Horasis Annual Meeting25-26 January 2011, Zurich, Switzerland

a Horasis-leadership event

Driving Towards Sustainable Growth

Report

Horasis Annual Meeting25-26 January 2011, Zurich, Switzerlanda Horasis-leadership event

Driving Towards Sustainable Growth

Co-chairs:Ademola Adeyemi-Bero Chief Executive Officer, BG Nigeria, NigeriaFrancois Barrault Chairman and Founder, FDB Partners, FranceAkil Beshir Chairman,Telecom Egypt, EgyptNasir Ali Shah Bukhari Chairman, KASB Group, PakistanSandi Cesko Chairman, Studio Moderna, SloveniaEsther Dyson President, EDventure Holdings, USAMark Foster Group Chief Executive Global Markets,Accenture, UKPanayiotis Hadjipandelis Chief Financial Officer, Holy Archbishopric of Cyprus, CyprusAlan Hassenfeld Chairman, Hasbro, USAYoshito Hori Chairman, Globis Group, JapanSteve Killelea Chairman, Integrated Research,AustraliaSung-Joo Kim Chairwomen, MCM Holdings, KoreaAnil Kumar Chief Executive Officer, Ransat Group, United KingdomNicholas Parker Chairman, Cleantech Group, CanadaMartin Richenhagen Chief Executive Officer,AGCO, USAScott E. Rickert Chief Executive Officer, Nanofilm, USAEdward Shenderovich Founder and Managing Director, Kite Ventures, RussiaNiraj Sharan Chairman,Aura, IndiaJohan Staël von Holstein Chief Executive Officer, Mycube, SingaporeBoris Nemsik Chief Executive Officer (ret.),VimpelCom, RussiaJean Rosanvallon Chief Executive Officer, Dassault Falcon Jet, FranceGuy Spier Chief Executive Officer,Aquamarine Capital, SwitzerlandEnki Tan Chief Executive Officer, Giti Tire, ChinaLynn Tilton Chief Executive Officer, Patriarch Partners, USAAlexander Wan Senior Advisor, China Daily Asia, ChinaKimberly Wiehl Secretary General, Berne Union, United Kingdom

Co-organizers: Knowledge Partner:CEO Clubs UAE B-InternationalThe Young Presidents’ Organization (YPO)

Upcoming Horasis events:Global Russia Business Meeting Limassol, Cyprus, 10-11 April 2011Global India Business Meeting Naples, Italy, 26-27 June 2011Global Arab Business Meeting Ras Al Khaimah, UAE, 9-10 October 2011Global China Business Meeting Valencia, Spain, 7-8 November 2011

Table of Contents

Foreword 4

Redefining Sustainability, Growth and Capital 18

Sustainable Growth in the Frontier Markets 26

The Future of Digital Technology 28

Driving Towards Sustainable Growth 30

at the Radisson Blu Zurich airport hotel - the venue of the Horasis Annual Meeting The 2011 Horasis Annual Meeting was being watched closely the world over

Foreword

At a time of great change and transformation,Horasis is committed to anticipate and shapethe course of that change, serving as a plat-form where the future of our economiescan be debated from different perspectives.Horasis is proud of its track record since itwas incorporated six years ago. During thepast years, hundreds of companies, organiza-tions and business leaders have contributedto that success, and we remain grateful forthat support.

In 2010, Horasis hosted the followingmeetings:

Horasis Annual MeetingZurich, Switzerland, 26-27 January

Global Russia Business MeetingLjubljana, Slovenia, 16-17 May

Global India Business MeetingMadrid, Spain, 21-22 June

Global Arab Business MeetingRas Al Khaimah, UAE, 26-27 September

Global China Business MeetingLuxembourg, Luxembourg, 21-22 November

We are now creating a traditional approachfor the Horasis Annual Meeting at the begin-ning of the new year. In this we summarizethe previous year in the world and monitorthe trends from the past. Also, we makeforecasts for the upcoming 11 months andpropose appropriate novel actions evaluatingtheir effectiveness into the New Year.Thequestions we ask are:What should be at thetop of the agenda for the New Year? Andwhich issues do businesses and governmentsneed to deal with urgently? At the 2011meeting, business leaders focused on anagenda designed to tackle the key issuesfacing the world and how best to restoresustained economic growth.

The 2011 Horasis Annual Meeting was fullof insight, inspiration and leadership.Withthe support of Horasis’ visions community,Horasis convened 100 of the most prominentglobal leaders in Zurich on 25-26 January2011 to assess the trajectory of the world’seconomies, global imbalances and the post-crisis outlook for capitalism. Also, the mee-ting offered access to some of the world’smost sequestered leaders. Held under thetheme ‘Driving Towards Sustainable Growth’,the Horasis Annual Meeting was the idealoccasion for the world’s business elite toshape the post-crisis environment.

Frank-Jürgen Richter welcoming Amre Moussa

The opening plenary panel with Amre Moussa, Secretary General, League of Arab States, Egypt

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Participants engaged in a thorough discussionon how to conceptualize and enact sustain-able growth.

This report shall summarize the outcomes andobservations that emerged from the meeting.We hope you find this report to be an insight-ful and timely guide to how participants ofthis Horasis Annual Meeting addressed theimplications of the current economic, politicaland social challenges.

The Horasis Annual Meeting provided aone-of-a-kind setting for attendees to meetinformally, forge business ties and gain freshperspectives from a diverse group of leaders.The panel discussions spanned the world,from the future of the Eurozone and growthof the BRICs (Brazil, Russia, India, China)to investment opportunities in the frontiereconomies of Africa.The co-chairs debateda wide range of issues, from the rebalancingof Europe’s energy portfolio to world trade,from financial regulation to the process ofinnovation. Senior executives and governmentrepresentatives from 25 countries attendedthe Horasis Annual Meeting, including thefollowing co-chairs: Ademola Adeyemi-Bero, Chief Executive Officer, BG Nigeria,Nigeria; Francois Barrault, Chairman andFounder, FDB Partners, France; Akil Beshir,

Chairman,Telecom Egypt, Egypt; Nasir AliShah Bukhari, Chairman, KASB Group,Pakistan; Sandi Cesko, Chairman, StudioModerna, Slovenia; Esther Dyson, President,EDventure Holdings, USA; Mark Foster;Group Chief Executive Global Markets,Accenture, UK; Panayiotis Hadjipandelis,Chief Financial Officer, Holy Archbishopric ofCyprus, Cyprus; Alan Hassenfeld,Chairman, Hasbro, USA; Yoshito Hori,Chairman, Globis Group, Japan; SteveKillelea, Chairman, Integrated Research,Australia; Sung-Joo Kim, Chairwomen,MCM Holdings, Korea; Anil Kumar; ChiefExecutive Officer, Ransat Group, UnitedKingdom; Boris Nemsik, Chief ExecutiveOfficer (ret.),VimpelCom, Russia; NicholasParker, Chairman, Cleantech Group,Canada; Martin Richenhagen, ChiefExecutive Officer, AGCO, USA; Scott E.Rickert, Chief Executive Officer, Nanofilm,USA; Jean Rosanvallon, Chief ExecutiveOfficer, Dassault Falcon Jet, France; NirajSharan, Chairman, Aura, India; EdwardShenderovich, Founder and ManagingDirector, Kite Ventures, Russia; Guy Spier,Chief Executive Officer,Aquamarine Capital,Switzerland; Johan Staël von Holstein,Chief Executive Officer, Mycube, Singapore;Enki Tan, Chief Executive Officer, Giti Tire,China; Lynn Tilton, Chief Executive Officer,Patriarch Partners, USA; Alexander Wan,Senior Advisor, China Daily Asia, China;Kimberly Wiehl, Secretary General, BerneUnion, United Kingdom.

Participants place their bets

Community building at the Horasis Annual Meeting

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The following session hosts led andsummarized the discussions: Martin Roll,President, Martin Roll Company, Singapore;Usman Ghani, Chairman, AIMS, USA;Riaz Currimjee, Partner, Surya Capital,United Kingdom; Maria Livanos Cattaui,Member of the Board, Petroplus Holding,Switzerland; Thierry Malleret, SeniorPartner, IJ Partners, Switzerland; ArunSharma, Chief Investment Officer, IFC, USA;Nico Luchsinger, Founder, Sandbox,Switzerland; Annette Nijs, Former DutchMinister of Education; Executive DirectorGlobal Initiative, CEIBS, China.

