Standard Bank Talks In-Market Insights

In-Market Insights - Sr Tony Blair in-conversation with CEO of Standard Bank CIB

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The world today is increasingly multipolar, with the US and China competing for influence, Europe redefining its economic relationships, and new financial hubs emerging in the Gulf and Asia.

Where does Africa fit in this evolving global order and what are the deliverables that demonstrate the change in the relationship with Western powers. Is this a geopolitical moment where Africa can redefine its role, and which economies or regions are best placed to seize the opportunities.
28 May English South Africa Business · Investing

Audio transcript

00:12 We're really grateful for your time and look forward to your insight.
00:16 And given the work that you do through your Tony Blair Institute for Global Change, I thought it might be a useful start just to share for those in the room and those online who might not be aware of the great work that you do and what part of it is done on the continent.
00:36 Okay, well, first of all, Livo, thank you very much indeed for having me at the conference.
00:40 A great pleasure to see everyone here.
00:43 And I was introduced saying that my institute was working in just over 30 countries.
00:53 Actually, by the end of this year, it'll be almost 50 that we're in.
00:58 In Africa, around 20.
01:02 In Asia, Europe.
01:06 Middle East, Latin America now.
01:09 So we're expanding.
01:11 We've got roughly just over 1,000 people working for us.
01:15 We have a large policy section too.
01:17 And we're a not-for-profit, but we try and run ourselves more on business lines.
01:25 And I started it.
01:27 So we work helping governments with their reform and change programs.
01:31 Because when I was in government, and I spent 10 years as British Prime Minister, I found the hardest thing about government was getting anything done.
01:48 So I had this, you know, because we won a landslide victory, and I came into power, and I thought, I'm Prime Minister, right?
01:58 I'm the most powerful person in the country, presumably.
02:01 Well, apart from the Queen, obviously, is a different, but...
02:06 But so I thought, if I'm sitting around that cabinet table in number 10 Downing Street, and I say something should happen, then something will happen.
02:19 Big mistake.
02:20 Nothing happened.
02:24 The bureaucracy would just absorb the instruction.
02:28 There would be a lot of dancing around and activity.
02:33 Then about a year later, I would discover things hadn't really changed.
02:37 So in my second term, I set up something called a delivery unit, which is now copied in many parts of the world, and started to run the thing more with priorities, with clear focus on implementation.
02:55 And I always say to people, the problem in politics, well, first of all, politics is a unique profession.
03:02 in the sense that you can put someone in charge of a country in a very important position with no actual qualifications.
03:10 So, and, you know, you would never do that in any other walk of life, would you?
03:15 I mean, you know, I mean, you've been with Standard Bank for 20 years, right?
03:21 So it wouldn't just have pulled you and put you in the position you're in now.
03:26 You know, if you were running a football team, you wouldn't say, okay, the most enthusiastic fan, put them in charge.
03:32 People say, this is insane, you can't do that.
03:34 But in politics, this is what we do.
03:37 And the problem is that the skill set that brings you to power, which is often a skill set around persuasion, campaigning, when you get into government, it's not the skill set that really is of such use to you.
03:52 Yes, of course, you've got to keep on persuading people, but you run as the great persuader.
03:58 And then when you're in government, you've got to become a great chief executive.
04:02 and that is a different skill set so this is really the journey that i went on and why i do what i do now with other governments and leaders because you know it it it's what i it's what i found when i was in government and so i say to them let me try and shorten your learning curve that's basically what we know that's wonderful um there's quite a number of topics that we could uh start on i definitely want to come back on your leadership um I suppose lessons, you know, during your two terms.
04:34 But maybe the most obvious place to start is the geopolitics that we are all experiencing at the moment, both in its unpredictable nature, fast-changing nature.
04:48 What advice are you giving government officials in how should they think about...
04:58 their own objectives in this.
05:01 what appears to be a new um you know landscape uh which is uh hasn't been seen in in forever i would argue yeah so the geopolitical landscape has obviously changed um just before i answer that though let me just say one thing i still think the single most important thing for any country is what you do within your country right and Yes, there are countries that will affect the big geopolitics of the world, but they don't include most countries.
05:40 But having said that, yes, of course, the election of Donald Trump is a huge change.
