organization’s Administrator Rajiv Shah. “We will achieve greater impact by partnering with outside organizations and businesses that leverage innovative approaches and new technologies,” he said. “This approach will also emphasize sustainability by

building local capacities for operations, maintenance and monitoring.”

US Senator Richard Durbin added that the new strategy highlights how sustainable use of water is critical to saving lives. “This new US Water and Development Strategy will help lift poor people around the world out of conflict and poverty,” he said. “It is smart, strategic and builds on our past successes using new breakthroughs in science and technology. It will save water and it will save lives. USAID’s new plan will bring water and sanitation — the most basic of human needs — to millions of people around the globe, dousing the flames of global poverty, disease and conflict.”

World Bank targets greater gender equality

USAID releases first water strategy

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0706

African agriculture set for investment boost Tokyo conference prioritizes Africa’s sustainable developmentThe recent Tokyo International Conference for African Development (TICAD V) has drawn to a close with a commitment from Japanese Prime Minister Shinzo Abe that his country will contribute US$32b to increase TICAD’s agenda in Africa over the next five years.

Leaders from more than 50 African countries and international partners had gathered in the city of Yokohama to discuss new initiatives for promoting African development and greater cooperation between Asia and Africa. The public and private funds are expected to help the continent in areas including trade, infrastructure and private sector development, health, agriculture and agro-processing. They include US$1b in development, humanitarian and security assistance for the Sahel region — which extends from Senegal eastward to The Sudan — and an initiative to help tens of thousands of Africans find jobs.

Delegates at TICAD’s closing ceremony issued the “Yokohama Declaration,”

which calls on African countries to unleash the continent’s business and trade potential while improving well-being through agricultural development, job creation and promotion of food security. An Action Plan was also issued, which commits Africa to aim for 6% growth in the agriculture sector and a doubling of rice production by 2018 from its 2008 level.

“The challenge for Africa now is to transform economies so that agriculture becomes more productive, manufacturing flourishes and high-value service industries emerge,” said UN Development Programme Administrator Helen Clark. During the event, Clark moderated a high-level discussion on gender equality and the empowerment of women, with Japanese Foreign Minister Fumio Kishida, Heads of UN Agencies and African Heads of State as panelists, and echoed a call from Liberian President Ellen Sirleaf Johnson, to “see women as the greatest opportunity to unleash the full potential of the continent.”

Mixed news from Australian aid budgetAustralia will delay its foreign aid targets but increase its spending by 9.6% to a record AU$5.7b (US$5.5b) in 2013–14, according to its latest Budget settlement. This is an increase of AU$513.4m (US$493.7m) on 2012–13 and brings the aid budget to 0.37% of GNI. “This is the highest the aid budget has been as a percentage of GNI in over 25 years and, in dollar terms, Australia’s largest aid budget in history,” said Minister for Foreign Affairs, Senator Bob Carr.

One of the eight MDGs for countries such as Australia was having an aid budget equal to 0.5% of national income. However, given substantial write-downs to Budget revenues, this target is being deferred by one year, to

2017–18, in order to help balance the books. “While that’s disappointing, it simply reflects the reality that you can’t borrow money to spend on aid,” Carr added. ”We have seen great progress toward the MDGs in our region, and Australia is committed to supporting these goals. But major challenges remain.”

Around 900 million people in Asia Pacific still live in poverty and nearly 20 million boys and girls do not attend school. More than 85% of Australia’s country-specific aid is delivered in Asia Pacific, with new initiatives including AU$390.9m (US$375.9m) to support increased efforts to accelerate progress toward the MDGs in the region.

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We meet ... | Breaking barriers, building bridges

For a comparatively small development agency, the Millennium Challenge Corporation packs quite a punch. Here, Michael Beaulieu and Cerena Mitchell speak to its Finance, Investment and Trade team about its efforts to reduce global poverty

Breakingbuildingbarriers,

The As-Samra wastewater treatment plant expansion in Jordan, rural electrification in El Salvador and

wind power development in Mongolia — three separate initiatives, three separate countries and three separate development goals. These projects may be separated by thousands of miles geographically, but they all share an important common link: all three have been funded by public private partnerships led by the US development agency, the Millennium Challenge Corporation (MCC).

Since its creation in 2004, MCC has been working to reduce global poverty through economic growth. MCC forms partnerships with some of the world’s poorest countries, but only those committed to good governance, economic freedom and investments in their citizens. By providing these countries with large-scale grants to fund country-led solutions for reducing poverty, it aims to identify economic growth opportunities, improve the lives of poor people and create the markets of the future, with which companies can do business and trade.

MCC-funded programs strive to improve the core market-supporting functions of its partner country governments, from delivery of infrastructure and social services to strong institutions and regulatory environments.

Such ambitions, however, are far from straightforward. To deliver on its goals, MCC relies heavily on its work with private sector organizations — something that Carl Sangree, Head of Finance, Investment and Trade (FIT) at MCC, says has always been pivotal to how the organization has operated. “The whole idea of bringing in other capital, bringing in private investors and co-investors is part of what the MCC model is all about,” he says. “If you go back and look at the enabling legislation, it talks about market-based solutions which are meant to reduce poverty through economic growth. When we begin a project, by law we have only five years to complete it. So, having the private sector carry the project forward is clearly a good thing. The notion of bringing in private investors is part of the DNA here.”

bridges

Clean water is drawn from a borehole in Mecupes village, Mozambique. The Millennium Challenge Corporation has brought fresh water access to a number of remote villages, including Mecupes, through the drilling of boreholes and the installation of water access points.Photograph: Jake Lyell for MCC

Electrical towers at Mtoni service station in Zanzibar, Tanzania. The Millennium Challenge Corporation is increasing electrical infrastructure by bringing a new submarine cable from mainland Tanzania, constructing new electrical sub-stations and installing new power lines.Photograph: Jake Lyell for MCC

The newly constructed Tanga — Horohoro trunk road moves through blasted rock in northeastern Tanzania. The highway, which reaches to the Kenya border, was constructed as part of the Millennium Challenge Corporation’s Rehabilitation and Construction of Roads Project.Photograph: Jake Lyell for MCC

Students learn in a classroom lit by overhead lighting at Hogoro Primary School in Hogoro village, Dodoma Region, Tanzania. The Millennium Challenge Corporation’s Energy Sector Project has recently brought electricity to Hogoro and other rural areas throughout the country.Photograph: Jake Lyell for MCC

11Dynamics │ Issue 7 │ July 201310 Dynamics │ Issue 7 │ July 2013

We meet ... | Africa on the rise

Compact, threshold program and eligible countriesMarch 2013

Compact completedCompact active

Compact eligibleThreshold activeThreshold completedThreshold eligible

Country map color denotes current status (mixture indicates multiple, concurrent status).

* MCC’s Board of Directors put on hold, suspended or terminated a portion of assistance due to events or government actions inconsistent with MCC’s eligibility criteria.

Guatemala

El Salvador

Honduras*

GuyanaNicaragua*

Peru

Paraguay

Philippines

Mongolia

Kyrgyz Republic

Nepal

Jordan

Uganda KenyaRwanda

Tanzania

Madagascar*

Malawi*

Mozambique

Lesotho

Namibia

Zambia

Morocco

SenegalCape Verde

Burkina Faso

Sierra LeoneLiberia

GhanaBenin

São Tomé & Principe

Mali* Niger

Armenia*

Georgia

Ukraine

Moldova

TunisiaAlbania

Indonesia Timor-LesteVanuatu

MillenniumChallenge CorporationUnited States of America

FIT for purposeThe FIT team at MCC leads the agency’s efforts to partner with the private sector and seeks to work collaboratively across the organization to strengthen MCC’s approaches. James Hallmark, a member of the FIT unit, points out that one of the agency’s key principles is that private investment is the real engine for economic growth. “What we’re focused on is trying to mobilize private investment, and this group has been re-oriented to really prioritize this in and around our projects, starting at an earlier stage of the compact development process,” he says.

“We have re-engineered our process to look at private investment earlier so that

we have time to dialogue with companies of all types to explore partnership opportunities with us,” he continues. “Getting input from business on the problems they see acts as a form of intelligence for us and helps us zero in on what is really stopping companies from investing. And we always encourage that dialogue to take place. We do this to ensure increased impact and sustainability — that’s the name of the game for us.”

Such “compacts” are large, five-year grants for countries that pass MCC’s eligibility criteria and are set up to fund specific programs targeted at reducing poverty and stimulating

economic growth. When a country is awarded an MCC compact, it creates a local accountable entity to manage and

oversee all aspects of implementation. Some 25 countries have signed MCC compacts and a further 9 are eligible to

develop compacts at this time; some are developing new compacts and some are developing second compacts. No compact is final until the actual compact document is signed.

“I think for a while we had a mentality of ‘if we build it, they will come’,” says Sarah Crawford, from the FIT team. “But now, instead of waiting for people to come, we’re bringing them alongside with us. We had a lot of access to credit and access to finance programs at one point in time — again, to act as a catalyst for private sector growth and increased business opportunities. The FIT unit 100% understands that outreach to the private sector doesn’t have that much

power unless you can point them toward opportunities where they are on the ground, and/or design programs around sustainable access for the private sector in these economies.”

Where appropriate, MCC and its partners seek opportunities for co-investment within MCC compact projects. MCC also pursues complementary investment during compact implementation and after compacts are completed. Within this context, MCC actively engages the private sector in its programs in three ways. First, MCC requires its partner countries to involve business and civil society

stakeholders during program development and implementation. Second, MCC fosters business start-up and expansion through projects targeting policy reform, private enterprise financing financial sector

Carl Sangree

Sarah Crawford

James Hallmark

Stephen Gaull

Bringing in private investors is part of MCC’s DNA.Carl Sangree

Outreach to the private sector doesn’t have that much power unless you can point them toward opportunities where they are on the ground.Sarah Crawford

12 Dynamics │ Issue 7 │ July 2013

We meet ... | Breaking barriers, building bridges

development, and private participation in provision of public services. And third, MCC ensures procurement opportunities are fair, open and competitive, and that US companies are aware of potential business opportunities.

Stephen Gaull, another member of the FIT team, says that both MCC and private sector organizations stand to benefit. “Why would companies want to work with us?” he asks. “Well, we’re in markets where they are, or where they want to be because these countries have a certain social, political and economic stability that is ripe for growth. But there are still difficulties. What we’re focused on is addressing key problems that limit businesses. We are trying to help alleviate those problems that are keeping them from investing in those countries so we can help them, in turn, invest more in those countries. What I’d like to get from companies is for them to tell us what their problems are so we can see how we can partner to address that. They are focused on a lot of the same things we are, so there is a lot of overlapping interest.”