The Annual Meeting’s deliberations tookplace against the background of the turmoilin Egypt and elsewhere in the Arab world.Terrorism was also on the agenda, after thebombing of Moscow’s Domodedovo airport.Amre Moussa, Secretary General, Leagueof Arab League States, Egypt, opened themeeting with a special address that hit theheadlines.The Secretary General painted alucid, inspirational vision for the future ofthe Arab world. Referring to the upheavalsin Egypt and Tunisia, he explained that ‘thepolitical uprising in Arab countries in recentweeks is linked to the region’s lack of eco-

nomic stability.’ He also stressed the needfor stronger economic connectivity betweenArab countries as a way to alleviate joblessnessand other problems facing the Arab world.‘The Arab world needs a renaissance. Andwe need to emphasis education as the toolto achieve our goals’, he concluded. MariaLivanos Cattaui, Member of the Board,Petroplus Holding, Switzerland, commentedthat ‘we have to bridge cultures to restorestability and growth, in the Arab world andbeyond.’

As world leaders flew into Zurich for theHorasis Annual Meeting, global economicrecovery was showing signs of progress.‘Asthe global economy embarks on a new phaseof growth, the world needs a new frameworkthat will make the economy more sustainable,’said Maurice Pedergnana, General Secre-tary, Swiss Private Equity&Corporate FinanceAssociation, Switzerland. ‘The dialogueamongst participants has started the processof moving policy toward realistic solutions,’he continued. Darren Fogelman, Founder &

Guy Spier, Chief Executive Officer,Aquamarine Capital, Switzerland - stimulus measures need to bescaled back as economic recovery unfolds

Amre Moussa, Secretary General, League of Arab States, Egypt -the Arab world must reform

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‘The Arab world needs a renaissance.And we need to emphasis education asthe tool to achieve our goals’Amre Moussa, Secretary General,League of Arab League States, Egypt

Managing Director, FTC Global, China,said: ‘2011 will be the year of strategicredesign: the worst of the crisis is over, andnow it’s time to think big again.’ Still, themeeting occurred at a time of pronouncedvolatility - and heightened uncertainty - inthe global economic system. Although therewere signs of tenuous recovery from theglobal economic crisis, it was obvious toparticipants that the extent and speed ofeconomic recovery would not be uniformacross economies. Participants reached con-sensus that the divide between developingcountries with large trade surpluses and lowdebt and developed countries with largetrade deficits and high debt to remain amajor theme in 2011. Furthermore, it wasclear that the economic stimulus packagesthat were implemented to pull the globaleconomy from recession ‘were themselves aserious constraint to future growth andvitality,’ as Panayiotis Hadjipandelis,Chief Financial Officer, Holy Archbishopricof Cyprus, Cyprus, put it.The debt crisis inGreece, the banking crisis in Ireland andensuing financial malaise across Europeamounted to a serious warning sign thatgovernments everywhere would be underincreasing budgetary pressure. ‘Stimulusmeasures need to be scaled back as economic

recovery unfolds’, added Guy Spier, ChiefExecutive Officer, Aquamarine Capital,Switzerland.

In January 2010, at the inaugural HorasisAnnual Meeting, participants acknowledgedthat the signs of global economic recoverywere increasingly evident. Still, primarilybecause of volatile growth across geographies,continued caution was the order of the day.One year later, at the 2011 meeting, theview was changed.The world is in a much

‘The case for continued caution iscompelling’Martin Richenhagen, Chief Executive Officer,AGCO, USA

Martin Richenhagen, Chief Executive Officer, AGCO, USA andMaria Livanos Cattaui, Member of the Board, Petroplus Holding,Switzerland

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Panayiotis Hadjipandelis, Chief Financial Officer,Holy Archbishopric of Cyprus

We need to emphasis education as the tool toachieve our goals - Amre Moussa

Arun Sharma, Chief Investment Officer, IFC, USA and AnilKumar, Chief Executive Officer, Ransat Group, United Kingdom

better state than many expected it would bea year ago.‘I think the bottom has been hitand we have started on the uphill climb’,said James Fierro, Chairman, RecipcoHoldings, Canada.To be sure, the signs ofeconomic recovery now are far moreevident - the pillars of the post-Lehmanworld seem to robust as world output levelshave improved markedly.‘The world economyis well placed. to continue recovery. Globaltrade has bounced back’, said Arun Sharma,Chief Investment Officer, IFC, USA.‘Andstock markets - although still very volatile -have rebounded’, continued Scott E. Rickert,Chief Executive Officer, Nanofilm, USA.

Still, as Martin Richenhagen, ChiefExecutive Officer, AGCO, USA, noted,‘thecase for continued caution is compelling.’The caution is understandable.The privatesector debt crisis of 2008-09 has translatedinto a public-sector debt crisis in 2010-2011.‘We all realize the periods ahead are goingto be challenging and tumultuous - growth isharder to come by’, said Oltmann Siemens,Chairman, Interleaseinvest Group, Austria.Despite positive signals, current trade flows

are still below pre-crisis level. Skyrocketingof public debt continues - and debt issubstantially higher than before the crisis.‘Banks must restore trust. Banking systemsin many countries have not yet fully recovered,and it remains to be seen whether or notgovernment reform of the financial sectorwill effectively address the weaknesses ex-posed by the crisis’, stated Boris Nemsik,Chief Executive Officer (ret.),VimpelCom,Russia.‘The financial sector of the developedworld remains impaired and credit flows havenot increased to the needed extent. Further-more, there is a large liquidity overhang’,added Thierry Malleret, Senior Partner,IJ Partners, Switzerland. On top, ‘politicalrisks will remain elevated, as budgetary cutsand high levels of unemployment impactdeveloped nations while inflation in emer-ging markets might lead to difficulties’,concluded Jean Rosanvallon, Chief Exe-cutive Officer, Dassault Falcon Jet, France.

Among other things, the economic crisishas illuminated fault lines that were lessapparent prior to the onset of the crisis. Forinstance, the dollar’s status as the world’smain reserve currency is under threat,

‘I think the bottom has been hit andwe have started on the uphill climb’James Fierro, Chairman, Recipco Holdings, Canada

‘The world economy is well placed. tocontinue recovery . Global trade hasbounced back’Arun Sharma, Chief Investment Officer, IFC, USA

Boris Nemsik,Chief Executive Officer (ret.),VimpelCom,Russia, making a point at one of the sessions

Amre Moussa and Martin Richenhagen, Chief Executive Officer,AGCO, USA

Jean Rosanvallon, Chief Executive Officer, DassaultFalcon Jet, France - political risks will remain elevated

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although - as the problems some of the Eurozone countries are facing show - there is abig question mark over the viability of themonetary union and hence of the euro itself.Francois Barrault, Chairman and Founder,FDB Partners, France, explained that ‘theeuro crisis is deep and frightening.We face acrisis in competiveness and structural adjust-ment in the European periphery. Europe’sshortcomings have been laid bare by the eurocrisis.’ ‘Are we not learning fast enough toadapt to this new environment, or are weunable to change with the changing worldfast enough?’ asked Eberhard von Koerber,Co-President, Club of Rome, Switzerland.Aside from highlighting vulnerabilities inindividual economies, the crisis revealed thelack of flexibility in policy responses.‘European consumers have become morefrugal - how shall we stimulate domesticdemand?’ asked Sandi Cesko, Chairman,Studio Moderna, Slovenia.‘Europe seems tobe gripped by uncertainty, dealing a setbackto one of the most momentous regionalintegration stories of the last half century’,opined Thomas Wu, President, MSM,

Germany.‘China has pledged to buy parts ofEurope’s national debt in an effort to stabilizethe continent’s finances. Chinese businessleaders have confidence in the Europeanmarket. China will be a long-term investorhere,’ he concluded.