05:44 And it is an inflection point, I think, in modern politics.
05:49 And my advice to the leaders I work with is get out of your comfort zone, because this is a new era.
05:58 A lot of conventional thinking does not apply.
06:00 And I think it's a new era, both in terms of the way America looks at the world, and therefore the way the world has to look at itself and not just at America.
06:11 So in Europe, there is a reconsideration of Europe, its capabilities, particularly in defense, but not only in defense, that I think is greater than any point in time since the Second World War, which is a good thing, by the way.
06:28 But, you know, it is a big thing.
06:31 So I think that's one thing.
06:33 But the other thing that I think is really interesting from the point of view of government is the Doge experiment and this idea that the state itself needs to reform fundamentally.
06:44 And you can agree or disagree with the measures that are being taken or the way it's being done, but my institute has a whole policy project called the Reimagined State, and I do believe where this technology revolution is going to create.
07:01 an era in which we reimagine government and the way that it works, and the countries that understand this and get on top of it are going to do well, and those that don't are going to fall behind.
07:13 I think this technology revolution is as big, if not bigger, than the 19th century industrial revolution.
07:21 And therefore, I think it's going to change everything.
07:24 It's going to change the way we live, the way we work, the way we interact with each other.
07:29 It's going to change the private sector, as many people here will know better than me.
07:34 And in time, therefore, it'll change government.
07:37 Now, government's slower to change than anything else.
07:41 But in the end, it will.
07:43 And so I think the key task today for governments is how do you understand, master, and harness this technology revolution?
07:53 And I think it will be the same for companies as well.
07:56 But if that happens, it's not surprising.
07:59 that everything else changes around it, including geopolitics.
08:04 So if you want what the thing that is motivating Europe at the moment, when it looks at itself now as in a way the Trump administration is forcing it to look at itself and say, okay, where are our capabilities?
08:17 What makes a great power today?
08:21 Economic strength, military capability, and probably now technological capability.
08:30 America's got that, China's got that.
08:34 I think in time India will have that.
08:40 Has Europe got that?
08:41 Well, no.
08:44 It's got a great single market, commercial market, but has it got real military capability?
08:50 No.
08:51 Is it keeping up with America and China in technology?
08:55 No.
08:56 So I think what will happen, and to come to Africa specifically, is that these regional alliances, European Union, ASEAN, the alliance in Latin America, Africa Union even, right, are going to become much more important.
09:13 Because in a world which isn't built on very stable alliances, but is built on power dynamics, if you're not careful in today's world, there are going to be these three giants, and everyone else is going to get sat on.
09:32 So this is where I think geopolitics is going to take us.
09:35 No, that's great.
09:36 And I suppose you touched on technology.
09:41 In your mind, when you think about the current trajectory of artificial intelligence, and in the context of some of the inequality that we see in the world, which has in some parts driven some of these changes in election outcomes away from incumbents.
10:01 to new parties.
10:03 Do you see AI as a tool for good or a tool potentially that will, in exactly what you've just described, strengthen the strong and the weaker will be left even further behind?
10:23 Yeah, so sometimes I have a discussion with a leader and they'll say to me, yeah, this artificial intelligence, is it a good thing or a bad thing?
10:31 And I say to them, it's general purpose technology.
10:35 So it's both.
10:36 It can be used for good and it can be used for bad.
10:39 The question you should ask is not, is it a good thing or a bad thing, but is it a thing?
10:46 In fact, in my view, it's the thing.
10:49 And when you get generative AI, which is one big step forward, and then you get artificial general intelligence, which is a whole new step forward in time.
10:59 artificial super intelligence everything's going to change um now the problem for today's leaders and i include obviously myself in this category is that the number of people who really understand this stuff is limited right and you know i over lunch someone asked me about cryptocurrency you You know, a few months back.
11:30 I made the mistake of agreeing to give a speech on cryptocurrency.
11:36 So I phone up my son, who's in the technology business, and I say to him, OK, cryptocurrency, explain it to me.
11:46 So he gives me an explanation, and I say to him, I don't understand a word of what you're talking about.
11:52 So he sends me, my son sends me this booklet, whose title is The Idiot's Guide to Cryptocurrency.