It’s a point echoed by Carl Sangree, who is keen to stress that private sector engagement is about more than procurement. “If a company might happen to find us — and bear in mind that, in the jungle of acronyms in Washington DC, we’re quite a small organization — their first thought might be procurement oriented,” he says. “Ok, but there’s more. We’re like a portfolio manager. We work with companies to find ways they can invest in our partner countries.”

As a result, Sangree and his colleagues are broadening the conversation. “We are investors,” he says. “We’re making investments on behalf of American taxpayers with the objectives of reducing poverty and creating more vibrant economies that will, hopefully, be better trading partners for the US going forward.

As investors, we’re in parts of the world that other investors increasingly care about. Companies have seen how quickly markets can develop and populations can boom, so they’re looking for those new opportunities and their peripheral vision has broadened. So the conversation we’ve shifted to is more strategic with other investors. It’s a two-way dialogue. When we go into a country, we try to create a foundation for others to build upon.”

Measuring successSince its launch in 2004, MCC has approved over US$9.3b in global programs that support country-determined projects. Its portfolio of original compact projects is maturing, and early results indicate positive trends in outputs, outcomes and impacts. In that period, for example, more than 210,000 farmers have been trained and more than 3,500 enterprises assisted, more than 4,900km of roads are under design or in construction, and more than US$83m has been disbursed in agricultural loans.

This performance is partly a result of the rigorous monitoring and evaluation (M&E) program in place at MCC since day one of its operations. “Making M&E a key part of the process was considered revolutionary at the time,” says Sangree. “It takes two years to gestate a project and then five years to implement it and we’re doing M&E along the way. I think it’s proven itself to be the right way to do things. For us, a success is hopefully to design better projects by virtue of the results we get.”

“What really moves the needle for us, though, is whether we’ve increased the per capita incomes of the target populations,” adds Hallmark. “As an investor, we conduct rigorous analysis on projected economic rates of return before we select a project for funding, and we fund independent impact evaluations once a project concludes. We focus on achieving real results.”

Of course, MCC is far from the only agency on the ground in these developing countries. In addition to international colleagues, MCC teams work closely with their counterparts at USAID, the US Federal Government agency primarily responsible for administering civilian foreign aid. “We’re all part of the same

team,” says Sangree. “USAID has a much larger budget and has a much broader mission than MCC. What we’re about is trying to find leverage. We are a small agency making a big impact to reduce poverty and promote economic growth.”

Sangree, himself a former financier on Wall Street, goes on to liken MCC to venture capitalists. ”We’re trying to find gaps and impediments to growth,” he says. “As an investor, we are unique in that our investments are government-to-government, which means we do have the leverage to change the business environment. But it’s hard. We joke that our middle name is ‘challenge,’ but it’s true. Most of the problems we face are multi-billion dollar challenges. But if we’re successful, then our investments can create the conditions for others to do business, make larger investments in the future, increase the level of economic activity and improve standards of living.”

Our purpose is to ensure increased impact and sustainability — that’s the name of the game for us.James Hallmark

We are trying to help alleviate those problems that are keeping businesses from investing in these countries.Stephen Gaull

Michael Beaulieu is a Senior Manager with EY.michael.beaulieu@ey.com

Cerena Mitchell is a Manager with EY.cerena.mitchell@ey.com

Marc Andersen is EY’s Global Client Service Leader for the Millennium Challenge Corporation.marc.andersen@ey.com

Connecting the world in conversation. That’s the current focus of UNDP

director Olav Kjørven. Here, he tells Michael Ingram about how citizens

are influencing the design of the next set of development goalspriority

thepeople

Making

13Dynamics │ Issue 7 │ July 2013

15Dynamics │ Issue 7 │ July 201314 Dynamics │ Issue 7 │ July 2013

We meet ... | Making people the priority

As Assistant Secretary General of the United Nations, Olav Kjørven is hardly unfamiliar with

challenging projects. But his current priority — engaging hundreds of thousands of people from around the world to shape the next generation of development goals — is something never attempted before. Kjørven, however, is more energized than intimidated by the responsibility.

“I personally find this to be enormously fascinating and exciting,” he says. “It’s about what really matters. It’s about the world people want to live in, which is really what the whole post-2015 development agenda is all about, or needs to be all about.” With the debate on what will succeed the Millennium Development Goals (MDGs) in full swing, Kjørven and his teams are using digital media and mobile phone technology to include as many individuals as possible in the discussions. To date, more than 700,000 people have taken part in what is called the “Global Conversation.”

Kjørven, who is Director of the Bureau for Development Policy at the United Nations Development Programme (UNDP), is thrilled by how the project is going. “In many countries, it’s been quite impressive to see how, through the facilitation of the UN country teams, we’ve been able to get people with disabilities, ethnic minorities, sexual minorities, indigenous people, women smallholder farmers and youth in the cities — all these different

constituencies — to have the opportunity to speak out,” he says. “It’s a tremendous source of knowledge and, if you wish, intelligence about how people see it around the world that had never before been there.”

The discussions have been taking place on several platforms. In addition to local workshops in nearly 100 UN Member States, 11 global thematic consultations are taking place online through the “World We Want 2015” website, where people

can contribute their ideas on issues such as inequalities, food security and access to water.

There is also the “MY World” survey, available in 10 languages, which invites people to vote for 6 out of 16 priorities

for the future development agenda. “Anyone who is interested can log in and vote, whether they’re using the internet or whether they’re using cell phones,” explains Kjørven. “And since a lot of people are still not connected, we’re also

It’s about what really matters. It’s about the world people want to live in.

using the old-fashioned method of offline polling.” For example, UN teams have held workshops in Amazon regions, such as Ecuador and Peru, for villages that do not have access to communication grids.

Kjørven believes that the results of the conversations, together with the outcomes of the thematic consultations, which bring in the voices and views of experts of academics and people from civil society organizations, are combining to create a hugely valuable repository of knowledge. “It’s buzzing and I think, if anything, it’s going to pick up as it moves forward,” he says. “I hope, and that’s why we’re doing this, that it will drive decision-makers and negotiators to be, perhaps, a little bolder and to step up to seek the kind of consensus that is needed on the tricky issues. This will help the next

global development framework to be as ambitious as it needs to be to tackle the considerable challenges we face.”

Influencing the influencers But that’s easier said than done. There’s no doubt that a vast amount of information has been created from the grassroots, but how will this data — be it raw or weighted — actually be used by policy-makers at the decision-making table?

“What we’ve set up is a very purpose-driven network to, first of all, make this as far reaching as possible in terms of inclusion, to get an unprecedented level of input from people all over the world and into the process,” replies Kjørven. “Part of the answer is in how the whole post-2015 process has been set up by the UN Secretary General, which provides for different tracks of input into the deliberations, so it’s embedded into the process itself. Although that doesn’t guarantee that when governments, through the inter-governmental process, deliberate about this agenda they will formally consider all that input, what I can tell you is that they are drawing on it. The inputs that we have provided are already being considered. We can already see that what we have brought to bear is seen as relevant and useful by a number of Member States in the UN. So the formality

Olav Kjørven

17Dynamics │ Issue 7 │ July 201316 Dynamics │ Issue 7 │ July 2013

goals so that they can help foster more integrated action.”

Lessons to learnOverseeing a project the breadth and depth of the Global Conversation has been quite an experience for Kjørven and his team. Given that they now hold important insights about how to engage the grassroots in strategic policy discussions, it is clear that the broader development

community could well have some lessons to learn.

“This kind of massive global outreach to really get as many views as possible and get engagement around an agenda is not something you would do routinely,” admits Kjørven. “We’re at a unique point in time where we’re trying to build a bridge from one development framework with the MDGs into another one. But, that said, I think there is something very valuable and important that we’re doing in building a different kind of accountability — whether it’s at the global level of trying to get

governments to agree on something, or it’s at the national level of deciding policies on development. What I think we’re seeing here is that, by reaching out in a systematic way to the range of constituencies, and particularly those groups that are normally not heard from, we’re creating a new dynamic that’s very valuable.

“I think we could draw huge lessons from what we’re doing here in terms of

developing new approaches to building the social contract, to strengthen cohesion and foster collaboration in societies around development and public policy,” he continues. “In many societies, that social contract and that level of collaboration are, unfortunately, very weak. But I think by having embarked on this, we’re also helping a lot of people in governments in many parts of the world discover the advantages of working in a more iterative and, if you wish, collaborative way in shaping decision-making and public policy.”

Another important factor in facilitating greater citizen involvement in policy-making is the tremendous drop in the cost of communications and the power that social media has created. This enables governments to be more accountable or even potentially force those governments to be more accountable — something the UN, with this project, is already demonstrating on a multilateral basis.

“The first line in the UN chart from 1945 is, ‘We the People of the United Nations’,” points out Kjørven. “Of course, the UN will always be mainly about Member States, but that line says ‘We the people.’ It’s now possible, for the first time, for the UN to also have that connection to people around the world, and this helps ensure that the UN will continue to be relevant and vibrant for the future.” By demonstrating how governments can embrace technology to strengthen the democratic and inclusive process, there is little doubt that projects such as the Global Conversation will help move this vision into reality.

We meet ... | Making people the priority

here is, in some ways, not so important. It is how useful is it and how usable, in a sense, for governments trying to sift through everything and figure out, okay, what are we going to do with all this.”

As someone well used to representing his country in international negotiations, Kjørven is speaking from a position of some authority. Before his appointment as Assistant Secretary General in 2007, he led the UNDP’s Environment and Energy

Group for two years. And, from 2001 to 2005, he served as Norway’s Secretary of State for International Development. With his deep knowledge of the development sector in mind, it seems pertinent to ask about the issues already arising from the results of the Global Conversation. Are the grassroots concerned about areas that have not been prioritized by policy-makers for example? Kjørven says that two key issues are emerging.

“The first high-level big message is ‘don’t mess around with the MDGs’,”

he says. “We like the MDGs and what they represent in terms of their focus on education, on health, and on water and sanitation. People are definitely saying, ‘Don’t throw the baby out with the bathwater.’ We’re also getting a call for improvements on that agenda, learning from what wasn’t thought through well enough at the time. So it goes beyond getting all kids to school, ensuring precisely that kids learn something in

school and go beyond just the focus on primary education to give that example. Another thing that comes out when it comes to improving the MDGs is ‘don’t deal only with averages and aggregates.’ Ensuring we’re able to capture the groups that are the most vulnerable and the most excluding is a very big message.”