The BRICs (Brazil, Russia, India and China)are continuing to grow at a spectacular pace.Alan Hassenfeld, Chairman, Hasbro, USA,highlighted that the recovery in the globaleconomy is asymmetrical - with the westlegging behind the BRICs. But ‘most com-panies, business leaders, regulators, citizensdo not know where the next shoe is goingto fall’, according to Amir Yaar, ManagingPartner, Cigate.Asia, Israel. For sure, emer-ging markets, in both output growth and

Alan Hassenfeld, Chairman of the Executive Committee, Hasbro,USA - on how to drive our future

Francois Barrault, Chairman and Founder, FDB Partners, France- the euro crisis is deep and frightening

Sandi Cesko, Chairman, Studio Moderna, Slovenia, on refinancing of the global economy

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‘The current events in the Arab worldmay be ‘the perfect storm’, and thatthe world may just realize that there is an urgent need to move towardssustainable growth’

Alan Hassenfeld, Chairman, Hasbro, USA

trade, are growing substantially faster thanthe developed economies. Still, emergingmarkets face risks of their own.The mostalarming is a sharp rise in inflation - a resultof strong domestic growth. EdwardShenderovich, Founder and ManagingDirector, Kite Ventures, Russia, observed that‘the Russian economy is expected to performstrongly in the years ahead.The growth pro-spects in Russia seem to be more compellingthan what is being observed in Western Eu-rope, despite the obvious risks.’ Martin Roll,President, Martin Roll Company, Singapore,suggested that in the next 10 years, emergingmarkets could grow at a 7 percent averageannual rate compared with a correspondinglevel of 1-2 percent in developed economies.

It is not difficult to realize why emergingmarkets - the BRICs in particular - have

been the favorites of investors for the lastdecade. It has become conventional wisdomthat the post-cold-war world will see risingpowers such as the BRICS create what inter-national relations experts call a ‘multi-polar’order. ‘Investors, while maintaining a coreexposure to the BRIC economies, shouldnot close their eyes to other growth areas inthe emerging world’, said Akil Beshir,Chairman,Telecom Egypt, Egypt.‘Many ofthe smaller emerging and so-called 'frontiereconomies' have been making investorfriendly reforms - they are growing atrecord rates and are attracting real interestfrom investors.These emergent economiesare becoming a whole new motor for theglobal economy’, added Nasir Ali ShahBukhari, Chairman, KASB Group, Pakistan.Riaz Currimjee, Partner, Surya Capital,United Kingdom, emphasized: ‘as investorssift through the new investment opportunitiesin the world, I believe that many of them arein the pre-emerging or new frontier markets,especially in Africa.’ Ademola Adeyemi-Bero, Chief Executive Officer, BG Nigeria,Nigeria, cautioned his co-panelists:‘althoughmany frontier markets are enjoying some ofthe highest growth rates in the world, some

‘The Russian economy is expected toperform strongly in the years ahead’Edward Shenderovich, Founder and ManagingDirector, Kite Ventures, Russia

Martin Roll, President, Martin Roll Company, Singapore Akil Beshir, Chairman,Telecom Egypt, about new frontier markets

Amir Yaar, Managing Partner, CIGATE.ASIA, Israel, in discussionwith Frank-Jurgen Richter, Chairman, Horasis

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are failing to benefit from the same levels ofliquidity and investor interest as before theglobal recession.’ Steve Killelea, Chairman,Integrated Research, Australia, concludedthat ‘income distribution in some emergingand new frontier economies has remainedimbalanced in favour of the rich. A seriousbacklash is brewing. Over-population,corruption, ethnic grievances and collapsinginfrastructure are pushing many new frontierstates towards failure.’

A reason for global concern is the unevennessof the recovery in the developed world.‘Oureconomies remain in a difficult situation’, saidJeffries Briginshaw, Executive Director,TransAtlantic Business Dialogue, Belgium,citing a stagnant employment picture andwarning that the developed world’s economiescould be depressed by a possible slowdownin China.Although there are signs of renewedeconomic vitality in the United States, conti-nued high unemployment threaten the effortsof the US government to energize demandfor labour. Europe, for reasons already ad-dressed, is on a slow-growth trajectory.

And after a period of protracted economicanemia, ‘the risk of slowing growth is stilllooming large. Japan is encountering seriousobstacles in jumpstarting the economy.TheJapanese economy has been stagnant for twodecades and the country’s population isshrinking’, as observed by Yoshito Hori,Chairman, Globis Group, Japan.

The global economy has reached the pointwhere growth will stop being led by govern-ment employment and start being led byprivate industries. Kimberly Wiehl,Secretary General, Berne Union, UnitedKingdom, raised that while the crisis hasenfeebled many governments, it has streng-thened parts of the private sector. Againstthe financial and economic pressures, manyindustries and individual companies haveconsolidated and are now in much better

‘Income distribution in some emergingand new frontier economies has remainedimbalanced in favour of the rich’Steve Killelea, Chairman, Integrated Research,Australia

Ademola Adeyemi-Bero, Chief Executive Officer, BG, Nigeria -speaking with optimism and anticipation

Kimberly Wiehl, Secretary General, Berne Union, United Kingdomand Oltmann Siemens, Chairman, Interleaseinvest Group,Austria

Yoshito Hori, Chairman, Globis Group, Japan - on demographicsand inertia

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Meeting co-chair Nasir Ali ShahBukhari, Chairman, KASB Group,Pakistan

shape – perhaps even better than ever.Thisis an important positive outcome of whatare otherwise challenging economic circum-stances.‘Companies are starting to invest andramp up for new work but’, Hany Assaad,Managing Director, Avanz Capital Partners,USA, said ‘at the time, businesses had learnedthrough the prolonged recession how to domore with less, meaning that unemploymentis going to remain high for years to come.’Annette Nijs, Former Dutch Minister ofEducation; Executive Director GlobalInitiative, CEIBS, China, pinpointed thoughthat ‘consolidations have generated short-term gains that may be - and likely are -unsustainable.To compete at a global level,the private sector must learn how to tap intointernational markets for talent, technologyand customers.’ Yylmaz Argüden, Chair-man Turkey, Rothschild,Turkey, underlinedthat any return to protectionist measureswould be damaging to global economies.

‘Protectionism breeds inefficient localcompanies and, in the long run, destroys thevery jobs that it seeks to sustain’, he said.‘Even more dangerous than trade protectio-nism is the risk of a currency war’, addedMike Garrett, Chairman, Evian Group,Switzerland.‘We will all be hurt by a globalcurrency war.’

A major theme discussed at the meeting wasthe significance of technology to improveproductivity and boost the global knowledgebase. In the past, government often funderprograms to ensure economic growth fundedthrough higher taxes, but globalized compe-tition and enormous public debt make thisoption more challenging for governments.‘Technology, on the other hand, has helpedto enable cross-border connections andcontributed to enhancement of free tradeand investment flows’, said Esther Dyson,President, EDventure Holdings, USA. Steamengines, electricity, computers, Internet ledto productivity gains and economic growth.‘Companies that integrate technology intoits strategies will also boost their potentialfor sustainable growth.There is lot of reasonfor optimism in terms of technology-driven

‘Even more dangerous than trade pro-tectionism is the risk of a currency war’Mike Garrett, Chairman, Evian Group, Switzerland

Esther Dyson, President, EDventure Holdings, USA -setting the technology agenda

Annette Nijs, Former Dutch Minister of Education; ExecutiveDirector, Global Initiative, CEIBS, China

Johan Staël von Holstein, Chief Executive Officer,Mycube, Singapore - on social media

Yylmaz Argüden, Chairman Turkey, Rothschild and Usman Ghani,Chairman,AIMS, USA

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Mike Garrett, Chairman, EvianGroup, Switzerland

growth.We need to do the necessary toensure that technology related investmentsincrease corporate performance’, observedNico Luchsinger, Founder, Sandbox,Switzerland. Mark Foster, Group ChiefExecutive Global Markets, Accenture, UK,stressed that ‘Innovation does not just happen.It happens in market driven ecosystems.’Johan Staël von Holstein, Chief Execu-tive Officer, Mycube, Singapore emphasizedthat ‘social networking redefines the way oureconomies work. Still, we have to allow usersto have complete control over their owninformation.We have to avoid a Wikileaks-type of anarchy.’ Nicholas Parker, Chair-man, Cleantech Group, Canada, added that‘record levels of activity from investors,governments and corporations demonstratesthat the market for clean technologies con-tinues to strengthen regardless of any nonbinding global climate change agreement -clean technologies are one of the most im-portant drivers of global economic growth.’