12:00 I read it and realize I've attained a higher level of stupidity because I still don't understand the damn thing.
12:06 Finally, on the morning of the speech, I phone him in desperation.
12:09 I say, look, I'm about to address these people.
12:11 What shall I say to them?
12:12 He said, tell them you're sick.
12:18 You're not fit to get out there in front of that audience.
12:22 I mean, I did because I'm a politician, right?
12:24 So it's really...
12:29 A lot of it is very difficult to understand, but you're going to be able to deploy this technology in extraordinary ways.
12:36 So drug discovery is going to get transformed.
12:39 There are interactive education tools that will teach you some of the basic things around literacy and numeracy better than most teachers can teach.
12:49 And here's the opportunity for Africa, because a lot of what I was engaged in in my institute going back a decade or more, was how do developing countries develop the legacy systems of the West in health, in education, law and order, in government, right?
13:07 I don't think that's what Africa should do today.
13:10 It should be redesigning healthcare based on the use of technology.
13:16 You know, it should be looking at, it's got, but to do that and to come to your point about, you know, will it create more inequality?
13:25 You've got to build the digital infrastructure and That digital infrastructure today is supremely important.
13:32 And so, for example, how you get connectivity to the places that don't have it, how you make sure that everyone has access to electricity, these are the big things that countries have got to get right.
13:42 But if you do that and you create the right digital platform, you've got some fascinating things happening in the technology sector today in Africa.
13:50 You know, great things in fintech, but also in other technologies.
13:54 So I think this is a revolution.
13:57 that is going to change everything.
13:59 And, you know, the question is how you get governments to understand what they need to do in order to take advantage of it.
14:09 No, that's fantastic.
14:11 You know, one of the issues we've been debating today over the course of today and in tomorrow, it's just the need to mobilise capital to fund the massive infrastructure.
14:26 gap that we have on the continent.
14:28 And, you know, there have been a number of issues raised in terms of what are some of the disablers, you know, starting from bankable projects, policy making that is supportive of private capital participation, the perceived risk and maybe given the people in the room here We all believe it's a sort of overestimated risk on the continent, which then drives the cost of funding to be able to fund these projects.
15:09 I'd be really interested to hear your thoughts, and I know it's one of the items that you, through your institutions, have released some thoughts on how some of that funding, cost of funding, could be reduced.
15:24 in the continent.
15:26 But maybe just your own initial thoughts.
15:31 This topic could have been spoken about 20 years ago, and it feels like it's quite perennial.
15:39 What, you know, the starting at a high level is stopping the continent from realizing as close as possible its potential in this particular challenge?
15:53 Yes, this is a really important question.
15:57 Recently, my institute produced a paper on how you might swap out high interest debt for low interest debt.
16:04 And we're talking about how you might create a new deal on debt, because it's a massive problem for African countries.
16:14 I mean, Ghana has a borrowing requirement as a percentage of GDP.
16:23 less than France, but it costs it five or six times the amount to borrow.
16:31 And the interest repayments now are, for some countries in Africa, I mean, a massive problem, right?
16:41 Eating up a huge amount of revenue.
16:43 And, you know, it's interesting when we did, because I was in power at the time when we did the most...
16:52 high indebted countries initiative and we've forgave a lot of debt and for example places like nigeria i mean you could see the growth that came from that and the improvement in services and a lot of this recent problem is not you know you've had these world crises you've had covid which did it immense damage to a lot of the economies and shut down a lot of production and then you had the energy crisis.
17:23 Neither of those things started in Africa, as it were, or were created by Africa, but they've had huge impact.
17:31 So I think it requires two things.
17:35 I do think it requires some new multilateral initiative, but I don't think you're going to get that unless it's clear that it's a deal or a bargain in which countries are prepared also to reform their systems of governance.
17:51 Where, for example, it's you're doing everything you can to reduce the political risk, where you're dealing with longstanding issues of corruption, which can be, you know, you've got to be honest about it, is it can be a big problem.
18:04 Where the public sector is welcoming a partnership with the private sector, where we're trying to make sure that commercial contracts are honoured, that you have taxation systems for companies that are open and transparent, and where the ease of doing business.