The second big picture message is about sustainable development. Integrating the economic, the social, the environmental is coming in very strongly, it appears. “Sustainable development

is definitely a hot topic in the hearts and minds of those who have been involved in the Global Conversation,” he says. “Citizens are raising a number of important aspirations for the upcoming sustainable development goals and we are currently running exciting e-discussions to bring new ideas to the table. Building on the momentum created by last year’s Rio+20 Conference, there is a clear message calling for the full incorporation of the three strands of sustainability — the social, the economic and the environmental — into the design, implementation and evaluation of public policies. In UNDP, we are supporting countries to implement ‘triple-win’ policies to enable the achievement of inclusive and sustainable development.”

Kjørven believes that these overarching messages hold some important lessons for development professionals. “We tend to think about development issues in silos,” he says. “You have experts on all sorts of different issues working and designing interventions, whether they work internationally or within each and every country and specific ministries. They think about their sector and their issue. But people don’t see issues that way. They see them as interlinked and they live their lives in a reality where everything is connected. The interconnection of issues too often gets lost. And I think one big challenge, when it comes to the post-2015 agenda, is to think of a way to link up these different

Michael Ingram is a Manager with EY based in Washington DC.

michael.ingram@ey.com

One big challenge when it comes to the post-2015 agenda is to think of a way to link up different goals so that they can help foster more integrated action.

We’re at a unique point in time where we’re trying to build a bridge from one development framework with the MDGs into another one.

Feature | Africa on the rise

With diverse African economies continuing to outperform other regions in the world, now is the time to invest for long-term growth, says Michael Lalor

Africa on the rIsE

19Dynamics │ Issue 7 │ July 2013Dynamics │ Issue 7 │ July 201318

21Dynamics │ Issue 7 │ July 201320 Dynamics │ Issue 7 │ July 2013

Feature | Africa on the rise

Cape Town’s V&A Waterfront packed with tourists ... a bustling marketplace in Kigale, abuzz with commerce ... thousands of oil and gas sector

workers pouring through the arrivals terminal at Nigeria’s Abuja International Airport ... a long line of voters, waiting patiently in the midday sun, as they prepare to cast their ballots in Nairobi ....

Such images — positive, vibrant and energizing — offer not only a snapshot of life in Africa today, but also highlight the sense of optimism that is increasingly coursing through all corners of the continent. While challenges of course still remain, Africa’s recent story is primarily one of economic growth, diversifying economies, democratization and vast potential. And as new opportunities continue to ricochet across the continent, such shifts look set to accelerate in the years to come.

EY’s recent Africa attractiveness survey confirmed Africa as a continent on the move. Growth continues, development is ongoing and prospects remain robust. But it wasn’t all good news. To our surprise and disappointment, project numbers for foreign direct investment (FDI) were down, reversing the trend we saw last year. This result underlines that more work needs to be done to persuade international investors that Africa’s rise is both real and sustainable.

Moving over the gain line In recent months, we have noted some commentary that has criticized the “irrational exuberance” associated with African growth, suggesting that it comes from a low base, is mainly driven by commodity prices and is not likely to prove sustainable. Such skepticism, together with

the long-standing image of Africa as conflict ridden and poverty stricken continues to endure in many quarters. Partly, this is down to the continent’s sheer size and diversity — while success stories abound, there continue to be failures, and it is these failures that too often form the basis of newspaper headlines and TV reports.

What is undeniable, however, is that a huge number of African countries have now experienced consistent growth for more than a decade — certainly the longest period of sustained growth since most countries attained independence in the early 1960s. Since 2002, the size of the overall African economy has more than trebled (and increased at twice the population growth rate) — over this period, the size of the sub-Saharan African (SSA) economy has grown well over three-and-a-half times. What makes this economic performance all the more remarkable is

Morocco4.7%

Algeria4.3%

Tunisia5.5%

Libya4.0% Egypt

5.6%

Chad3.5%

Niger4.0%

Mali4.6%

Senegal4.7%

Ghana4.5%

Benin4.5%

Togo3.8%

Nigeria5.1%

Cameroon5.0%

Ethiopia6.3%

Kenya4.0%

Uganda5.8%

Rwanda6.5%

Burundi4.5%

Angola6.5%

Zambia6.2%

Botswana5.6%

Zimbabwe5.3%

South Africa4.2%

Lesotho4.5%

Madagascar4.2%

Mauritius4.0%

Reunion3.5%

Gabon3.3%

Seychelles3.9%

Comoros4.0%

Namibia3.8%

Tanzania6.0%

Malawi7.0%

Mozambique6.9%

CentralAfrican Republic

4.5%

SouthSudan5.7%

Democratic Republic of

Congo6.2%

>3.0%–4.0%<3.0% (countries not listed)

>4.0%–5.0%>5.0%–6.0%>6.0%–7.0%

Source: Oxford Economics; EY Growing Beyond Borders™.

Projected GDP growth rate(percentage year-on-year change, 2012–17)

São Tomé & Principe5.6%

Burkina Faso5.5%

Gambia5.2%

Cape Verde4.7%

Sierra Leone4.8%

Côte d’Ivoire

4.0%

that half of that decade has been scarred by a deeply troubled global economy.

Looking forward, and according to the IMF’s most recent forecasts, 11 of the world’s 20 fastest-growing economies through 2017 will be African. As of today, 22 SSA countries (45% of the total), as well as 5 North African countries, have attained “middle income” status as defined by The World Bank and, if current growth rates are sustained, 13 more could reach middle income status by 2025.

While these numbers should really speak for themselves, it is important that we do not get caught up in a latter-day “gold rush” mentality. Most African countries still have a long way to go to emulate Asia’s sustained meteoric growth, for example. In many respects, Africa is today at a point where many of the east Asian economies were in the 1970s, and the likes of India, Mexico and Turkey were in the 1980s. However, while there is no “cut-and-paste” answer to effective economic growth and industrial policy, we strongly believe that a critical mass of African economies are poised to drive the structural transformation required over the coming decades.

A sustainable growth trajectory Why are we so confident? There is no one overriding factor that makes us confident about the sustainability of Africa’s growth trajectory. Instead, there are a number of economic, social and political factors that are all moving in the right direction. For example, a large number of African economies have been better managed over the past decade than their developed market counterparts. Economic reforms that began being implemented in the 1990s have laid a foundation for the sustained growth that we have subsequently seen.

There has also been an increasing diversification of sources of growth. There is a fairly common view that Africa’s growth over the past decade has been driven by natural resources. However, while they are, and will continue to be, an important contributor to growth, resources have contributed less than a third of Africa’s expansion since 2000. The rest has come from a range of other sectors, including agriculture, manufacturing, construction and, in particular, services.

Top 10 African destination countries for infrastructure projects, up to February 2013

Number of projects Sum of capital invested (US$b)South Africa 134 129.9Nigeria 106 95.5Egypt 82 60.2Uganda 63 17.7Kenya 60 32.9Algeria 34 87.2Mozambique 31 32.1Libya 29 20.7Tanzania 29 16.2Cameroon 25 8.5

Source: Africa Project Access, Business Monitor International; EY analysis.

23Dynamics │ Issue 7 │ July 201322 Dynamics │ Issue 7 │ July 2013

are the ones that have implemented long-term and comprehensive reforms and investments across the transport and logistics supply chain.

Enforcing anti-bribery and corruption initiatives is similarly important. Although bribery and corruption is neither rampant across the continent, nor inherently a greater challenge across all of Africa than it is across other emerging market regions, it is, nevertheless, clearly identified in our survey as one of the biggest constraints to doing business on the continent. These are not issues for government alone, and attention also needs to be given by business to addressing the role of the private sector in these processes. One important measure would be to adopt greater corporate transparency, providing stakeholders with relevant information on, for example, anti-corruption programs and country-by-country operations.

Over the horizonWhile the focus in looking ahead is often one of the challenges Africa still faces, it is also important to emphasize the abundant potential. Imagine the opportunities that will continue to be unlocked as these challenges are addressed, even in part. African governments should engage in more collaborative and productive partnerships with these companies already doing business across the continent.

There also needs to be greater focus on creating an enabling environment for doing business. With a critical mass pulling in the same direction, and with committed leadership from government, business and civil society, Africa will continue its rise in the decades to come.

Getting down to business, EY’s 2013 Africa attractiveness survey, is available for download at www.ey.com/attractiveness

Feature | Africa on the rise

Michael Lalor is Lead Partner, Africa Business Center

michael.lalor@za.ey.com

Growth in Africa’s trade with the rest of the world has grown over fourfold since 2000 and has been another key driver of Africa’s sustained economic rise. While the EU as a bloc remains Africa’s largest trading partner, trade with other markets, particularly those in the emerging world, has picked up. Standard Bank, for example, estimates that that there has been more than a 10-fold increase in total trade with BRICS (Brazil, Russia, India, China and South Africa) over the course of a decade.

Such gains can partly be attributed to the slowly improving picture of infrastructure across the continent. Infrastructure gaps, particularly relating to logistics and electricity, have consistently been cited as the biggest challenges by those doing business in Africa. The flip side of this challenge, though, is that strong growth has been occurring despite such infrastructure constraints — consider the potential not only to sustain, but to accelerate, growth as the gap narrows. And it is narrowing: our analysis indicates that, in 2012, there were over 800 active infrastructure projects across different sectors in Africa, with a combined value in excess of US$700b. The large majority of the total infrastructure projects are related to power (37%) and transport (41%).

In conjunction with the progress on infrastructure has been the ongoing story of political development, one which has seen democracy increasingly take root across the continent. Between 1960 and the fall of the Berlin Wall in 1989, only five African countries held elections

on any kind of regular basis. In contrast, since 1990, we have seen well over 30 ruling parties or leaders changing through a democratic process — Kenya’s presidential elections in March this year being the most recent example. Given that it took centuries for democracy to evolve and stabilize in Western Europe, Africa’s progress over the past 20 years has been remarkable.

Such advances are mirrored by the improvements being made in the quality of human life in Africa. While there is obviously still a long way to go, the trends point to significant progress not only in raising income levels, but in areas of health, education and general welfare in many parts of Africa. For example, according to The World Bank, the poverty rate in Africa has been falling by one percentage point a year since 1995. They estimate that the proportion of Africans living beneath the poverty line will have reduced from 60% in 1995 to 38% in 2015. At the same time, based on UNESCO data, average literacy rates in Africa have improved from 52% in the 1990s to almost 65% today.