The rapid growth of global markets has notseen the parallel development of institutions

to ensure balanced, inclusive and sustainablegrowth.The staging point for discussion wasthat despite all founded criticism, capitalismis here to stay.The question, then, is notwhether or not there is another more suitablesystem for our world economies, but ratherhow capitalism can be tailored to fit thechanging challenges of our times. Clearly,the system of unfettered free markets isunder scrutiny.The so-called ‘Anglo-Saxonmodel of capitalism’ might be replaced by amodel which favours long-term orientationinstead of the usual practice of speculationand short-term profit taking hence inheritinga more ‘Asian’ approach towards capitalism,as Enki Tan, Chief Executive Officer, GitiTire, China, put it. Anil Kumar, ChiefExecutive Officer, Ransat Group, UnitedKingdom, added that ‘we have to maintain abalance between co-operation in the pursuit

Mark Foster, Group Chief Executive,Accenture - on innovation in ecosystems

Nico Luchsinger, Founder, Sandbox, Switzerland, on technology and social networks

Nicholas Parker, Chairman, Cleantech Group, Canada - onrenewing technological innovations

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Enki Tan, Chief Executive Officer,Giti Tire, China, talking aboutChina as the world’s new growthengine

‘Technology, on the other hand, hashelped to enable cross-borderconnections and contributed toenhancement of free trade andinvestment flows’Esther Dyson, President, EDventure Holdings, USA

of public goods and the creative power ofcompetition; and between respect for socialvalues and the pursuit of individual self-interest.The purpose of the economic acti-vity must be realigned along the creationof shared values.’

Capitalism is going to be ‘more female’ inthe years to come. Lynn Tilton, ChiefExecutive Officer, Patriarch Partners, USApinpointed that ‘women are now poised todrive the post-recession world economy.

That growth represents the biggest ‘emergingmarket’ - bigger than opportunities in allBRIC economies combined.’ Sung-JooKim, Chairwomen, MCM Holdings, Korea,announced that ‘global economic growthcannot be restored without tapping into thepower of women.’ Niraj Sharan, Chairman,Aura, India, added, that ‘India’s boomingfinancial services sector is also benefittingfrom the female touch where more thanhalf of chief executives are women.’

At the close of the Horasis Annual Meeting,participants called for shifts in our economicmodels and practices to address the strikinggaps exposed by the crisis. ‘We need toupdate our models of economic growth as westand at a point at which existing practicesand institutions are no longer enough’, said

‘I did not consider myself as a ‘tea lady -I was determined to attack corruption’

Sung-Joo Kim, Chairwomen, MCM Holdings, Korea

‘The so-called ‘Anglo-Saxon model of capitalism’ might be replaced by amodel which favours long-termorientation instead of the usualpractice of speculation’Enki Tan, Chief Executive Officer, Giti Tire, China

Niraj Sharan, Chairman,Aura, India - India is alsobenefitting from the female touch

Usman Ghani, Chairman,AIMS, USA - a sustainable futurerequires people with ideas and vision

Sung-Joo Kim, Chairwomen, MCM Holdings, Korea- we have to attack corruption

Lynn Tilton, Chief Executive Officer, Patriarch Partners, USA -women are now poised to drive the post-recession world economy

‘Women are now poised to drive thepost-recession world economy.Thatgrowth represents the biggest ‘emergingmarket’- bigger than opportunities inall BRIC economies combined’Lynn Tilton, Chief Executive Officer,Patriarch Partners, USA

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Glenn Proellochs, President, B-Interna-tional, Switzerland. Indeed, when dealingwith the new complexities of our globaleconomies, traditional methods seem lessappropriate than ever.‘Designing for a pros-perous and sustainable future requires peoplewith ideas, vision, and an understanding ofwhat it takes’, added Usman Ghani, Chair-man,AIMS, USA.The co-chairs, moderatorsand participants made the following proposalsat the closing plenary:

• First, effective and timely consultationand coordination is necessary to addressglobal economic and financial volatility.The G20 is the vehicle of choice toaddress the global challenges of today.Both the developed and developingcountries should work together to mini-mise volatility and the risks to recovery.In addition, the private sector shall beincluded in economic consultations - theglobal community must create platformswhere the public and private sectors canmeet.

• And second, companies should genuinelyembrace the wider world in which com-panies operate. All strategies and actionsshall be oriented towards long-term goals.Capital and knowledge shall be channeledinto productive investments, rather thaninto speculation. Policymakers andeconomic practitioners have to avoid acapitalism of the rich and powerful.Thesharply widening gap between rich andpoor in emerging and developed econo-mies has to be closed. Inclusive growthshall be the guideline for the next decades.

Claude Beglé, Special Adviser, Government of the State of Geneva- on global values

Annette Nijs, Executive Director Global Initiative, CEIBS, China, moderating the closing panel

Glenn Proellochs, President, B-International, Switzerland,summarizing the results of the Horasis Annual Meeting

‘Many people suffer from greediness anda big ego, which sometimes may get intothe way of just and fair progress withinsocieties. Business leaders should stepup their individual accountability formoving towards sustainable growth’Glenn Proellochs, President,B-International, Switzerland

‘Are we not learning fast enough toadapt to this new environment, or are we unable to change with thechanging world fast enough?’Eberhard von Koerber, Co-President,Club of Rome, Switzerland

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The proposals are conceivable, but we willnot reach them by accident. At a time ofconsiderable uncertainty, the purpose of the2011 Annual Meeting was to conceptualizestrategies to drive sustainable economicgrowth.We hope you find this report to bean insightful and timely guide to how globalleaders will combine their crisis managementexperience with new approaches towardseconomic competitiveness to ensure long-term growth. On behalf of Horasis, I wouldlike to personally thank the co-chairs andmoderators of the 2011 Horasis AnnualMeeting.The Horasis Annual Meeting was aunique experience which would not havebeen possible without the dedication andenthusiasm of the members of the Horasisvisions community.

It is our hope that the Horasis Annual Meetingwill continue to serve as an important plat-form for stimulating discussions and creativesolutions in the years to come. Horasis looksforward to welcoming you back to next year’sedition of the Horasis Annual Meeting whichwill take place in Zurich in January 2012.

Dr. Frank-Jürgen RichterChairmanHorasis:The Global Visions Community

Frank-Jurgen Richter, Chairman, Horasis - we need a convincingglobal economic strategy

Mirjana Dimc-Perko, Member of the Board of Management, Gorenje, Slovenia

Edward Shenderovich, Founder and Managing Director, Kite Ventures, on entrepreneurship in Russia

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Participants reflecting what the major issues are in 2011

Riaz Currimjee, Partner, Surya Capital, United Kingdom, hosting the session on frontier markets

Chris Lindenmeyer, President, Schindler Elevator, Switzerland,pleading for the crisis not to be wasted

Marc Deschenaux, Managing Partner,Deschenaux & Partners, Switzerland

Jeffries Briginshaw, Executive Director,TransAtlantic Business Dialogue, Belgium

Michel Hirsig, Director,Transports Publics Genevois, Switzerland

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RedefiningSustainability,Growth andCapital By John B. Kidd, Lecturer,Aston Business School,United Kingdom

The delegates at this Second Annual meetingwere directed to a discussion of ‘TowardsSustainable Growth’ though they seemeddetermined to discuss broader issues thatnevertheless encompassed sustainability andgrowth. Many micro-discussions within thenetworking during the Welcome Receptionwere concerned with the past and future roleof banking - how to separate and redefinetheir workings within capital markets asdistinct from their role in retail banking.

