The CEO of one of South Africa’s largest financial-services companies discusses the state of business in Africa.

Maria Ramos could not have chosen a more difficult moment to become CEO of Absa, a Barclays subsidiary that is one of South Africa’s largest financial-services companies. Taking over the job in March 2009 in the midst of the global financial crisis, Ramos, an economist by training, has had to call upon the broad range of skills she honed in a career split between the private sector and public service. Before joining Absa, Ramos was CEO of Transnet, where she gained an international reputation for her leadership in helping to turn around that giant state-owned transport and logistics company.

In an interview with McKinsey’s David Fine, Ramos discusses Africa’s economic prospects, the status of the continent’s financial sector and the way the crisis has affected it, and the importance of financial inclusiveness to economic development.

We also asked Ramos how South Africa’s cultural context has shaped both her management approach and her thoughts about diversity within her leadership team. View this brief video to hear her responses, or download a PDF of the video transcript.


The Quarterly: How would you describe the state of the African economy?

Maria Ramos: Africa did not go through the recession unscathed. That’s not possible; we’re part of the global economy. But we did relatively OK, given the depth of the global recession. If you look across the African economies, the biggest ones do reflect the downturn. But we’re starting to see African economies come back—whether you look at Botswana, Ghana, Nigeria, South Africa, Tanzania, Zambia—and show some decent growth. Going into the global crisis and recession, African economies were already growing pretty strongly.

It’s also important to realize that it’s a vast continent, with a lot of very different economies. But this is a continent with solid growth opportunities in many of those economies.


The Quarterly: What are the drivers and enablers of growth in Africa?

Maria Ramos: In many countries, there is absolutely no doubt that the focus continues to be, and will remain for some time, on commodities. But we also need to understand that it’s not just the commodity endowment that is driving the potential of those economies. It’s also what’s happened in the last decade and a half around the investment in people, systems, and social and physical infrastructure, as well as increasing government stability and sounder fiscal policies. Those moves are beginning to pay dividends.


The Quarterly: Some people see Africa as the last frontier, the last of the world’s really big growth opportunities. Yet it’s the continent most in need of aid. What is your view on the seemingly contradictory nature of Africa’s situation?

Maria Ramos: We live on a continent where there is still significant poverty and where we still need to have the likes of nongovernmental agencies come in and offer support. I think we should see that not as a negative but rather as an enabler. Africa is much more than a recipient of aid flows. We have countries with large economies and the makings of an economic base that will be increasingly attractive to foreign direct investment and domestic investment.

The notion of the “last frontier” creates an image in my mind that anything goes. It isn’t like that. It’s not an anything-goes kind of place. But it is a place where there are many, many opportunities and a heck of a lot of talent. I have always felt that the biggest resource on our continent isn’t natural resources—irrespective of how important those are. It’s actually the talent, the people. And if we just continue to invest in talent, that’s what’s going to give Africa its comparative advantage.


The Quarterly: What advice do you have for multinationals seeking to invest in Africa?

Maria Ramos: The first piece of advice I give our teams—and remind myself of—is that we need to do very thorough due diligence. We need to understand that if we are going to invest in another country, we must understand that environment well, irrespective of whether you’re investing in Africa or investing in any other geography.

You are going to find some challenges in Africa that you probably wouldn’t be finding if you were investing, for example, in parts of Europe. There certainly will be challenges in some aspects of infrastructure and in telecommunications—the World Bank says that African countries lag behind their peers in other parts of the developing world by just about every measure of infrastructure coverage. If you do encounter challenges, what’s required is a thorough engagement and commitment to the investment you’re making. Sometimes investments have longer return horizons than they do at other times, and that requires you to put some of your best people, technology, and systems on the job. There are no shortcuts. This is not one of those places where you’re going to come in and make a quick buck and leave. That said, we believe that countries offering the strongest growth potential in the coming years are Angola, Ghana, Nigeria, Uganda, and Zambia, which are likely to be the biggest gainers from development in the mining, energy, and other infrastructure sectors.

The big issue is financing—for example, how to cross the divide and provide funding solutions to African countries and businesses. In some cases, there will be a need for governments to support the financing solutions. This will reduce the risk and naturally reduce the cost of funding. Public–private partnerships, which are already being seen, may become more prevalent on the continent.

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