The final factor that underpins our confidence in Africa’s continuing growth is the fact that it is getting easier to do business. Using The World Bank’s Doing Business research as one key indicator of trends, many African economies have made substantial progress. Focusing only on SSA, The World Bank’s research shows that 45 out of the 46 sub-Saharan economies they track have improved their regulatory environments for doing business since 2005. In fact, among the 50 economies that have made the biggest improvements over that period, the largest share — 19, or well over a third — is in Africa.

Bridging the perception gapThe most significant take away from this year’s Africa attractiveness survey is the stark and enduring perception gap between those with an existing business presence in Africa and those that have not yet invested. For those with an established business presence there, the continent remains a more attractive investment destination than any other region in the world, other than Asia (and even there, the difference is small). Those with no business presence in Africa remain very negative, again ranking Africa last out of all the regions (and by some distance).

Perhaps the critical point for us, though, is that while some international investors may be flirting with the idea of investing in Africa, there are a number of companies with an already-established presence that are very positive about Africa’s prospects and are getting down to business. These are the believers in the Africa growth story, who do not need convincing; they are growing their investments, creating new jobs and focusing on long-term, sustainable growth opportunities there. These companies will be instrumental in helping to drive the continent’s ongoing growth and economic transformation over the next decade. The focus of both business and government in Africa, therefore, needs to shift from “why” to “how”; from converting skeptics to encouraging and supporting believers; to focus in on what it takes to succeed in Africa and what needs to be done to further develop an environment that is conducive to doing business across the continent.

Addressing key constraints to doing business on the continent should be an important priority. Take improving transport and logistics infrastructure, for example. Although there is no “silver bullet” for solving the transport and logistics challenge in Africa, the countries that are making substantial performance improvements

Share of total capital investedShare of total projects

Power plants and transmission grids

37.0%

10.6%

4.7%

1.5%

6.4%

3.3%

0.7%0.4%0.1%

7.3%7.2%

2.6% 3.1%1.8%

4.7%

17.6%

24.9%20.9%

10.3%9.6%7.3%4.6%

0.9%0.9%0.2%

11.5%

RailRoads and bridgesCommercial construction

HousingPortsWaterAirportsOil and gas pipelines

Industrial construction

Residential construction

Health care

Education

Africa’s infrastructure projects up to February 2013Percentage share of total number of projects and capital invested — by different sector activity (ranked by most projects)

Transport and logistics sectors account for:

42.0% of projects (as % of the total)

41.5% of capital invested

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We meet ... | Destination Africa

At a time of ongoing uncertainty in the global economy, with the Eurozone in particular continuing to struggle, economic growth across much of Africa has remained robust, with a number of its economies still among the fastest growing in the world. This continues a remarkable decade of growth and development, with not only economic, but also social and political indicators all trending in the right direction. EY’s recent Strategic Growth Forum in Africa examined many of these issues. Here, we speak to some of the keynote speakers about the continent’s challenges and opportunities

Africa

Lessons from MauritiusHon. Xavier Luc Duval Vice Prime Minister Mauritius

The 2012 Ibrahim Index of African Governance ranked Mauritius first in good governance. Also in 2012, Mauritius’s sovereign credit rating was increased to 1, with a stable outlook, by Moody’s Investors Service. This positive momentum and robust growth can be attributed largely to the close partnership between its public and private sector.

Breaking the barriers to improve the ease of doing business has seen Mauritius break through many African stereotypes. If I had to pinpoint a key factor in our success, it would be the reforms that we enacted in the 1980s. This was when personal and income taxes were halved, and we enacted legislation to attract foreign direct investment from Asia for our exports. We empowered labor laws to ensure our people do minimum overtime, so that companies can be profitable.

A directed lending policy was also adopted — banks were obliged to lend to our export processing zone at rates lower than elsewhere. Mauritius focused on growing key sectors of its economy, such as tourism. At this time, when other countries in the region were focused on centrally managed economies, we opted for a very different approach to bring us the outcomes we were looking to achieve.

Today, the country is in a strong position. Having maintained reasonable growth rates through the years of the financial crisis, it also has excellent economic fundamentals, such as a 1.8% budget deficit. We have continually been able to reduce taxes, while, at the same time, still receiving increases in tax revenues. We are also looking into moving to new sectors, such as financial services, as we believe in supporting our different sectors of the economy. Further, to simplify the ease of doing business, we are streamlining regulations and the permit process.

All of these reforms and initiatives have placed Mauritius in good stead and have forced many business people across the world to reconsider their perceptions of Africa. I believe that our region can be prosperous. The winds of change are sweeping across Africa, albeit at different rates, but I am optimistic about the future.

seeking the opportunity, managing the riskDiana Layfield Africa CEO Standard Chartered Bank

When I visit our clients in other parts of the world — particularly Asia — the first thing they want to talk about is Africa. The growth opportunities in Africa are increasingly evident: by 2035, the continent will have the world’s largest workforce, with over half of the population currently under the age of 20; the past 10 years have seen vast improvements in macroeconomic stability, and a burgeoning and fast-growing South-South trade and investment flow (with over US$170b of trade with China alone).

Africa presents a significant opportunity across multiple sectors — with US$2.6t of revenue expected by 2020 across resources, agriculture, consumer and infrastructure, of which US$1.4t will be in consumer industries alone. The rapid emergence of a middle class, already equal in size to India, makes consumption a major driver of economic growth across the region, and is one of the most interesting yet less explored opportunities across Africa.

We are often asked about the risks of operating in Africa. While the existence of corruption, poverty and limited infrastructure mean that the continent can still be a challenging place to do business, we are seeing steady progress across most markets. Over the last 10 years, governance and political stability have improved significantly. Although the levels of education, employment and skills vary substantially across the

continent, there are increasingly deep talent pools in a number of key markets. Importantly, while many of these challenges facing businesses in key African markets are no more significant than elsewhere in the world, the rewards on offer are substantial. Critically, it is this risk-reward equation that makes African investment so compelling — the returns remain among the highest in the world, while risks are diminishing and can be effectively managed.

Standard Chartered has found a number of factors helpful in harnessing this opportunity and managing the risks. The first is commitment: Africa rewards those who invest with a long-term agenda, both in respect of time and in conscious contribution to the economy and society. Second is local understanding: these are markets where critical information is not published or uniformly accessible and taking the time to build local relationships and teams is key (98% of our staff in Africa are African and many of our client relationships are multigenerational; both key to giving us a differentiated risk understanding). Third is people: ensuring that you hire, and more critically train, the best in the market can be transformational. Fourth is portfolio: although the growth trend for Africa is unequivocally positive, there will be more bumps in the road than in the case of Asian growth, and having the ability to balance risk across a number of markets can be extremely helpful. Investors who take the time to understand the nuances, risks and opportunities in Africa will be rewarded.

Closing the infrastructure deficitEbrima Faal Regional Director African Development Bank

African growth has generated greater demand. We have huge demographic shifts creating higher expectations, as well as increasing urbanization, which means that 40% of Africans are projected to live in cities by 2030. And, since 2006, intra-African trade has increased from about US$48b a year to over US$100b a year. Again, what has not kept pace is the infrastructure itself. Today, 30 countries are affected by chronic power problems. Transportation costs are on the up — increasing the costs of goods by at least 75% in some landlocked countries.

It has been well established that Africa needs to spend approximately US$90b a year for the next decade to upgrade and maintain its infrastructure. We have financing for about US$40b a year, so the deficit each year is estimated about US$50b. We will also need to focus on the maintenance and rehabilitation of existing infrastructure, where a huge funding gap also exists. Clearly, the need is urgent, and innovative and bold approaches are required — a business-as-usual approach will not suffice.

We are seeing a trend where African leaders are now prioritizing visible infrastructure programs and opportunities across different regions of the continent. We’re also seeing new sources of financing developing. The reliance on overseas development aid has fallen back since the financial crisis, and infrastructure financing must look beyond aid. We now have to look to different flows of capital, such as Africa’s foreign exchange reserves invested abroad, pension funds, domestic issued and diaspora bonds, remittances and sovereign wealth funds, all of which can catalyze private sector investment in infrastructure.

But, of course, there is competition. For example, Eastern Europe needs over €2t for its infrastructure over the next decade. This means we need to move from having a wishlist of investable projects to having bankable projects. Establishing bankability and making it easier for the private sector to come in is a key priority.

Improving the environment for doing business in AfricaAsad Alam Regional Director World Bank

Every country has a unique history, is coming from a different place and has a different set of aspirations, but actually, when you cut across borders, a lot of the countries are facing common challenges.

There are several African countries that have risen up the ranks of the World Bank’s Doing Business indicators. Mauritius is a leader — number 19 in the most recent assessment. South Africa is in the 30s, and Rwanda is another up-and-coming country. But there are still a number of African countries that are clustered in the lower ranks, and this brings the average for Africa down, which is still pretty low.

We know what the frontier is — it is a question of how to get governments to cut through the red tape and make it easier to do business. The recent successes of Mauritius break through so many stereotypes, such as the notion that a lot of African countries are small and, therefore, cannot grow. Mauritius has dispelled that by going global

and opening up its borders. Another notion is that African countries are stuck in a trap of undiversified economies and are not creating jobs — but Mauritius has shown that jobs can be created, particularly for youth and women. This is particularly important.

I can think of several ways to build trust between governments and the private sector. First, countries need to start by developing a common vision for their future. These can bring people together as they pursue common goals, such as fighting poverty, inequalities and creating jobs. Second, there also needs to be strong institutions (judiciary, free press and civil service), as they are the interface between the private sector and the state. Third, there needs to be a consistency in the tax regime. Fourth, there needs to be clear communication between the two sectors and, finally, transparency, which is essential around public finances, procurement and the government-business relationship. These are all extremely important to build trust with the private sector.

Voicesfrom

27Dynamics │ Issue 7 │ July 201326 Dynamics │ Issue 7 │ July 2013

A long-standing and systemic lack of investment going back decades is primarily to blame. At approximately 5% of its GDP, India’s health care spending is significantly lower than the global average of 8.3%, as well as other emerging countries, such as Brazil (8.4%). India’s rising population will also impose further pressure on the already inadequate health care infrastructure, creating a severe need for more hospital beds.

Increased wealth and rising standards of living have also contributed toward more people suffering from lifestyle-related diseases. For example, the percentage of population suffering from cardiac diseases, diabetes, obesity and cancer are expected to rise from 7.7% in 2005 to 11.6% in 2015. This increase is likely to lead to

extra demand for specialized treatment at a time when there is already an underutilization of existing resources. To put the current situation into context, a study by the Confederation of Indian Industry, published in May 2010, found that India needs US$50b annually for the next 20 years in order to meet World Health Organization standards, and a further injection of US$82b is required to close the current health care infrastructure deficit.