The latter affects strongly our personalpockets and thus our ability to borrow so as to obtain mortgages and so maintain thefluidity of labour markets. It also determinesthe ability of the Small and Medium enter-prises to access working capital and creditso maintain their working relationships withbuyers, suppliers and their workers.

The present restrictions in the retail bank’scash flows attract the ire of the press, and thepeople of many developed nations blametheir government and their regulators forthis mess. However the capital markets arebecoming very strongly regulated, in partthrough the new pressures due to the enact-ment of Basel III which severely restrict thefreedoms that ‘banks’ used to have across alltheir operations - some of which left themat risk of holding insufficient funds to coverrapid capital flows due to real or perceivedrisks. Basel III is supposed to force Banks tomaintain higher funding levels and to reducetheir risk exposure, but its rules have un-covered several unintended consequences [a phrase that cropped up fairly frequentlyduring this Horasis Annual Meeting]: in theBanks case resulting in strong constraints ontheir retail branches to lend to the SMEs(small and medium enterprises) and toindividuals.There was some strong feelingexpressed that the money arising throughseveral governments ‘quantitative easing’had in fact exacerbated, and not reduced theretail banks’ freedoms through the backgroundapplication of Basel III: again, unintendedconsequences. During the later discussionswe heard how SMEs were being starved ofcash, thus whole economies starved of themanufacturing from these small firms thatall firms, both large and medium dependupon. Eurostat says that there are 20 millionSMEs in Europe representing 99% of allbusinesses and they contribute to over 50%of European added value business: globally wefind similar percentages. It is in the best in-terests of governments to support their SMEs.But some bankers do not feel the same way,being more commercially inclined and theywish to enhance their shareholder’s valueso they prefer to lend to less risky large firms.Some delegates mentioned that they thoughtthere were few resource restrictions in anysector and the recent ‘financial crisis’ wasonly a brief state of disequilibrium: as didsome bankers of the Basel III issues - bothaspects therefore were only the sharp shocks

John B. Kidd, Lecturer,Aston Business School, United Kingdom,on the power of small and medium enterprises

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of a step change into a new form of equili-brium.Therefore might we be moving into anew period of redefining sustainability, growthand capital movements? What ought we to callthese emergent revisions and the new era oftheir operations?We reconvened on 26 January with a sense ofanticipation to attend one of the three WorkingBreakfast debates discussing ‘strategic sus-tainable growth’ in (a) developed countries,(b) emerging countries, and (c) the frontiercountries [which I will choose to report].This session was chaired by Riaz Currimjee,Partner, Surya Capital, United Kingdom.Ademola Adeyemi-Bero, Chief ExecutiveOfficer, BG Nigeria, Nigeria, told us that hiscompany looked to uphold operations thatwould support integrity with productionsecurity between themselves and good[trusted] partners. Guy Spier, Chief Execu-tive Officer,Aquamarine Capital, Switzerland,described his business of investing in frontiermarkets using relatively low-tech methodsof analysis, essentially looking for largerpartners with high ethical values who wouldnaturally protect his own interests and hisrelatively smaller investments. Akil Beshir,Chairman,Telecom Egypt, Egypt, notedthat his enterprise was alone in the world oftelecom companies in not having an inte-grated mobile phone group, relying insteadon a 45% stake in Vodaphone that providesstrong income streams.Telecom Egyptdeclares strong profits even though landline use is falling; but not withstanding thegood profits its other indicators are falling(eg growth, cash flows, etc). Guy Spier notedthat at a first level of analysis he was lessinterested in the environment or climatechange - these concepts are divisive andought to be managed by governments. Hisconcern was to check that his partners werewell governed. On the other hand,AdemolaAdeyemi-Bero was concerned that ‘frontier’firms were risky, and that searches for greatercertainty in projects that were competing forresources need to offer long-term trajectories.The biggest challenge was therefore for the

local firms to meet international standardsand ethics. Governments would not be thedriver, but (again) he stressed the nature of integrity and ethics in partnerships thatwould raise a nation’s sustainability. AkilBeshir suggested the notion of ‘sustainability’was predicated on better education as somestudies have shown that mass education hasdriven up growth and personal wealth in somecountries - for instance, a 10% increase inmobile ownership might show a 1% increasein GDP. He illustrated that in developedmarkets mobile use growth was in textingor music/games downloads while in thedeveloping areas mobile use was more andmore directed at business growth, informa-tion acquisition, and mobile banking with noincrease (even negative growth) in fixed linepenetration. I injected my apprehensionabout the definitions of sustainability,growth and so on noting that sustainability(in the developed world) might equate to amediocre target, and the associated conceptof ‘frugality’ inclined me to consider ‘lostcauses’. However, the new uses of mobilephones in a frontier country were neither‘sustainable’ as there was no history of theiruse to ‘sustain previous use’, nor was thatdevelopment ‘disruptive’ as it did not cut outolder developments (eg fixed lines) as therewere so few. We must be careful about ourdefinitions, yet we have need to be evangelicalin our pursuit of new and beneficial techno-logies or practices, but not to be so ‘over thetop’ as to become the subject of ridicule -betting on the risks and the developments isa hard process. Other delegates raised con-cerns about water resources as a global issueand one in which many factors contribute ina complex way, but in which education of allis important just as is sustained inwards in-vestment. Riaz Currimjee, the Chair, offereda summary encapsulating the need for localgovernments to work transparently, tosupport education and to support localchampions so as to reduce misconceptionsof the region while enlightening investors toenable solutions faster than in earlier times.

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Immediately following the openingdiscussions the Opening Plenary Sessionconcentrated on the evolution of the worldeconomy in next 6 to12 months.The plenarywas chaired by Maria Livanos Cattaui,Member of the Board, Petroplus Holding,Switzerland with Amre Moussa, SecretaryGeneral, League of Arab League States,Egypt, presenting a keynote address as wellas fielding several questions on the verytopical news of unrest in Tunisia, Lebanon,Egypt and the Yemen where local populationswere revolting against years of oppression -looking for democracy instead of dictator-ship, transparency instead of corruption andnepotism, and thus becoming free to managetheir own lives. Amre Moussa noted all theArab nations have a high proportion of youngpersons who, sadly, carried high rates ofunemployment and were inclined to‘revolution’ - yet happily most of theirprotests were relatively calm and theirrespective governments had reacted reason-ably wisely. In response to being questionedabout the weakest of the 22 Arab states hereplied cautiously noting that Yemen haddifficulties but Iraq was moving towardsnormality whereas Somalia had its owndifficulties. Overall he was optimistic aboutall the 22 nations; come back to this questionin 5 years he suggested, we will have seenmany changes, and maybe many of the old‘conservatives both in the Arab world as well

as outside may have resolved their currentantagonisms, though we are collectivelyresponsible to some extent for the presentstate. Better education will help, as willbetter representation in the ‘G’ groups - G2,G8, G20, G-many. There is a ‘clash of civi-lisations’ but as he had said when addressingthe sixty-first session of the UN GeneralAssembly on 8 June 2006, ‘... respect forhuman rights and all freedoms withoutdistinction on the basis of faith, colour orthought is the way to create a new world’.It might be of interest to note a cross refe-rence to the 1st Horasis Global Arab BusinessMeeting 26-27th September, 2010 in Ras AlKhaimah, United Arab Emirates in which wenoted “...there would be around 20 millionunemployed citizens in the Arab world by2025 and the region needs to transformitself to an advanced knowledge deployingindustrial society to face the challenge”.Many at the Arab Global Business Meetingwere worried about the prospect of having ahuge overload of angry, uneducated youthsacross the Arab world: education for all wasa recurrent theme. Perhaps now, followingthe present unrest that Amre Moussa wasdiscussing with us in Zurich, may the timefor leaders in the 22 Arab nations to begin toeducate their young, both men and women,with relevant modern knowledge fitting themfor living and working in the 21st Century.