18:20 is clear, where, for example, in electricity and power generation, you're making regulatory reform so that people know if they invest, there's a proper return.
18:30 And I often say to presidents I work with on this continent, what you need to do is quite easy to see.
18:40 It's doing it that's hard.
18:42 And you've got to take some pretty fundamental decisions that, OK, it may be unfair.
18:49 that Africa is viewed as a higher political risk.
18:53 In some ways it is unfair and most people who invest in Africa get a good rate of return, sometimes a better rate of return than they get elsewhere.
19:02 But if you want to deal with the situation, you've got to accept the political risk as a fact and there are ways of minimizing it, but it requires government to take really strong action and to make sure that people who come invest are treated properly, with predictable rules, with government as a partner and not government as a threat to them.
19:28 And where if there are problems of corruption within the system, they're dealt with and dealt with firmly so that people believe they can do business in a clean way.
19:38 If we could just shift gears toward this topic of energy transition and with the African lens and each market in Africa is very different.
19:55 But these, I suppose, in some of the markets, energy security and access is still quite benign.
20:06 And when you consider the natural endowments, which often is fossil fuel heavy in some of these markets, when you counter that with actually the impact of climate change, how massive it is on the continent, how it's impacted.
20:24 the agriculture sector whether it's been flooding or drought how do you how do you think for africa what do you think is a fair transition expectation for the continent we all have a very strong view um in the room i'm sure um but how do you think africa should actually be thinking about about this is there space for africa to define what the transition should be, given all the challenges of maybe lack of access to capital and the need to sources from outside of the continent.
21:05 Yeah, so I mean, I have a slightly heretical view about this.
21:11 We'd love to hear it.
21:14 First of all, for me, the priority for Africa is to develop.
21:20 and to develop you need energy and you know africa didn't create the climate change problem right i i know it is a real problem but frankly africa's not going to solve that problem itself right so i am in favor of africa doing everything it can around renewable energy because it's got a lot of potential there we my institute actually works on several renewable energy projects There are big hydro projects that Africa could do.
21:54 It's obviously got big capacity for solar, for wind.
21:58 But you can't say to an African country that's got significant gas reserves or even oil reserves, you can't develop those because they need to develop.
22:10 And it's actually better that people are using gas than they're burning wood for cooking, for example.
22:17 So I just think...
22:20 Africa's got to go for that.
22:22 Look, my view of climate change, as I say, I think it is a real problem, but I honestly think it's time you took the climate change debate out of the hands of campaigners and put it in the hands of serious policymakers.
22:36 Because in the end, the only solution to climate change is through technology and through getting flows of finance to the developing world that allow them to invest in renewables.
22:48 The one thing that's not mobile is your government.
22:51 And it really does make a difference.
22:53 And if you look at the countries that have, you know, come from nothing to success, I mean, it's interesting.
22:59 You just, you can take two countries side by side, same potential, same resources, roughly same population, one succeeds, one fails.
23:10 And I could take you around the world and show examples.
23:13 You could look at Poland and Ukraine before the war, right?
23:17 Poland because it joined the European Union, because it therefore reformed, because it had to reform.
23:23 Look at Poland today.
23:23 It's a successful economy.
23:26 The average real wages in Poland are not a lot different from the UK.
23:31 When it fell out of the Soviet Union in 1992 alongside Ukraine, most people would have given Ukraine a better chance.
23:40 But this is why I think it really is important.
23:43 And it's important.
23:45 as a major part of that for the private sector and government to be in the right cooperation.
23:50 So Tony Blair, thank you so much for your time.
23:51 I really appreciate your insight and for sharing them so candidly.
23:57 And thanks for taking the time to come and spend your few hours with us.
24:03 I'm sure people will be fascinated to know where to after Cape Town.
24:08 So after Cape Town, I'm actually going to other parts of Africa, starting with Botswana.
24:16 And, you know, my commitment goes back a long way.
24:19 I mean, we did a lot when I was in government.
24:22 And I love, you know, despite all the challenges and the problems, I love the energy of Africa.
24:31 And every time I come here, I feel kind of revitalized.
24:39 And as I get older, revitalization gets quite important.
24:44 Anyway, it's been really great spending time with you guys and thank you very much.
24:49 Thank you.

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