Given the abundant challenges at play in the public health care sector, it is perhaps not surprising that the private sector has rapidly grown in size. Although, at the time of independence, the private health care sector accounted for less than 10% of total patient care, World Health Organization research has shown

Feature | Health benefits

Few countries offer such diverse stories as India. A melting pot of huge potential and huge challenges, its health care system is just one area in need of urgent development. satish Kaushal examines what needs to be done to encourage faster progress

benefitsHealth

Around the world, governments are united by challenges large and small. Looming large among issues such as economic growth and

high unemployment is health care, a policy area that fluctuates and shifts, regardless of developed or developing country status. Demographic changes, of course, are a prime cause of this state of flux. But it’s not just about people living longer. The rapid pace of technological change, together with the increasing prevalence of chronic lifestyle diseases, is also shaping this fast-evolving environment.

India is hardly immune from these challenges. Its sheer size is the immediate problem: ensuring good quality and affordable health care for more than a billion people is hardly straightforward. And although recent years have been marked by its rapid economic rise — a process driven by the high potential of the domestic market, an emerging middle class, cost competitiveness and a huge labor pool — demand for health care services is also surging, placing ever greater strain on a system in urgent need of both reform and greater investment.

Indian health care uncoveredThe health care sector in India is the country’s second largest service sector. Each of the country’s 28 states and 7 union territories implement both central and state-funded schemes. Unfortunately, government-run facilities are far from cutting edge. Most hospitals lack the necessary number of beds and equipment to cope with the country’s needs, and given that the population is set to rise sharply, this is a problem that is poised to worsen in the years to come.

There are also some persistent geographic disparities to address. Rural India, for example, accounts for 70% of communicable diseases, as well as 50% to 70% of non-communicable diseases. The urban rich also accesses health services at a rate double that of the rural poor and around 50% more than the national average. Given that 69% of the Indian population lives in rural areas, it is clear that hundreds of millions of lives are being affected by these problems.

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Feature | Health benefits

that of total health care spending in 2011, the private sector contributed 68%, as well as providing more than 40% of the country’s hospitals. And, according to the country’s most recent National Family Health Survey, the private sector is the primary source of health care for 70% of households in towns and cities, and 63% in rural areas. The private sector is not just attracting domestic customers either. With prices far lower than in developed health markets such as the US, the country has quickly established a fast-growing trade in health tourism as well.

Government remediesThe Government of India (GoI) has launched several programs over the past few years to improve the health of India’s population. One example is the National Rural Health Mission (NRHM), launched in 2005 with the aim of providing an accessible health care delivery system in rural India. This program involved building infrastructure and recruiting health care staff with the aim of having a female accredited social health activist (ASHA) in every village. NRHM has significantly reduced the prevalence of several diseases and has achieved several of its projected targets.

NRHM has recently been renamed the National Health Mission (NHM), under which health care would be provided to urban poor. As a stepping stone to provide universal health coverage, GoI launched the Central Government Health Scheme, which provides comprehensive health care facilities for central government employees and pensioners, including their dependents. This works in conjunction with the Employees State Insurance Scheme, which was launched in 1948, and under which employees are entitled to medical treatment for themselves and their dependents, unemployment cash benefit in certain contingencies, and maternity benefit in the case of women employees. Total beneficiaries of the scheme, as of December 2011, are above 65.5 million, i.e., around 5% of the population.

In a move to provide health care services to the poor at a minimal cost, a National Health Insurance Program was launched in 2009 and targets India’s below poverty line population. It provides for cashless insurance for hospitalization in public as well private hospitals. And, more recently, a National Program for Prevention and

Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke was launched in the face of rising lifestyle-related diseases. The recent 12th five-year plan envisaged an investment increase of 322% over the previous plan, which is the highest sectoral budget increase. This initiative is similar to the National AIDS Control Organization (NACO), which is working to meet the goal of zero new infections and zero AIDS deaths by 2015. Statistics indicate that NACO’s initiatives have resulted in the reduction of number of new HIV infections by 60%.

Looking forwardThere is little doubt that Indian policy-makers are seeking to make up for lost ground by prioritizing health care spending and development. To further assist this process, they might also be advised to analyze how other emerging countries have addressed their health care needs. Brazil, for example, has seen sharp improvements in infant mortality rates and life expectancy rates. Between the 1920s and 1970s, it was hampered by insufficient numbers of doctors. As a result, adequate medical coverage was very often restricted to private sector workers, to the exclusion of rural and unemployed people. The 1980s and 1990s, however, saw improved access through the introduction of a genuinely universal health system. Management and funding were also decentralized to a state and local level, and a family health program was set up for primary care. And, since 2000, there has been a focus on reducing inequity and improving quality.

Such wide-ranging reforms hold many lessons for Indian policy-makers, not least the fact that transforming a health care system is a long journey, and needs to be driven by consistent political leadership over a sustained period. Creating universal access has to be the primary focus, with a secondary focus on efficiency or quality. Government also needs to choose between focusing on increasing funding for programs such as national insurance or, alternatively, concentrate on providing better infrastructure, such as more hospitals and clinics, and increasing recruitment.

There should also be a far closer partnership between the public and private sectors. To enhance collaboration,

the Government needs to set out an inclusive vision, as well as an effective regulatory framework. As part of its core focus on prevention and early stage management, the Government also needs to ensure it has the capability to oversee large-scale implementation of programs, as well as effective monitoring and governance.

Such programs will work toward the long-term objective of ensuring that every citizen has assured access to a defined and essential range of medicines and treatment at an affordable price, which should be entirely free for the population living below the poverty line. Many of these live in rural areas, which have their own set of unique challenges. These include a lack of monitoring of service delivery, insufficient integration between health care providers, and shortages of drugs and equipment needed for primary health care. Solutions to such issues range from better provision of rural health infrastructure and the recruitment of more doctors to shifts in procurement patterns and the introduction of mobile medical units and services such as tele-health.

But the implementation of such measures should be just the beginning of a nationwide reappraisal of how we run our health care services. Ours is a country on the up in so many ways, but it is simply not good enough that we rank below our peers and neighbors on all manner of life expectancy and mortality indicators. With our growing economy demonstrating the underlying strength and potential of our country, placing health care at the heart of our development plans will ensure we are investing in today’s generation — and tomorrow’s.

Transforming a health care system is a long journey, and needs to be driven by consistent political leadership over a sustained period.

Ours is a country on the up, but it is simply not good enough that we rank below our peers and neighbors on all manner of life expectancy and mortality indicators.

India’s health care spending is significantly lower than the global average of 8.3%, as well as other emerging countries, such as Brazil.

Satish Kaushal is Executive Director, Government Services, at EY India.

satish.kaushal@in.ey.com

Asia’s rapid economic rise has rightly won plaudits the world over, says Bill Banks. But challenges remain, not least around the region’s infrastructure

Think of Asia these days and you’re most likely to think of the jagged silhouette of Shanghai, Hong Kong’s electric, commerce-fueled buzz, or the dazzling sight and sounds of Formula One cars piercing the Singapore night. It’s a region replete

with positivity, whose vibrant images attest to the incredible economic growth of recent years. But there’s another side to report. Despite the booming economy, South Asia has the world’s largest concentration of poor people, with more than 500 million people living on less than US$1.25 a day, according to The World Bank. It’s quite a statistic and one that highlights the many challenges that continue to echo across the region.

A key cause of this systemic poverty lies with the region’s infrastructure. The gleaming towers of the region’s financial centers, together with dazzling new airports and high-speed rail networks, might give observers the impression that other priorities should take precedence. They should think again.

City slickersA key factor in the increasing need for better infrastructure is the rise of urbanization — not just in Asia but around the world. Key global gateways such as London, New York and São Paulo, together with their counterparts in Asia — Shanghai, Mumbai and Singapore, among others — are becoming more and more crowded as people flock to their borders in search of jobs and wealth. However, the magnetic allure of these cities will not be sustainable without hugely improved infrastructure that can foster mobility, limit congestion and pollution, deliver sufficient supplies of power and potable water, and promote a desirable quality of life for the tens of millions of people living and working there.

The challenges are numerous. In many developing economies, meeting basic human needs for potable water, wastewater treatment and electricity remains a challenge. Even China’s meteoric growth has not enabled it to deliver clean water and municipal and industrial sewage treatment in parts of the country. Lack of this basic infrastructure holds back economic development, increases health problems and reduces life expectancies.

Feature | In the works

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Lack of basic infrastructure holds back economic development, increases health problems and reduces life expectancies.

Multimodal mass transit systems — including light rail, subways and bus rapid transit — are now seen as a pre-requisite. But the costs are universally steep and the alternative of car dependence merely delivers traffic gridlock, as seen in cities such as Beijing and New Delhi. Power generation is another key priority. Many countries in Asia and around the world are seeking to convert from coal and oil to less polluting, lower greenhouse gas-producing energy sources, and then complementing these investments in new facilities with power grids and pipelines to reach end users reliably and cost-effectively. However, renewable energies, such as wind and solar, remain heavily dependent on public subsidies that are subject to uncertainty, nuclear is beset by spiraling costs and new natural gas hydro-fracturing technologies have prompted widespread environmental opposition.

Underpinning these concerns is the increasing need to maintain and overhaul existing infrastructure. Highways and sewage plants cannot last forever, nor can old bridges

or water tunnels. Merely maintaining this older generation takes time and money, steering valuable resources away from much-needed new initiatives. And, in any case, even if the funding is available for these investments, convincing a public tired of austerity to agree to increased taxes and user

fees can be far from a done deal, often resulting in problems that are merely pushed onto the next generation’s shoulders.

Adapting to new realitiesComing to terms with these challenges will not be easy. Globalization and urbanization continue to reshape the world around us, driving countries closer together and vast swathes of the population toward already-overburdened cities. Faced with this challenging backdrop, policy-makers continue to look to public-private partnerships (PPPs) as a key way to address these myriad issues. Finding the necessary funds — not easy given the impact of austerity in many developed economies — is the first step. Governments often have little option but to work with not only the private sector to fund the necessary investments but also international donor agencies such as The World Bank and the Asian Development Bank. These multilateral organizations are increasingly lending directly to projects or assisting these economies with the establishment and implementation of private financing policy and procurement advice.