Those linkages are way upThomas Trauth, Chief Executive Officer,Kaiser Ritter Partner Privatbank, on investment strategies

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Maria Livanos Cattaui asked the otherpanellists for comment, firstly Anil Kumar,Chief Executive Officer, Ransat Group,United Kingdom. He returned to the questionof the ‘reform of the UN’ noting that the UKattempted in the late 1980s to enlarge thebrief of the Security Council to encompassbroader discussions with more members:this was rejected at the time, but perhaps wemight see this happen soon. He also thoughtthat China and India will firstly consider theirinternal issues then embrace the UN groupsof G2/8/20 - but the G-everyone wouldlack form and focus. Basically he feels thatlocal management of issues is more effectivethan a remote pressure from a ‘G’, or anIMF, etc. Martin Richenhagen, ChiefExecutive Officer, AGCO, USA, tended tobe ‘bullish’ about the global state of agricul-ture based on his internal analyses - yet thiswas tempered by a recognition that resources,especially water, needs to be nurtured acrossthe globe; and a return to open Free Tradewas a necessity as bi-laterality, and that pro-tectionism distorted the real marketplace.He remained confident that farm incomeswill rise due to high commodity pricesnotwithstanding the stress of speculation insome commodities, but he skirted the issuesof local unrest, even rebellions arising dueto the these higher prices. We ought to notethe present rise in food prices - by Decem-ber 2010, the FAO Food Price Index (FFPI)surpassed (slightly) its peak in June 2008,reflecting increases in world prices of allfood commodities. Anil Kumar in otherdiscussions stated he was a little worriedabout speculation in commodities across thewhole market place; and also he felt that‘money’ was too free as, again, speculatorswere looking for instant returns whichdamaged the middle classes and smallerbusinesses.

We moved on to the Boardroom DialogueSessions. Herein participants were to identifythe relevant drivers for the refinancing of theglobal economy, the repositioning of globaltrade/investment, and the renewing tech-nological innovations to drive economicgrowth.There were three groups a) Refinan-cing of the Global Economy, b) Repositioningof Global Trade and Investment and c) Re-newing Technological Innovations - I willreport on group (b) chaired by ArunSharma, Chief Investment Officer, IFC, USA.Kimberly Wiehl, Secretary General,Berne Union, United Kingdom, noted hergroup is the leading association for exportcredit and investment insurance worldwide,working for cooperation and stability incross-border trade and providing a forum forprofessional exchange among its members.Importantly for all, it undertakes indepen-dent risk assessments of the US$ 1.5 trillionof global trade, seeing it was again stable -indeed, through the financial crisis tradecontinued broadly unabated, but its riskcost was rising. There was a semblance ofnormality globally, yet at the second layersand deeper, trade tended now to be restrictedto a local reach as the ‘new normal’, partlyas one of the unintended consequences ofBasel III implementations. She offered aglobal view, whereas the second speakerLynn Tilton, Chief Executive Officer,Patriarch Partners, USA, gave a passionatespeech about her hard, incessant toils afterleaving 20 years of Wall Street behind togenerate ‘a giving back’ to the communityfrom her portfolio of firms. She said she hasbecome an industrialist and a real trader andshe asserted that the US is in a perilous stateas its SMEs are starved of cash. However,she has inculcated a love of work in heremployees through her own example ofhard work and of knowing every nuance ofeach business. Importantly, while she doesnot shirk competition she abhors distortionand unfair support by some of her competi-tors - in other words, unfair trade ought to

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be banned. She says her Patriarch Partnersportfolio of 74 firms (at present) has miti-gated risk by being control-active investors.Control means that the investment fundsthemselves own a controlling interest in theequity, and control the boards: active investingis undertaken by her highly experiencedoperational executives who work on site atthe portfolio companies; they are roadwarriors who travel where their talent ismost needed. Experience has taught her thatsuccess is only realized by the way of active,hands-on creation of enterprise value. Afterinforming her workers of the synergies inthe portfolio she is not averse to tradingoverseas if that adds value to her firms: herworkers understand this need to think globaland work local. The next speaker also dis-cussed a similar set of values: FrancoisBarrault, Chairman and Founder, FDBPartners, France, described his own ‘hands-on empowerment of local managers’.He is a firm believer in breaking down ‘siloattitudes’, and while he actively de-centra-lises and abhors HQs (the tendency to‘silo’) he insists that his managers reallymust understand their job and that theycommunicate their targets clearly and openly.Further, he is a strong advocate of face-to-facemeetings as one ‘can smell’ ones’ discussants,and so get to know them instinctively.

Lynn Tilton and Francois Barrault pas-sionately demonstrated their individualisticapproach to management to us though theirdifferent verbalisations seemed to offerdifferent approaches. Underpinning theirwords were the same beliefs in the empower-ment of all their staff, through knowledgeexchange, and through transparent honestleadership.They are examples we ought tolaud. Finally Jean Rosanvallon, ChiefExecutive Officer, Dassault Falcon Jet,France, from his years of experience in theaerospace industries notes that Asia willbecome a very important player - both as abuyer and as an original equipment manu-facturer, so we in the developed world willhave to take care to compete fairly and openlyand not rely on the high entry barriers thatonce gave protection to the few, like Boeingand Airbus Industries. Maybe a third of allplanes sold over the next 20 years will bebought in Asia: increasingly many will bebuilt there.The audience noted that ‘fair’ wasa flexible definition globally, yet ‘local’ wasan observable effect everywhere: we mustsupport ‘local’ but not artificially by subsidiesor by artificial trade barriers, but by trans-parency, education and co-operative workethics.We thus returned to our needs to beethical, have good governance and to behonest with our suppliers, customers andworkers.

Thierry Malleret, Senior Partner, IJ Partners, Switzerland, asking a questionPrabhu Guptara, Executive Director, UBS, Switzerland -capitalism is here to stay

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We adjourned for a brief networking breakfollowed by the Closing Plenary Session torecap and synthesize key conclusions of theday’s discussions in the context of the globaleconomic crisis and to outline a roadmapconceptualizing how to enact sustainablegrowth.This plenary was chaired byAnnette Nijs, Former Dutch Minister ofEducation; Executive Director, GlobalInitiative, CEIBS, China who suggested thatit may be NGOs who drive change in globalmanagement closely followed by the largercorporation, with governments laggingbehind - therefore, the session was to discuss‘how do we achieve sustainable growth?’She called on Sung-Joo Kim, Chairwomen,MCM Holdings, Korea, to open the discus-sion. Sung-Joo Kim related a little of herbrief business history which commenced asa business owner in 1990 determined tosucceed in the male-dominated Korean systemin which she did not consider herself as a‘tea lady’ - she was determined throughbeing the ‘waif’ of her family to supportfeminine values in business, and to attackcorruption via her strong ethical beliefs(aided by her Christian values). Her ethicalstance has been rewarded by the Inter-national Association for Human Values(IAHV) recognising Sungjoo Group as an‘Outstanding Corporation’ at the 2009Ethics in Business Awards. The Koreancompany’s motto of ‘succeed to serve’ andSung-Joo Kim’s philosophy of women’s em-powerment was also noted with respect andhonour. Her strong values were expressed atour meeting with her telling us of hercontinuing fight against corruption by usingthe strength of IT and accounting to bringbetter value to the customer, and by notthrowing ‘geisha parties’. She suggested heremotional intelligence, and undoubted abilityto multi-task has allowed her to pursue herethical goals worldwide. Steve Killelea,Chairman, Integrated Research, Australia,presented to us surprising evidence on thecost of global conflict: for the period 2006-2009, the total economic impact of the cessa-

tion of violence could have been US$28.2trillion.This consists of US$9.7 trillionderived from the static economic effect ofpeace and US$18.5 trillion derived from thedynamic peace dividend.These estimateswere supported by the Institute for Economicsand Peace and Economists for Peace &Security (EPS). Simply put, violence alonewasted about US$ 7 trillion, thus the starkreality is that we globally waste a great dealof cash through conflict that could be put tobetter purpose as peace creates a betterbusiness environment. Further he noted ourneed to better manage food supplies, fordisaster, and for all urban populations acrossthe world. Not by badly conceived subsidiesbut by education both of farmers and consu-mers to be able to manage their governments’lack of structural infrastructures pertainingto the food chain in all its complexity fromclimate change to population management.Education is a key factor he believes, but thisdoes not factor in many strategic analyses.Alan Hassenfeld, Chairman, Hasbro, USA,returned to the worry about global foodshortages (the Index was noted above) andthis he coupled with the rise in the 18 -25snumbers in some parts of the globe whoremain a lost generation, with little educa-tion and few employment prospects, so arepointers to ‘a perfect storm’. Again we havea back story in the 2010 Horasis GlobalArab Business Meeting where some of theArabian leaders noted their increasingworries on these points, and a link too to thediscussion led by Akil Beshir (above) whosaid that mobile telecoms in the developingworld held great promise in opening marketsby creating digital banking systems and byproviding instant market data allowing localpeople to better direct their efforts (in con-trast to the developed world being focusedon music downloads, for example). AlanHassenfeld also pleaded for the reduction ofcorruption in banks and other institutionsthat soured the markets in many places: henoted Ghandi who said ‘... we have enoughfor our needs, but not enough for our

