Innovation keeps ex-African Development Bank chief upbeat

The political and economic uncertainty in South Africa has not dampened the confidence of former African Development Bank Group (AfDB) Chief Economist and Vice President Mthuli Ncube.

Ncube, who is currently Professor of Public Policy at University of Oxford says there is no reason to be gloomy about prospects.

"I think highly of the Silicon Cape and the ingenuity that I see in Gauteng from having spent time at the Innovation Hub in Pretoria where there are some amazing youngsters who do incredible apps. I have been working with one Afrikaner guy who has developed a virtual medical aid card and payment system to go with it. They can match anyone in the world. Just imagine the impact of that if we were to roll it out in a country like Kenya which is already so tech oriented."

Ncube says mobile based micro insurance for smallholder farmers in Africa represents ample opportunity for entrepreneurs.

"You can sell all manner of insurance, from equipment to weather insurance, and you can sell it through mobile and make a lot of money from that. There is just so many opportunities. Entrepreneurs should also target opportunities in terms of demographics in the FMCG space because once you got a growing population there is growing demand for something as simple as soap. Whatever a growing population needs, you want to make sure that you take advantage of that. Opportunities are everywhere in my view."

As South Africans worry about the threat of the country being reduced to below investment grade, Ncube, who is also an author in economics, political economy and finance, says the consequences of the country being reduced to junk status will bring strain for the South African economy.

"I am worried about the junk status, we are all worried about that. I spent a lot of time interacting with the Moody's team and of course they didn't tell me which countries are headed which way but I can tell you which countries in my view are likely to have an upgrade going forward. One of the countries is Ethiopia but things are not looking great for south Africa right now on the political risk issues and growth prospects."

Ncube says some of the consequences of a downgrade for South Africa will be higher costs for borrowing and reduced investment inflows which will affect the exchange rate negatively - although the country could restore the situation by applying improved management measures.

He also emphasises the need to explore opportunities in power generation around the continent.

"The African Development Bank, where I used to work, has really embraced the power Africa objective and I think South African companies would work really hard to find opportunities to partner with the African Development Bank. There many key power projects in Africa that require investment and we need to turn them into bankable projects. There isn't enough risk capital for what we call upstream work in terms of project capital but once the investment is made then we can get going. Infrastructure is the way to go. There are even more opportunities in non renewable energy in places like Cape Verde where you can supply the entire country with electricity generated from wind."