Robust economic and cost-benefit scrutiny is also critical to the success of any infrastructure project. Such analysis will reassure policy-makers that their investments will deliver maximum economic impact, but to ensure this happens, projects must be properly selected on sound economic grounds and then delivered within a robust procurement framework, with the required level of program delivery assurance built into the delivery phase of the project. PPPs, then, are best understood as an infrastructure delivery mechanism, implemented after the detailed planning has already occurred. For PPPs to work, governments should fine-tune procurement models and make the process more efficient, encouraging the adoption of best practices.

This evolving approach to PPPs reflects the unavoidable fact that infrastructure development — by its very nature — remains in continual flux. New technologies, funding needs, construction methods and changing demographics continually shape and impact infrastructure’s priorities and processes. In Asia, and indeed other regions around the world, the flexibility to adapt to changing circumstances is crucial both today, and into the future.

INThe

worksMultilateral organizations are increasingly lending directly to projects or assisting these economies with private financing policy and procurement advice.

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Feature | Brazil’s road to sustainability

Linking the twin powerhouse cities of São Paulo and Rio de Janeiro, Brazil’s Presidente Dutra Highway is not only a pivotal transport artery for one of the world’s fastest-growing countries, but it is now also playing a key role in delivering new standards of sustainability. EY’s Claudia Valenzuela investigates

sustainability

Brazil’s road to

As the key connection between Brazil’s two largest metropolitan areas, there is no doubt that much depends on the Presidente Dutra Highway. The efficient transportation of people and goods between São Paulo and Rio de Janeiro — two

states that have a combined population of nearly 60 million people — is one obvious priority. But the highway, which is managed by CCR NovaDutra, a Brazilian concession company, is also a link for other important cities throughout the South East region of Brazil. So much so that 55% of the country’s GDP is transported along its 402km, as well as 876,000 trips every day.

Now, though, the road is being used for an important additional purpose. The issue of sustainability is increasingly resonating across Brazil, an important catalyst having been the United Nations’ Conference on Sustainable Development, Rio+20, which took place in Rio de Janeiro in June 2012. During this conference, a new initiative, the “Sustainable Road” project, was launched to exploit the highway’s economic significance and geographic location to further encourage greater sustainability across the region.

The project, which is sponsored by CCR NovaDutra and supported by EY, aims to turn the road into a leading example of sustainable development in the country by harnessing the collective power of those who live and work alongside this key transport corridor. By bringing together business leaders and policy-makers, entrepreneurs and NGOs, the initiative will deliver greater collaboration among this diverse community, as well as promote a cross-sector set of ideas and actions that will support greater sustainability.

In order to ensure all levels are involved in this process, a collaborative platform has been sponsored by CCR NovaDutra and established between Porto Seguro, Ipiranga, EcoFrotas, the National Front of Mayors (Frente Nacional de Prefeitos), ANTT, Fundação Dom Cabral, Instituto EcoSolidario, Associação Corredor Ecológico, Abrelpe, NTC, BioPlanet and supported by EY. Here, we speak to key representatives to find out more.

Feature | In the works

Dynamics │ Issue 7 │ July 201332

Infrastructure 2013: Global Priorities, Global Insights, EY’s 7th annual joint report with the Urban Land Institute examines the critical factors affecting infrastructure in emerging and developed economies and is available for download at www.ey.com/GL/en/Industries/Government---Public-Sector/Infrastructure-Advisory

China spotlightInfrastructure problems in a country as wealthy and powerful as China may, on the surface at least, be difficult to believe, but the fact remains that despite huge investments running into the trillions of dollars, many of the country’s citizens continue to experience shortfalls. Water sanitation and housing, together with the lack of a unified electrical grid, continue to be challenging areas.

Among China’s latest high-profile projects: ► shanghai commercial and transportation hub. The

Hongqiao Transport Hub, a massive shopping mall and commercial entertainment center, will serve 75 million people within its high-speed rail lines’ catchment zone.

► Asian rail connections. New rail lines connecting with Thailand, Myanmar, Vietnam, Laos and Cambodia are designed to extend China’s regional economic clout and provide additional access points for trade, particularly from nearby ports.

► Urban transit expansions. Twenty-seven subway-building programs are proceeding, including expansions of transit systems in Guangzhou and Shanghai.

► Airports. Construction is advancing on 82 new airports and the refurbishment of 100 others by 2015.

► rural highways. Expansion of rural road networks is continuing to connect all cities with populations exceeding 200,000, bringing the country’s total highway network to nearly two million miles by 2020.

India spotlightFor all its high-profile infrastructure projects in recent years, India continues to experience challenges, largely as a result of the spiraling needs of an economy growing at 7% annually. Tens of millions of people are also moving from the countryside into informal settlements in cities every year, as they look for work and a route out of what can often be deep-rooted poverty. By 2030, about 40% of the country’s population — nearly 600 million people — will be living in cities. The cost of ensuring adequate infrastructure for them will be hugely significant.

High-profile projects in India include the following: ► New roads. The country is constructing 20,000km of

new and upgraded roads over the next five years.

► Industrial corridor between Mumbai and Delhi. The creation of an ambitious industrial corridor between Mumbai and Delhi, financed in conjunction with Japanese companies, will develop as many as six new cities.

► Transport. Construction of 120 bridges and the completion of other road improvements will help connect rural areas to Chennai, the capital of the southern state of Tamil Nadu.

► energy. Investments worth US$250b in electric plants and power grids are being made throughout the power-starved country.

Bill Banks is Global Infrastructure Leader at EY.

bill.banks@au.ey.com

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Feature | Brazil’s road to sustainability

Claudia Valenzuela is a Director with EY in Brazil.

claudia.valenzuela@br.ey.com

Why has it become such a priority to include the local community in all the different stages of the project?Every sustainability project has got to be collaborative — nothing can be done without society. When we speak of the “Sustainable Road” project, we speak

of a system and not just a road: there are service stations, commuters, residents of the area, the municipalities and local industries, among others. All of these audiences must be engaged for the actions to take place, to become self-sustainable and thrive.

Which steps have already been accomplished? The program was launched in 2012 during the Rio+20 conference. After that, we conducted interviews in all of the 36 municipalities through which the Presidente Dutra highway runs, so that the people themselves would help us decide which steps to take. From this point on, we were able to choose seven items to develop: road safety, education, waste, mobility, green infrastructure, entrepreneurialism and health and food safety. We are currently holding forums to assign workgroups for specific projects within the road’s area of operation.

Any lessons learned so far?Actions can benefit greatly from the knowledge of many actors — something we found out when we gathered the audiences for the forums. It is also possible to use an existing program from within a municipality. The project can, through its actions, persuade service stations along the highway to provide collection points of kitchen oil to be recycled and become biodiesel. Taking these programs to other cities transforms them into sources of information and turns the “Sustainable Road” into a relationship platform.

Has the project received support from other mayors?The highway has taken on a strong and active role in promoting development. One way or another, all municipalities cope with similar challenges posed by urban clusters. The project has no expiration date but it does have a few milestones. During World Youth Day, which will take place in July 2013, our actions will be focused around road safety and waste management — generated by approximately 20,000 buses that will carry young people along the road during this period. It is important to emphasize that these two important items are being also discussed and incorporated into the project.

What has it been like working in a project with so many stakeholders?First, it is necessary to create room for trust, where people are able to express

their point of view, hear and be heard, be able to connect to the issues they must face. Sustainability requires a plan in common. From this, the necessary credibility between the actors is built in such a way that they can dream together. It then becomes easier to create a collaborative environment where actions are implemented as a whole. All points of view are valid and if you don’t make everyone feel represented in the process, there will be no commitment. And without commitment, no such project is taken forward.

How do you see the expansion of this project to the rest of Brazil and the world?As the challenge lies in the creation of this collaborative environment, the first ambition of the “Sustainable Road” must be for it to be used as a reference point and show the skeptics it can be done. Second, more facilitators who are capable of welcoming different points of view must be identified in order for a shared dream to be built. Human capacity represents a higher obstacle for the expansion than the actual willpower to do it. With this project as reference, we will be able to create new projects and apply this experience in other locations. It is also important to consider the individual characteristics of each area. There are common issues as well, but each one sees the same problems differently. To reproduce a project is not to simply take what has worked somewhere and apply it elsewhere — it takes time to understand and engage. Much hinges on the human being who facilitates this approach.

Why is it so important to include the local community in all steps of the project?It is because the Presidente Dutra Highway is the main development and transportation axis for our region. In addition, our town has a very strong relationship with the highway — an everyday relationship not limited to

the public sector or businesses, but one based on those people who use, praise and criticize it based on their own personal experiences. This dialogue with the community and with many segments of society is vital for us to make the best out of this relationship between the road and the town.

How has the community reacted?Perhaps the best example is the traffic issue. CCR Nova Dutra does a great job, along with the local municipality and the country school system, on road safety education. This provides great interaction between our community and the road.

What is the most important lesson learned so far?We need to get people involved and strengthen our knowledge about the reality of life in the region in order to try and build broader projects that involve more people and more institutions. We will then become even more effective.

What is your advice for the other cities involved?Invest in the dialogue and do not take short cuts. Of course, we always want immediate results, but building a strong relationship takes a joint effort of all those involved, working on the same level of understanding. Dialogue, meetings and seminars must take place so that integrated projects are able to gain synergy and support.

How did the idea for the “Sustainable Road” come about?We were preparing for our participation at Rio+20 when EY advisors came to us and

presented details of this project, which we soon took to the Mayors for consideration. Our organization’s president, then Mayor of Vitória João Coser, surprised me with the way he received the project, saying, “We are in, together, we want to support this.” He saw an opportunity to address claims coming from Mayors of towns through which runs a road that creates problems, some of which can only be solved with the cooperation of other cities — in this particular case, the Dutra highway: an old road with heavy traffic. The launch happened during the Rio+20 and, since then, we have supported many initiatives, participated at meetings and mobilized Mayors and Secretaries.

What does your organization expect from this project?That it is as successful as possible and that all Mayors involved feel that a conversation channel with CCR Nova Dutra has been created to solve the problems of each city. We would like the “Sustainable Road” to help provide solutions to problems in several areas, such as health and waste management, as well as lead to a reduction in the number of accidents. If there are fewer accidents, there will be fewer deaths and less stress on the health care system in each one of the 36 municipalities. We expect to offer the opportunity and the possibility of building this communication channel to all Mayors.

Ascendino da Silva MendesChief Executive OfficerCCR NovaDutra

Carlinhos AlmeidaMayorSão José dos Campos

Ricardo CattoSustainability LeaderEY Brazil

Gilberto PerreSecretary ExecutiveNational Front of Mayors

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We meet ... | My story, my views ...