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greed’. Finally the Chair called on GlennProellochs, President, B-International,Switzerland to offer a summary and overviewof the session. He suggested we all were toogreedy, with too large an ego, and toooptimistic.We must look to preserve thebasic needs of humanity, in particular andurgently the water, food, and energy supplies.After this, we must enhance all the basicinfrastructures so rural activity can supplyurban communities, and regional trade canexpand across borders to lift inter-regionaltrade (which in many regions does not takeplace to any degree), as well as to enhanceglobal trade but without the bias of protectio-nism and artificial subventions.The Internetmay be of help here.We in the audience areprivileged, but many in the world have alife-horizon of less than five years.We havean opportunity to help them to add to theirincome by educating for entrepreneurship,but their SMEs need a better access to cashthan exists at present. It is difficult, he said,to act ethically day by day but we must getback to the certainty of ‘a handshake being acontract’: we must respect each other as wedid some years ago.

It is quite difficult to draw conclusions fromsuch wide-ranging discussions, but severalaspects are becoming clearer. First, we don’treally know how to define unambiguously‘sustainability’ across the globe - it is a feel-good concept like ‘motherhood’ beingsomewhat indefinable, but we each feel wecan recognise it. However we must engagein measuring ‘sustainability’ for, if we donot measure and define, how then can wecomment on progress in this area? Second,there is the issue of ‘growth’. Again to all itmeans different things, to some it is a simpleact of life itself which may be limited to afew years or sadly only a few months.Wehave to somehow allow the globe to ‘grow’while garnering its resources - human andmaterial - to be better integrated. Ourdelegates understood this problem and in amyriad of ways are doing something about

it, but yet there is no general groundswell ofopinion of how this may best be achieved.We are all too greedy perhaps.Thirdly‘capital’ and its management via the banksprovided many points of concern during thediscussions, many pointed to the ‘unintendedconsequences’ of regulation; in part theBasel I, II and now III.Well meant regulationis needed, but their effects tied into thefinancial crisis have not done enough good;and we heard of the harm it is doing bythrottling the SMEs of the globe who arefeeders to necessary manufacturing in allnations.

We may however become more confidentthrough the Horasis Annual meeting andsimilar gatherings. Herein we talk of theissues we face and learn of the solutionsothers may have found that may partiallyresolve our issues - so we become stronger.By this knowledge exchange we may collec-tively influence others.

The Horasis Annual Meeting - a platform where the future of our economiescan be debated from different perspectives

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John Cook, Chairman, Rock Lake Associates, United Kingdom,in discussion with participants

Albrecht Graf Matuschka, President, Matuschka Group, Germany- governments are under budgetary pressure

Elena L. Barmakova, President, Fontvieille Capital, USA and Boris Nemsik, Chief Executive Officer (ret.),VimpelCom, Russia

Lynn Tilton, Chief Executive Officer, Patriarch Partners, USA - on the US’ declining competitiveness

John Cook, Chairman, Rock Lake Associates, Switzerland, asking a question

Sesto Giovanni Castagnoli, President,World Spirit Forum, Switzerland - on globalization and values

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SustainableGrowth in theFrontier MarketsBy Henricus J. Stander III, Partner,Surya Capital, United Kingdom

For many decades, the received wisdom wasthat when the US caught a cold, emergingmarkets caught pneumonia and frontiermarkets went into cardiac arrest. But if thesystemic financial crisis of 2008 offers anyinsights into lessons learned, it is that today’sfrontier markets have quietly been takingtheir preventative medicine and generallyhave emerged from the global crisis in sur-prisingly robust health.The sustainability ofthat health was explored during a packedworking breakfast on frontier countries atthe 2011 Horasis Annual Meeting.

By the end of the session a noteworthyconsensus had emerged that the prognosis forfrontier markets looks unusually promisingfor the foreseeable future. Participants notedthat, while OECD countries likely will facea decade of rising debt to GDP ratios, highertaxation, depreciating or weak currencies, andlower economic growth, the less developedworld appears instead to be enjoying theopposite macroeconomic symptoms: histori-cally low external debt positions, favourablecurrent accounts, relatively high foreigncurrency reserves, and buoyant growthdriven by domestic demand rather thansolely export-led growth. Others noted thatit is this latter factor, burgeoning domesticdemand, that perhaps most distinguishes thefrontier markets today from the frontiermarkets of last decade.Throughout the1990s, the growth strategies employed bythe NICs, ASEAN, India, China and parts ofLatin America were explicitly supportive ofexport-led growth reliant on the USconsumers’ seemingly insatiable appetites.

Indeed, much has changed in the interveningdecade. If Africa is examined as perhaps aprime example, it is domestic demand thathas propelled 74% of the greater than 5%growth experienced over the past decade.While mining and hydrocarbon exportsplunged during the crisis, domestically-oriented sectors like financial services,housing, communications, and consumerproducts maintained strong growthtrajectories.

Despite a few outliers, the maturing politicalfabric across the 54-nation continent hasyielded the peace dividend enabling thisgrowth. And that growth is in many casestorrid.The IMF forecasts that Africa willcontain 7 of the 10 fastest growing economiesin the world over the next several years andfirms such as McKinsey, Boston Consulting,Group, Monitor, Goldman Sachs and MorganStanley have all issued recent reports on thisoverlooked renaissance spreading across Africa.

Among the many questions investors, compa-nies and governments are asking is whetherthis is a false dawn or a sustainably new setof participants in the world’s economicrecovery. Clearly, in the case of Africa, aswith all frontier markets, sustainability willbe defined within the context of resourceconstraints - a point debated at length duringthe Horasis discussion. Few however con-tested the view that the constraints imposedby human capabilities, access to financialcapital, environmental endowments, andinstitutional effectiveness will shape the paceand trajectory of most frontier markets’growth. How individual nations choose tocultivate, harness and manage those endow-ments to build inclusive competitive advantageover time will be decisive in answering thesustainability question.

Certainly, some countries such as CoteD’Ivoire will continue to be restrained for atime by factional elites stuck in a governancemodel characterized by rentier entitlement

with which frontier market elites are oftenassociated. Others such as Tunisia, willfinally succumb to the collective will of amiddle-class, long-supressed by their rentierrulers, and usher in their own JasmineRevolutions.While yet others, such as Rwandaor Ghana will have transitioned into an ageof political maturity enabling considerednational debate and inclusive collective choice.The evidence suggests that legitimate, broad-based social compacts generate the paths tosustainable growth which are enduring withinour resource-constrained world.

Our view is unapologetically optimistic.There will be bumps along the windingroad to sustainable, healthy long-termgrowth. But having invested in the BRICeconomies when they entered a similar phaseof transition from frontier to emergingmarket status, we observe almost all of thesame fundamental drivers at work in Africa.But in addition, in countries like Tanzania,Mozambique, and Zambia an appreciation forthe good governance values of transparency,legitimacy, and accountability have beendramatically helped by the brushfire speedwith which communications infrastructureshave spread. Several participant in theFrontier Market session noted that theimpact of the internet and mobile telephonyon African life has been dramatic and cannotbe over-estimated.The empowermentresulting from access to and creation of

information has profoundly affected thepolitical, economic and social trendsshaping the continent and in fact has alreadycontributed to a broader more inclusivedialogue. Recently, that dialogue has thus farchosen peace as a solution for tribal powerdisputes in Kenya, Nigeria and arguablyeven in Zimbabwe. As communications net-works spread and become more ubiquitous,one can envision a not too distant future,where nationalism overcomes tribalism,where the desire for resource stewardshipeclipses the consumptive privileges ofpatronage and where inclusion into the globalcommunity is assertively won by companieswith durable competitive advantage, insteadof begged for at the doors of ODA donors.

