Why long term investors should engage with the Congo

World Humanitarian Day on August 19 is a good time for investors to reflect on the world we live in. The Melbourne Program Committee of Australia for UNHCR is holding its second event, which we hope will become an annual opportunity for the superannuation sector to support UNHCR’s work.
This year we will hear from Sister Angélique Namaika, a nun from the Democratic Republic of the Congo who works to assist women and girls who have been abused by the Lord’s Resistance Army, will present.

Sister Angélique – the 2013 recipient of the United Nations High Commissioner for Refugees’ Nansen Refugee Award for her work with Congolese refugee women – has seen at first hand the impacts of DRC Congo’s tumultuous past, which continues to play out today with news this week that 34 people have been charged with genocide.

It would be easy to conclude that after a decade of conflict that involved nine African countries and led to the deaths of 5.4 million people, mostly through disease and starvation, that DRC Congo is no place for investors.

However DRC’s huge natural resources means that long term asset owners already have some exposure to the country.

DRC is one of the most significant miners of coltan, which is used in a variety of electronics applications including every smart phones. With demand for coltan likely to increase over coming years we can expect to see more investment in the region with DRC already producing 20% of the global supply.

According to KPMG, the DRC is also the largest producer of cobalt globally, accounting for about 55% of the global output in 2012 and the second largest producer of industrial diamonds in 2012, contributing about 21% of global production.

The DRC is not only important for its minerals. DRC Congo is a huge country – the size of Western Europe. The Congo Basin, which spans six countries, consists of 500 million acres of largely undeveloped wilderness that is the companion to the Amazon as the Earth’s lungs.

What then should investors be doing in the DRC?

The first thing is to engage with mining companies to ensure that mining is conducted on a sustainable basis with benefits for the local population.
Investors need to also consider how to support the development of local infrastructure by working with development banks.

There is also a role for investors to engage around building frameworks that will support long term, sustainable economic development including the development of local stock exchanges.

Structures like the UN backed Principles for Responsible Investment provide the logical place for investors to collaborate to develop programs and practices that will support the sustainable development of countries such as the DRC – and indeed any other countries that are recovering from conflict.

World Humanitarian Day is a great place to start this engagement.

Melbourne Program Committee of Australia for UNHCR’s event will take place on Wednesday 19 August 2015, from 5:30pm – 7:30pm at First State Super Melbourne Seminar Room, Level 13, 15 William Street, Melbourne. To attend please rsvp to to Stacey Hynes on 03 8613 9732 or at stacey_hynes@firststatesuper.com.au

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The annual performance review is dead – good riddance

News that Accenture is getting rid of its annual performance review for its 330,000 employees is being greeted with announcements by other corporations including Deloitte and NAB to end the practice, which whilst universally unpopular has become a standard dance ritual in many organisations.

The criticism about the effectiveness of annual performance reviews have long been documented. How is it that the practice has continued for so long, for such little positive impact?

Elite sports are a good case study. Would a high performance footballer expect to only have an annual discussion on their performance? Would a coach be satisfied to only sit down with their players once a year to provide feedback on how they are performing?

The heart of the matter is that annual performance reviews are a lazy way of managing employees. Perhaps suited to an industrial world where jobs could be divided into constituent components, they are not fit for purpose for our modern economy.

So, how should an employee be managed?

It is timely to ask this question. One of the things that I have seen over the last twenty years is the disappearance of discussions on management from mainstream business focus.

Many will remember the focus on learning organisations and teams in the late 90’s. But as the economy recovered from the 90’s recession, the focus on management waned. As the economy boomed there didn’t seem time to focus on managing employees, and when the global financial crisis arrived the focus then became survival.

Now the economy has stabilised, and the day to day threat of economic collapse that the GFC threatened has subsided, it is time to focus on management quality. With rates of growth likely to be low over the coming years, good quality management is likely to become a key differentiator of performance.

Quality management requires time. Like a coach managing elite athletes, if a business wants to perform, then it will need to make sure that managers work with their team on a day to day basis. The end of the annual performance review is a recognition that lazy management is no longer acceptable. Good riddance I say.