Few leaders have traversed as many positions, to such consistent success, as Huguette Labelle. A former President of the Canadian International Development Agency and Chancellor of the University of Ottawa, she is now fulfilling a number of different roles, including chairing the board of Transparency International. Here, she takes a look back at her long and distinguished career

my views ...My story,

My experience of international development started to a great extent when I was serving as Deputy Minister of Transport Canada.

This is because we were doing a lot of international work developing agreements with different countries. From then, I went on to the Canadian International Development Agency (CIDA), and this role brought me to work very closely with other development agencies such as the Organisation for Economic Co-operation and Development (OECD), The World Bank, the UN and other multilateral agencies that all cooperate very closely.

These relationships played a very important role in terms of Canada’s foreign policy: if you work well bilaterally, it serves you well at the multilateral table. If Canada has a position it wants to take multilaterally, it really has to have many more friends around the world. You don’t participate in international development for the sake of creating friends, you do it because you want to share your prosperity, and you want to help countries that are not doing as well. But, at the same time, there are positive consequences in terms of current relations and future relations with those countries, so this was very enjoyable.

Huguette Labelle

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We meet ... | My story, my views ...

BeginningsI got my PhD in Education, which involved a fair amount of course work in psychology, and was then involved in the health field for a number of years, before starting work with the Federal Government at the Department of Health and Welfare. This was 1973 and there were very few women in the executive group at that time. I entered at the junior level and I was 1 of only 5 women out of 700 colleagues in that group.

I then moved on to the Department of Indian and Northern Affairs, where issues such as housing, economic development and natural resource exploitation immediately broadened my horizons. And, from there, I held different positions before being appointed to the rank of Deputy Minister in the Department of the Secretary of State, which is what Heritage Canada is today. I held different positions as Deputy Minister — from Secretary of State to the Privy Council and then to Transport Canada. It was in this role that the international world opened up because we were negotiating treaties with governments around the world to have reciprocity in landing rights and we had the Coast Guard which, of course, navigated in national and international waters.

Into the world of developmentFrom Transport Canada, I became President of CIDA, a position I held for seven years. When I think about how Canada is viewed by others in terms of international development, I believe that we have been seen in the past as an honest broker, a country able to see the importance of working bilaterally in a cooperative and supportive way that benefits Canada at the multilateral table.

At that time, we were working in about 100 countries around the world, with some of them on a smaller scale and about 30 countries very extensively. This was after the fall of the Soviet Union, so we were there to primarily support countries with their economic, financial and trade development because they had to rebuild their justice systems, their local government management and so on. At the same time, we were working in other very poor countries in Africa and regions such as South Asia, helping countries including India, Pakistan and Bangladesh. These experiences allowed us to see that countries depend on a properly functioning social, physical and economic infrastructure. This meant that much of our efforts were focused on these areas.

When you’re President of CIDA, you have to support the Minister and the Government and policy. You have your whole team and staff in the recipient countries as well as the capital. That’s where you need to spend a lot of time because the staff are the ones that matter. In a sense, they’re the ones who will make it possible for success to be achieved.

Caring for staff, and ensuring they are given their space, that their positive work is reinforced and that they know the direction of travel are all important.

At CIDA, I always believed that, if you’re going to be leading an organization, you need to know what the business is. So I spent quite a bit of time visiting our projects around the world and spending time in Africa, spending time with the women there and hearing what made sense to them and what it was that they wanted to achieve for their families.

I saw tremendous resilience in poor people, which was a huge learning experience. By listening to them, I came to understand how we could support their development. For example, microcredits can help ensure that girls and children can go to school — most of the time, women were the ones taking these small loans and they were paid back 98% of the time.

I saw how they were able to grow from taking something very tiny to making it bigger and bigger. The money they were making was going to their families, to their children for food, to school, to health care, and then they began to get involved in their communities and became tremendous leaders. So, the combination of education and access to microcredits became very

powerful. It showed how important it is to start with the needs and priorities of the community, as opposed to us arriving and announcing what our own priorities are, which is not a very helpful approach.

Trade and aidWe believe that trade holds the key to enabling developing communities become thriving communities. But trade will not happen without the essential infrastructure to support it. Investors will not go where the risks are high and where there isn’t at least a basic level of educated people. They need electricity to be able to grow their business and airports so you can fly in and out and a rule of law that works. They also require regulations that are not only on paper but are applied, enforced and implemented, so that there is a level playing field for business on which to operate.

This is where international cooperation is so important in terms of helping countries get to a certain level so that trade and investment can kick in. Once this happens, people will develop their own business because they have a higher capacity to do so, and the facilities will be there in order for them to do that. These were lessons that I thought were very important.

During my first week at CIDA, the Minister of Finance from an Asian country came to see me and said, “I’m here to beg you not to quit our country. Our country is doing much better and I hear CIDA wants to move on. Please don’t do that, we don’t need a lot of your resources now but we need you because trade has not started yet.” He went on to say how he wanted his country’s tax department to twin with ours, and much else before referring back to his own experience of studying in Canada: “I trust Canadians, because I know Canadians, I’ve been there, I know what their capacity is and how they work. Please stay with us for a few more years.”

We got the same thing from South America but that was my first week and that’s why it stayed with me. Sometimes it can be tempting to pull out very quickly because a country’s GDP is growing. But GDP or income per capita does not demonstrate the great disparity and inequality of income in the country. We have seen, in every country of the world, inequality between income levels, but in developing countries it can be acute and you can have a very small number of people increasing your income per capita and GDP, whereas the great majority of people still live in abject poverty.

That’s not to say aid isn’t important, but I have found there are certain factors that need to be followed in order for it to be as effective as possible. First, you need to

You don’t participate in international development for the sake of creating friends, you do it because you want to share your prosperity, and you want to help countries that are not doing as well.

I spent quite a bit of time in Africa, spending time with the women there and hearing what made sense to them and what it was that they wanted to achieve for their families.

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start with the premise that you are there to support the country and its development. You start with its needs and priorities and support it in finding the best ways to achieve its aims. Second, the donor country needs to ensure that its programs and capacity is sufficiently varied to be able to deal with a number of different countries. Third is consistency. It is very disruptive to move in and out of a country. For the country’s sake, but also for Canadians cooperating in these countries through CIDA, it’s very important to reach the goals that have been set, which are usually multi-year. These three factors have helped make aid effective not only for CIDA, but for the other developing agencies I have seen and worked with around the world.

One chapter closes, another opensAfter seven years with CIDA, I figured that it was time to move on. I could have stayed — I loved what I was doing — but after 19 years as a Deputy Minister, it was time to give back as well. I had intended to have at least a six-month cooling off period but on my last day of work, I started to get calls because people were saying, “Now it is no longer a conflict of interest could you join our board?” I had a cooling off period to do with those groups that I had been working with, but some of these other invitations were very interesting, so I started to get involved immediately when I could. The areas that I accepted were related to environmental conservation, higher education, development and governance. And, I think that these areas, if I were to put them all together, are very much what I have been involved in ever since.

I served as Chancellor of the University of Ottawa and I was also involved in development in the African Virtual University. I’m still involved in capacity building for Africans as a member of the African Capacity Building Foundation and Vice-Chair of the Board of the International Anti-Corruption Academy, which we’ve helped to support in its development.

In terms of environment work, I’m on the Asian Development Panel on Climate Change to try to help countries in Asia map how changes in the water level would impact coastal areas. We are also doing a number of other things such as supporting the Asian Development Bank, and I am advising the President of the Bank in that regard. I was also the Vice-President of the Board for the International Union for Conservation of Nature, which deals with many aspects of the environment, including biodiversity, conservation and environmental law.

On the governance side, the one area where I’m still spending a lot of my time is with Transparency International. I’m the Chair of its Board and have been for the last seven years. We have chapters in close to 100 countries around the world and we have been trying to see how we can make a difference to reduce corruption, which is an epidemic around the world that creates so much misery. Corruption contributes to illicit trade in people, in arms, in drugs and it destabilizes countries and feeds poverty around the world. It leaves, not just

a country, but the private sector, in situations that are very often worse, with people losing their companies or even finding themselves in jail.

We publish surveys and we also have been very involved in establishing conventions and working with industry, governments and the judiciary as a solutions provider. We are working together in identifying the kinds of institutions, systems and mechanisms — based on transparency to a great extent — that need to exist to prevent and identify corruption early on.

I’m always asked, “Do we have more corruption today than 30 years ago?” I’m not sure we have more corruption, but globalization and social networks mean there is a greater capacity to move money very rapidly. It can therefore be hidden by passing through a number of companies and then you don’t know who the beneficial owners are anymore. That’s what is different. But

today, we also have a greater knowledge of it and we have many more countries that have given themselves better institutions to try to prevent it and find it when it happens, to become a deterrent. We’ve seen, in the financial sector, a number of people who have paid huge amounts of money, some are in jail and therefore that is the positive side.

But I think we need to spend much more energy on working with people and communities. We need to do more at the local government level so that people will not feel that this is a way of life, that this is business as usual, and that they need to bribe their way in order to have access to services. We need to tell communities how they can help, where the tools are so that they can use them to identify issues and work the local government and NGOs in their community to bring people together — because there is strength in numbers as opposed to just one person.

If you ask me …The advice I would give people considering a career in development is first of all, get an education. If you get a Master’s in international development it’s helpful, but get yourself a good professional base. Get yourself a solid first degree and move on to a second.

Number two, get experience. When you’re doing your studies look at institutions that offer international internships. Use your summer period or inter-session periods to volunteer around the world. In other words, get

direct experience and that will really help you know a little bit more about what you want to do. Then, once you’re ready for work, look for an institution or agency that will continue to expand your experience. Not just a desk job in the capital city but one that will take you out there so you can really witness and do development correctly.

I also recommend reading voraciously about what is happening around the world and traveling to a great variety of countries, to the poorest as well as the richest countries. Whether it is in the NGO community, business community or government, look for agencies or

institutions that will give you that added international experience and I think you will not look back.

It is important to start with the needs and priorities of the community, as opposed to us arriving and announcing what our own priorities are.

We believe that trade holds the key to enabling developing communities become thriving communities. But trade will not happen without the essential infrastructure to support it.

We meet ... | My story, my views ...

