OPEN ECONOMY: Tidjane Thiam… the narrative behind his success!

29 Mar, 2015 - 00:03 0 Views

The Sunday Mail

There are many more traits possessed by talented economic and financial minds. We must identify these characteristics . ..

Recently, the biggest headline when it comes to financial and economic news – in Africa at least – was the appointment of Tidjane Thiam as the next chief executive of one of the world’s largest financial institutions, Swiss Bank Credit Suisse.

Born in Ivory Coast, Thiam had an upbringing and corporate ascendancy that is very admirable to many young Africans across the continent. Indeed, from his professional achievements and credentials, the man is a legend, a ground-breaker, a trailblazer!

It is wildly impressive for a man of African origin to head an iconic European Bank the size of Credit Suisse. However, maybe unique to my own perspective, therein lies my slight discomfort. While Thiam deserves all the praise he has received and has set a positive example to many including myself, there is a more concerning narrative underlying his appointment.

What does it say about Africa as a continent, in terms of attracting, rewarding and ultimately retaining its talent?

What historically began as a trend in the 1960s of Africans going to the developed world to get an education and coming back to develop their homelands, has become a trend of Africans going to study abroad and ultimately deciding to stay abroad.

Sure, many dynamics have changed since the 1960s, from colonialism, greater globalisation, professional assimilation, and many others. However, by the numbers, human capital seems less incentivised to exert its brain power on the continent’s affairs than it once did a few decades ago.

Thiam’s case for me is particularly interesting because over the evolution of Africa’s quest for empowerment and economic self-determination, the challenge has moved from military and political to the pressing need of overcoming an inequitable global financial system.

All African countries are already independent and have local representation in governance, yet the overwhelming majority is still purged by the plague of poverty and poor infrastructure. Unfortunately, this economic circumstance is overcast by debt burdens, an affinity towards aid and an International Monetary Fund/World Bank dependency.

After a brief period of economic growth, as soon as the Ghanaian economy got tough, the country’s economic governance immediately sought after IMF technical assistance and consequent financial aid of US$1 billion.

They literally passed along responsibility of their economy. Countries such as us Zimbabwe are still scholars to IMF Staff Monitored Programmes and technical assistance in running our own national asset Management Company and national budgetary allocations.

Evidently, there’s clear indication that perhaps for most of the continent, we have not matured enough for independent economic management. One is left with limited options and can deduce that we lack competent human capital adequate to manage our own economies.

Throughout the continent, any country that seems to be on a growth projectile is encouraged to pursue Euro bonds to finance further economic development. Nigeria and Ivory Coast recently issued as much as US$1 billion, with Kenya doubling that amount issuing a US$2 billion bond. Plated in gold, these Euro bonds were oversubscribed. Economic governance remains oblivious to the perils of this external debt financing – let alone the ineffectiveness of such financing in growing local wealth as all returns are expropriated outside our countries with interest. Africa’s exchange rate in-competitiveness makes it inconceivable to ever see African debt burdens, which stood at US$4 trillion in 2010, ever paid back. Just this quarter alone, the aforementioned Nigerians’ expenditure on foreign exchange reserves as the Naira has been falling steeply against the US dollar. As long as foreign guidance remains impressionable on Africa’s economic governance, we will always be directed towards debt dependence – Africa’s worst disease. Furthermore, due to our internal African mistrust and preferred western guidance, intra Africa trade stands at only 9 percent of trade transactions made continent wide. We fail to see how we can finance our own economic development and merge our output supply chains within ourselves as a continent.

Granted it lacks empirical evidence, I do believe that this is a contributing factor to our low standards of living and infrastructure deficit continent wide. These economic shortcomings arise from our lack of internal confidence – we have an inferiority complex in terms of economic and financial acumen. Yet, individuals like Tidjane Thiam show us that there is no reason to feel that way about ourselves.

The brains are there; we just don’t attract and retain them within our systems.

Hence, as a continent, we should start to ask ourselves why? A good starting point would be to assess what qualities people like Thiam, and the thousands like him outside of Africa possess that make them the talents they are. More importantly, how well their talents fit in and advance the interests of certain types of economic management systems.

You will find that top economic and financial talent is often contrarian. They analyse things and see details that not everybody else is able to. Ultimately, this is what makes them good decision-makers. Likewise, their contrarian nature leads them towards being risk takers.

Top talent has a tendency of not fearing to do the unconventional. This is the type of character we need to turn Africa’s current positioning in global financial system.

One of Thiam’s greatest moments in his career was when as CEO at Prudential he made a bid for AIA, a wing of American Insurance Group. Despite firm public disapproval which eventually led to his bid being rejected, AIA was later floated on the Hong Kong Stock Exchange and its value shot up well above what Thiam was going to buy it for.

There are many more traits possessed by talented economic and financial minds. We must identify these characteristics and then design our economic management systems around these competencies.

In Zimbabwe especially, there is urgent need to create a framework in our economic management systems that allow us to derive benefit from astute minds.

This involves things like setting managerial targets and enforcing performance based rewards. It would be of great benefit if we distanced ourselves from structures built on nepotism and patronage criteria.

Poor corporate governance in our parastatals, state enterprises, and parts of our banking sector, has shown this need for better frameworks in our economic management. We are overpaying poor talent. Their output is lamentable and it paints the wrong image of our talent.

Congratulations to Tidjane Thiam on his appointment as Chief Executive of Credit Suisse. He deserves the reverence and high regard. However, I do hope as Africans we take a moment of introspective reflection and assess our own economic management structures.

How well are we doing in attracting, rewarding and retaining our best economic and financial minds?

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