By the end of the discussion, most of theworking breakfast participants seemed toagree, that the fundamental economicdrivers are all well in place for sustainedgrowth in many of the frontier markets.Moreover, as prosperity spreads, we canforesee an accelerated transition to maturepolitical discourse within and across neigh-bouring nations in frontier markets such asAfrica. Once rooted, that process can onlyreinforce the sustainability of the growthdynamic currently underway. And that, inturn, will ensure the strong pounding heartof Africa and other frontier markets whenthe next financial crisis shakes the world.

Horasis Annual Meeting 2011 Steve Killelea, Chairman, Integrated Research,Australia,in discussion with participants

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The Future of DigitalTechnology

By Nico Luchsinger, Founder, Sandbox, Switzerland

Usage of digital technologies has growntremendously in recent years. 2 billionpeople are now connected to the internet;and internet services like Facebook andTwitter have not just grown rapidly interms of users (Facebook now being at anunprecedented 600m), but have alsoinfiltrated many aspects of our daily lives -from consuming news to coordinatingevents with friends. Simultaneously, thequestion of where we go from here hasbecome ever more pressing. Online digitalmedia, in all its forms, has becomedemystified by its own success: Newtechnological features aren’t as excitinganymore just because they are new - thequestion of what purpose these technologiesserve has become more important.

The panel debating this question at theHorasis Annual Meeting started out withdiscussing the obvious elephant in the room- Facebook -, and its recent 50bn dollarvaluation. Esther Dyson, President,EDventure Holdings, USA, who is an angelinvestor in many internet start-ups and haswritten about this space for many years,pointed out that while people will probablycontinue to connect over Facebook, it’s notnecessarily the company that will make allthe profit from it: Already now, gamingplatform Zynga, which integrates closelywith Facebook, is getting its fair share ofrevenue. Facebook, argued Dyson, can onlysurvive as part of an ecosystem.

Johan Staël von Holstein, Chief Execu-tive Officer, Mycube, Singapore, a Swedishinternet entrepreneur, added another pointof critique: privacy. Right now, Staël vonHolstein argued, platforms like Facebookand Twitter are owning what we put online- and with that, increasingly our digitallives. He compared the current state of theinternet to the Soviet Union, and promisedthat his (unlaunched) service Mycube willbring back complete control to users.

After discussing the intricacies of socialnetworking, Nicholas Parker, co-founderof Cleantech.com, and advisory group,rightly pointed out that these questions arecurrently irrelevant for a vast majority ofthe people on this planet.The real question,said Parker, was how digital and especiallymobile technology can be applied to spursustainable growth in developing economies.He sees a huge potential in the convergenceof energy and information technologies:Smart systems and grids, for example, couldhelp us better manage and control ourenergy consumption. Esther Dyson alsopointed to the start-up TXTEagle that usestext messaging to crowdsource certain tasks,thereby creating a source of income for peoplein developing countries and remote areas.

As digital technology is influencing more andmore aspects of our everyday lives, the issueof digital literacy becomes more pressing.This point was made by Mark Foster,Group Chief Executive Global Markets andManagement Consulting at Accenture.Theconsulting group had identified digitalliteracy as one of the main conditions forsuccess in a report published on the sameday as the panel took place. Panelists andparticipants agreed that spreading digitalskills was imperative for companies as wellas governments, and called upon executiveseverywhere to connect more often to ayounger, digitally savvier crowd.

Ulrich Becker, Managing Director, Credit Suisse, Switzerland

Thomas Wu, President, MSM, on inflationary pressure in China

Ulrich Urban, Chairman, Catsby Fin, Switzerland

Participants sharing a light moment

Efthyvoulos Paraskevaides, Chairman, EP Global Energy, Cyprus

Sergey Demin, Chief Executive Officer, Snegiri, Russia

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Driving TowardsSustainableGrowth

By Annette Nijs, former Dutch Minister ofEducation and Science, and current ExecutiveDirector Global Initiative, CEIBS, China

During the closing plenary session of the2011 Horasis Annual Meeting, the paneliststabled a number of new ideas and actionswhich are crucial for a successful roadmapto the world.There was a strong consensusthat resolving social issues and new valuesshould be high on the agenda in the newreality.The discussions at the plenarysession therefore reflected the main messagewhich was expressed at the recent US-Chinasummit between President Obama andPresident Hu Jintao - ‘mutual respect’ iscrucial for future steps forward.

Sung-Joo Kim, Chairwoman, MCMHoldings, Korea draw the attention of theaudience towards the female factor as aforce and source to reach out for sustainablegrowth. She illustrated this with her ownexample: whilst her father passed on thefamily wealth to her brothers - a typicalSouth Korean custom in those days - MsSung-Joo Kim was left to take her own lifein her own hand.The South Korean businesswoman built her own fashion emporiumthrough the global relaunch of MCM. Shehas become one of the leading businesswomen in the world. She stressed the needfor improved inclusion of women in thebusiness and political world as it will bringforward the importance of the ‘soft’ power,which is so much needed in this era where‘hard’ power needs to be balanced by ‘soft’power.

Steve Killelea, Chairman, IntegratedResearch, Australia, introduced a new gemof an idea into the discussion by reasoningthat executives should aim to make their owncontribution to a peaceful world.‘Managingthe population’ is also for business leadersone of the most important risks whichrequires careful management. He expectsthat more and more often people take tothe streets, like recently in Greece, France,UK and currently in Tunisia, Egypt andLebanon. Steve Killelea explained that theGlobal Peace Index (GPI) is an attempt tomeasure the relative position of nations’ andregions’ peacefulness. Factors examined bythe authors include internal factors such aslevels of violence and crime within thecountry and factors in a country’s externalrelations such as military expenditure andwars.

Sung-Joo Kim, Chairwomen, MCM Holdings, Korea and Alan Hassenfeld,Chairman of the Executive Committee, Hasbro, USA

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Alan Hassenfeld, Chairman, Hasbro, USA- a worldwide leader in children’s and familyleisure time entertainment elaborated onrecent events across the Arabic regions andexpressed his feelings that the currentevents may be ‘the perfect storm’, and thatthe world may just realize that there is anurgent need to move to sustainable growthwhich brings about a just, fair and equitablegrowth.‘Putting the community’ first is amust for all people and all companies every-where in the world if we want to transformthe world onto a more sustainable growthpath. Only when we start asking ourselveswhat we can do, and when we take actionwill we change the world into a better place.Alan Hassenfeld is a champion of corporatephilanthropy, but he also encouraged theparticipants of the Horasis Annual Meetingto take private action.

Glenn Proellochs, President, B-Interna-tional, Switzerland, delivered the closingcomment in which he built upon theatmosphere of the discussion in the panel.He pointed out that many people suffer fromgreediness and a big ego, which sometimesmay get into the way of just and fair progresswithin societies. He pleaded that businessleaders should step up their individual ac-countability for moving towards sustainablegrowth.

Steve Killelea, Chairman, Integrated Research,Australia and Annette Nijs,Executive Director Global Initiative, CEIBS, China

Shirlayne Quayle, Professor, University of Utah, USA - consolidation is the essence of the recovery

Continuing discussions during the break

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Michael Baer, Chairman, Baer Capital Partners, Switzerland

Uri Dromi, Director General, Mishkenot, Israel, in discussion

Arun Sharma, Chief Investment Officer, IFC, USA - global tradehas bounced back

Silvano Coletti, Chairman, Chelonia Group, Switzerland

Scott E. Rickert, Chief Executive Officer, Nanofilm, USA, studying the programme

During the welcome reception

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Nightly view from the meeting venue, on Zurich airport

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