43Dynamics │ Issue 7 │ July 2013

Regular | Country spotlight: Nigeria

Dynamics │ Issue 7 │ July 201342

Projected annual GDP growth rate, 2012–17: 5.1%Total foreign direct investment projects since 2003: 365Inflation rate in April 2013: 9.1%Life expectancy: 52 years (men), 53 years (women)GNI per capita in 2011: US$1,280ethnic groups: more than 250, 4,000 dialectssize: 577,355 sq miles (two-and-a-half times the size of California)Number of states: 36 plus Abuja, the Federal Capital territoryMajor ethnic groups: Yoruba, Hausa, Fulani, Ibo, Igala, Kanuri, Tiv, Ibiobio, Ijaw, Edo, Efik, Urhobo, Idoma, Itsekiri

Major ethnic subgroups:Hausa-Fulani: found predominantly in the northern states of Sokoto, Katsina, Adamawa, Jigawa, Yobe, Gombe, Zamfara, Kebbi, Kano, Bauchi and Kaduna. Most are Muslim, with their culture being greatly influenced by their religion.Yoruba: found in southwestern Nigeria and most live in the states of Lagos, Ogun, Oyo, Ekiti, Ondo, Osun, Kwara and part of Edo and Kogi. Many are highly urbanized, but retain strong kinship bonds. Igbo (Ibo): found in the southeast states of Anambra, Enugu, Ebonyi, Imo, Abia, part of Delta and part of Cross River. The Igbo are known for their hard work and resourcefulness. Traditionally farmers, today a significant number of them have become traders. Edo: this group is found in Benin (Edo) state.

Ijaw (also known as Zons): found in Ondo, Delta and Bayelsa states. They are basically fishers with their home made on stilts over the water.Ibibio: found principally in mainland Akwa Ibom.Kanuri: this group is found in Borno state. They have a long history and tradition as old as the Fulanis, but are found at the opposite end of the country.Jukun: this group is known for being war-like and live primarily in Taraba and Benue states.Nupes: most live in the Niger State.Note: there are many other smaller groups who are identified with either their tribal marks (scarring) or their mode of dressing. With modernization and intertribal marriage, many traditional ties and practices are changing or being lost.

Nigeria is the most populous country in Africa, and the seventh largest in the world. There are three main divisions in Nigeria — the North is dominated by the Hausas (21%) and Fulanis (9%) who are predominantly Muslim; the West is dominated by the Yorubas (21%) and the East by the Igbos, Calabar or Efik speaking people (18%). While members of each ethnic group are typically concentrated in one area, many have migrated to urban areas, thus producing modern cities composed of mixed ethnic groups.

Since 1908, when German engineers drilled the first oil well in Nigeria, a thriving industry has sprung up. Oil is today the bedrock of Nigeria’s economic development, accounting for more than 80% of its foreign exchange earnings. It is the seventh-largest producer of oil globally and also has vast largely unexplored natural gas reserves, the fifth largest in the world. Today, scores of European and American businesses are currently exploring joint venture businesses in gas production.

Although English is the official language, there are over 250 different languages spoken in Nigeria and the English spoken is often a pidgin form, locally referred to as “broken English.” The most widely spoken languages are Hausa, Yoruba, Ibo (Igbo) and Fulani.

There is no state religion in Nigeria. About 50% of Nigerians are Muslims and 40% are Christians. Many other Nigerians practice the African traditional religion. Nigerians are often very strict about their religious practice and beliefs but the

range of commitment, belief and practice varies in each religion. While most people practice Islam or Christianity, many will still also engage in practices derived from indigenous (traditional) religions. These practices will usually include spirit and ancestor worship and will be based on tribal affiliations.

In Nigeria, significant numbers of children do not get the opportunity to go beyond elementary school, but at least 65% do receive some secondary education and the adult literacy rate is currently put at less than 30%. Today, Nigeria can boast of over 120 universities, both private and government-owned institutions.

Despite the current tough global economy, the Nigerian economy is fast picking up and remains one of the 10th fastest-growing economies worldwide. Infrastructure investment is also increasing rapidly, particularly in the areas of power supply, transportation, health, education and Information and Communication Technology. In addition, policy-makers are prioritizing the privatization of the country’s energy sector, as well as implementing accounting reforms and adopting International Public Sector Accounting Standards.

The size of the foreign direct investment (FDI) flow has grown 6.2% since 2003, funding a total of 365 projects, according to EY’s African attractiveness survey 2013. The trend continues to be positive, with 60 projects green-lighted in 2012, compared with 50 in 2011. Survey respondents also ranked Nigeria as one of the top three

most attractive countries in which to do business — behind only Morocco and the leader, South Africa. With a critical mass of investment flows into Nigeria, it is expected that, with committed leadership from government, business and civil society, Nigeria will continue to be a leading investment destination for European companies.

Over the past 50 years, EY Nigeria has been at the forefront of the economic growth of the country. In addition to the distribution of thought leadership materials to both private and public establishments doing business in Nigeria, the firm has also promoted entrepreneurship through its annual Entrepreneur Of The Year Award.

Through its African Investment Plan, EY has also promoted business activities in key economic sectors. For example, the firm was the Platinum Sponsor of the Institute of Internal Auditors Annual Conference 2013, where it distributed free thought leadership materials to participants. Our events are fast becoming knowledge-sharing solution centers, where cutting-edge business decisions are churned out for companies operating in Nigeria.

As we look forward, while there are challenges that must still be addressed, EY Nigeria remains hugely positive and confident about our country’s prospects. We believe that Nigeria’s ongoing transformation will not only sustain, but even accelerate in the decades to come.

Country spotlight:

Nigeria

eY contacts

henry egbiki Nigeria Country Leader

henry.egbiki@ng.ey.com

Adekunle salau Advisory Leader

adekunle.salau@ng.ey.com

The story of Nigeria has prompted much debate. The country’s origins have often been examined through the lens of slavery and slave trade, where

the traffic in people characterized the pre-colonial era before the arrival of the British colony in 1861. For effective administration, in 1898 the colony was divided into two British protectorates — Northern and Southern — which later merged in 1914 to form the colony of Nigeria. A federal system of government was created in 1954 and, in 1960, Nigeria gained political independence from the British.

Despite this seemingly chequered historical background, Nigeria is today a thriving, buoyant country, whose rapidly growing economy supports a population of 167 million people, comprising 250 ethnic groups, speaking about 4,000 dialects. It is divided into 36 states and a Federal Capital Territory in Abuja.

45Dynamics │ Issue 7 │ July 2013Dynamics │ Issue 7 │ July 2013

► International development is a priority for EY. We have been working with development partners for more than 25 years and are passionate about our work — for many of our people, it is not a job, but a way of life.

► We are not a typical development contractor operating from the sidelines. We were one of the first to set up our operations in developing countries, giving us firsthand, in-depth understanding of the local environment. Remaining long after the completion of the initial program, we have become integral to the economies of developing countries by investing heavily in the development of our practices. We focus on legacy — not just the completion of a project.

► Metrics are in our DNA. As a fact-based organization, we are aligned with the need for accountability, measurement and evaluation of our work, which is an increasing focus for development partners.

► We are the most globally integrated professional services organization in the world and possess a deep understanding of the complex challenges faced by business and government in developing markets. This means that our clients have access to international leading practices enhanced by on-the-ground knowledge and insight.

► With more than 167,000 people and 700 offices in 140 countries, our teams live and work in developing countries around the world. We remain a leading organization in the private sector business community and recognize that our success hinges on sustainable economic development.

For more information, visit www.ey.com/international-development Cont

acts

Regular | EY contacts

Development: why EY?

AmericasMarc e. AndersenUs+ 1 703 747 0825marc.andersen@ey.com

Cherie Anne FaiellaUs+ 1 202 327 7022switzerland+ 41 58 286 8614cherie.faiella@ch.ey.com

Michael BeaulieuUs+ 1 703 747 1819michael.beaulieu@ey.com

Michael IngramUs+ 1 703 747 1068michael.ingram@ey.com

Charles-Antoine st JeanCanada+ 1 613 598 4302charles-antoine.st-jean@ca.ey.com

Claudia ValenzuelaBrazil+ 556 121 040 113claudia.valenzuela@br.ey.com

Carlos MillánMexico+ 52 (55) 5283 1494carlos.millan@mx.ey.com

AfricaJoe Cosmasouth Africa+ 27 (0)11 772 5416joe.cosma@za.ey.com

Baïdy Diengsenegal+ 221 33 849 2204baidy.dieng@sn.ey.com

Mitch khalpeyZimbabwe+ 263 4 750 979mitch.khalpey@zw.ey.com

Laban Gathungukenya+ 254 20 2715300laban.gathungu@ke.ey.com

Adekunle salauNigeria+ 234 1 46 304 79 80adekunle.salau@ng.ey.com

Lindsey DomingoDemocratic republic of the Congo+ 243 999 306 868 lindsey.domingo@cd.ey.com

Djabanor NarhGhana+ 233 21 772 088djabanor.narh@gh.ey.com

Yared Berhaneethiopia+ 251 11 550 4933yared.berhane@et.ey.com

Asia PacificMildred Tansingapore+ 65 6309 8200 mildred.tan@sg.ey.com

Bill Bankssydney+ 61 2 9248 4522 bill.banks@au.ey.com

winston ChanThe Philippines + 63 2 891 0307 winston.a.chan@ph.ey.com

europeAlessandro CenderelloBelgium+ 39 066 7535 531alessandro.cenderello@be.ey.com

Maryam kennedyUk+ 44 20 7951 0188mkennedy2@uk.ey.com

Michael Cupit Uk+ 44 20 7951 7167mcupit@uk.ey.com

Petr MedvedevUk+ 44 20 7951 6006pmedvedev@uk.ey.com

Ioanna kokkinouGreece+ 30 210 288 6278ioanna.kokkinou@gr.ey.com

Dexippos AgouridesBelgium+ 32 2 774 91 11dexippos.agourides@be.ey.com

Daina BelickaLatvia+ 371 6704 3828daina.belicka@lv.ey.com

International development is a priority for EY. We have extensive experience working on international development projects around the world and we’d like to hear more about your needs. Contact one of our professionals today.

44

Global International Development Leader

Dave readUk

+ 44 20 7980 0550dave.read@uk.ey.com

Middle east and North Africaosama ToemaBahrain+ 973 1751 4914osama.toema@bh.ey.com

Nelson JorgeJordan+ 962 6 580 0777nelson.jorge@jo.ey.com

IndiaGuru MalladiIndia+ 91 124 671 4188guru.malladi@in.ey.com

siddhartha Das+ 91 124 612 1202siddhartha.das@in.ey.com

wheN ThINkING ABoUT The FUTUre, seT YoUr sIGhTs hIGh.

EY can help you see the bigger picture, as well as the smaller details. Visit:

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